The economic outlook for the coming months does not look particularly rosy, especially for those who graduated this spring. There may not be a robust job market to enter, and as such, graduates may be thrust into the deep waters of having to learn how to create a career for themselves, by themselves. Youth does not need to be “wasted” on the young as many students will emerge from their studies with a more sophisticated view of the world than previous generations. And with time on your hands and lack of good job opportunities, you may now have the chance to launch that startup you’ve been dreaming about.

Realistically speaking, what starts out optimistically may not end as well, and the survival rate for early stage startups is dismal. A snapshot of “data from the BLS shows that approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more.” This is just a fact of life, and while businesses can fail for several reasons, at the end of the day a founder (or founders) of a startup must deal with the emotional fallout of this experience. There has been a trend that emanated from Silicon Valley to glorify failure as if it’s something desired, or even sought after. Sadly, failure is a painful process and should be avoided. As well-known PayPal founder and investor Peter Thiel states “every time a company fails it is not a beautiful working out of the Darwinian free market and it is not a fantastic educational experience for all involved. Every death is a tragedy and that is even true of deaths of companies.”

Building a business or doing anything worthwhile is difficult, and if one believes it’s a pleasant thing to blog about, they’re not in it for the long haul or the right reasons. A founder should push through and do whatever they can to make sure their business survives. Nonetheless, if you want to be an entrepreneur and do amazing things you need to accept that failure is a fact of life. You will have to stand on the mountain of no’s before you get one yes, so come prepared with the right mindset.

Know that it's OK, and you'll be OK

This may be the first time you’ve encountered a setback, the operative word being setback. Every single successful entrepreneur has dealt with failure and setbacks. However, it’s not that failure doesn’t happen, it’s about what the person does in response. Are they going to sit and feel sorry for themselves and give up? Or are they going to push through, learn from their mistakes and go on to do something bigger and better? Everyone deals with obstacles, but winners push through despite it all.

Dealing with what may seem like the end of the world, intense emotions happening within, and possible shame will be tough. But “this too will pass” and know that time and action, even small steps every day, taking care of yourself, and thinking about the day after will start to remedy what has transpired. History is littered with people with big egos who couldn't get out of their own way and did not let themselves pick up and try again. You do not need to be one of those people as you have the perspective to know that you are strong enough to bounce back by taking positive steps in the right direction.

Processing failure through self-care

Self-care is an important part of being an entrepreneur as you’re running a marathon and not a sprint. Sleeping enough, working out, and eating healthy are all part of managing your mental state when you’re going through the challenging process of building a business. When you’ve dealt with a failure like the closing of your business or being let go from a position there needs to be a way to process the difficult emotions that are likely to follow.

An effective way to deal with any difficult emotions, and maybe even process the situation that has just transpired, is to work out. An intense workout, alongside a healthy diet, can help someone cope with the day to day initial regret that accompanies failure. Journaling and writing down everything are actions that help the brain process trauma other ways cannot. It’s not a magic cure but one may find writing down what happened makes it less painful and gives the mind a way to get all those negative feelings out on a piece of paper. As this article highlights “writing about anger, sadness and other painful emotions helps to release the intensity of these feelings. By doing so you will feel calmer and better able to stay in the present.”

Give things time and space

There is some truth to the “idea that time heals all wounds”; that what may seem intense and cause severe discomfort when it occurs will eventually fade. This is difficult as we often want these feelings to go away immediately or to occupy our time with something that masks those feelings. But time is necessary to process and make sense of what happened, as well as learn any lessons (see below).

Space is another important concept. It’s not about running away, but taking some space, a breather to collect yourself, could also prove to be beneficial. Some people change locations for a time, but if that’s not possible even taking a walk or changing your environment can help. Getting out of our heads by taking positive steps like journaling is one thing, but sometimes you

Look for the meaning and the lessons

Philosophers such as the Stoics prepared for the worst, and there are so many lessons to be learned from their experiences in ancient Greece and Rome. Throughout history, people have been able to overcome what seemed like life-ending failures, and they were able to use these setbacks as rocket fuel to propel them to greatness. Roman Emperor Marcus Aurelius stated “the impediment to action advances action. What stands in the way becomes the way.” These words encapsulate the essence of failure: it’s just another opportunity to learn.

It’s important to reframe failure, and to understand what risk entails. One does not fail; they succeed because they try. And not like “try” where everyone gets a prize for participating, but because you put yourself out there. We tend to tie our whole identities to one or two failures that happen in our lifetimes, when the reality is that we need to try things and really understand our life’s true mission. We embark on a path because society, our parents, our peers, etc. tell us it’s the “right” thing to do. It may be for them, but not for us. Failure is life’s way of nudging us towards where we need to be to truly complete our life’s mission.

Find a community

There can be no two ways about this. You will struggle with setbacks, and failures if you want to build something great. It is a lonely journey, especially if you’re an entrepreneur without a co-founder. A partner or co-founder can row the boat along with you when you feel you’re lost at sea. There are, of course, downsides in having a partner as well. But a community of people who help you and listen when you struggle is important.

Tenacity is a trait needed to persevere, but so are people who will join you on this marathon. Sometimes it is hard to bounce back, hard to start again, and be tenacious. That is why having a community that supports your efforts, whether that be a group of fellow entrepreneurs, a religious group, or even your peers from university is vital for your ultimate success and mental health. This idea of the lone wolf entrepreneur who flies against the conventions of society is maybe good content for an Ayn Rand novel, but is far from the truth. It does take a village, or a community, to help young entrepreneurs on their long journey, so it’s important to turn to your friends when you need solace.

Today, failure is approached in two ways, either as something swept under the rug or glorified. Both views are unhealthy as failure is a very normal and natural part of life, like death. It is not bad or good, it just is. When you learn to accept that, and lean into it, the ultimate outcome will be less debilitating. When it does not own you, you are free to truly go where you need in order to succeed. Upon reflection, world famous author J.K. Rowling stated it best that “it is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all, in which case you have failed by default.”

There has been a focus in recent years on the feats of tech entrepreneurs such as Elon Musk and Mark Zuckerberg, claiming that if you want to be a wildly successful entrepreneur, you need to build a tech company. It is true that high-growth, high-risk startups have made a disproportionate impact over the past 15 or so years. The same goes for the return on venture money these entrepreneurs took on to build and scale their companies. However, tech startups represent only one type of business model, and historically speaking most entrepreneurship in this country has been of the traditional kind: lone business owners building their businesses, every day, in what would become legacy brands. It wasn’t called entrepreneurship back then, but simply making a living.

As we’ve noted in previous articles, we may be entering a period in which you’re going to have to start your own business to survive. So, before you rush headfirst into a business model that is not ideal, you should understand what different business models look like. There are many factors one must take into consideration when they’re looking to build a company, and self-awareness and honesty are key before embarking on this difficult but ultimately fulfilling path. If you are not building a business in order to solve someone else’s problems and make money by offering value, don’t start one. Additionally, if your intention is something short of solving problems to make a living for yourself, seriously reconsider if you want to be an entrepreneur.

OPM: Other People's Money

Taking Other People’s Money can be the rocket fuel for your endeavor aka startup or can be a curse if you and your investors’ interests are not aligned. Putting aside public markets, taking private money and venture money can raise your business to the next level. This is the standard model these days in VC, but while things are changing, know that you’re going to have to give up a lot of your business for the ‘privilege’ to take an investor’s money. Furthermore, you’re going to have to be held accountable to them, they will want regular reports, and will most likely start telling you what to do with your business. This article highlights the fact that “fewer than one per cent of all companies in the US are venture funded, and once you take other people’s money in exchange for equity in your company, the clock is ticking. They want their money back, plus a multiple of 3x to 10x, so your company will either need to ‘go public’ through an IPO or be sold in a trade sale.”

There are entrepreneurs who bootstrap and go for as long as they can without taking outside money; for some that is a good plan until they make the decision to take investor money. If there is one difference between a tech entrepreneur and a regular business owner, it is the decision to take venture money. An early stage startup’s success is based on scale, and getting sizable market share, so they need to burn through money to do so. While they need to grow, traditional businesses can grow at a stable rate, and start to make a consistent profit.

What problems to solve

Not everyone wants to solve some world pressing problem or disrupt an entire market. If you do, more power to you, but be aware it’s going to be a lot of work. Some people are driven to change the world and want to use technology to do so. They believe their destiny is intertwined with building a revolutionary startup. If you’re going to go big and want to make sure you raise a lot of money, find the biggest market to address.

There are others who want to solve more local problems, or want to build a business helping other businesses deal with tangible problems such as communications, strategy, etc. It’s important to work backwards and figure out who your customers are, and what is the problem that your business is going to solve. Some problems can be solved with an agency model, some need a SaaS model, and some can use a consultancy, but these are things you need to consider before you begin.

The risk factors

It’s not that people on paper don’t understand being an entrepreneur is a risky endeavor. And of course, the flip side is that there is a risk in not taking a chance in life if you really want to launch your own business. Simply put, if you launch a high-risk high growth endeavor such as a startup your chances of failure are higher, and certainly higher than if you launched a cash flow business that quickly turns a profit.

The thing about risk is that many people look only at the upside, on all the things that could go right. But you need to approach the situation thinking about what could go wrong, as most things will be harder than you expect. With startup risk, however, there is no upside at looking at the downside. This is how VCs view risk, as they’re banking on 1 ‘knock it out of the park’ winner out of a portfolio of 20 companies. It’s like a rocket ship: its fuel propels it to the atmosphere and space, and there is the very real risk that it could blow up on the way there. No wonder it’s called rocket ship growth!

Camels on the horizon

Since the pandemic started there has been a shift in the tech community regarding the growth of startups. Yes, you have your Zooms and TikToks of the world, but these are outliers. Right now, the idea of unicorns, billion-dollar valuation startups are not on the horizon. As more bad news comes out surrounding the economy and many companies continue to go under, a new model is emerging. That is of the camel, a startup that can go long periods of time without outside money, and is built for profit, almost like a real business.

“In today’s world, unicorns represent more than a valuation. Rather, they represent a philosophy, an ethos and a process of building startups. When being a unicorn is the objective, very rapid growth is the method. The tools are abundant venture capital, a deep and ready talent pool and a supportive startup ecosystem. This approach has worked well in Silicon Valley for some time. But in the wake of failed IPOs, the pushback against tech models and the range of social ills plaguing the Valley, the approach is losing its luster.”

Because of COVID-19, and for the first time in at least 10 years, we are facing an economic downturn. For many in the tech industry this is their first time dealing with such a situation. Nonetheless, this might be the right time, as many successful companies were built during economic downturns, and these new hybrid models may be the way forward.

Know thyself

In the end, after a long day of work, when you put your head on your pillow you must ask yourself if you are on your mission. You need to ask yourself and look to visualize what your future will look like. Will it be as a solo entrepreneur where freedom is a priority, or will you run a team and build a culture around your idea? Ultimately, these things will change, as you learn from your mistakes, grow and develop. As this article states on understanding yourself, “as an entrepreneur, you will have no place and no one to hide behind. Knowledge of yourself is the key to confidence, and confidence builds leadership. Building a new business requires good leadership to develop the market, attract customers, motivate the team and conquer the unknowns.”

Maybe being an entrepreneur will not be in vogue anymore, and that stability (like a well-protected government job) will be sought after during these tough economic times. Either way, it’s important to understand what makes you happy, and how you feel when you’re by yourself. Telling people at cocktail parties that you’re an early stage tech entrepreneur may sound like a cool idea, but you must be OK with the stress of raising money, dealing with customers, and everything else. You need to ask yourself: if this is what you really want?

Now is a good time as any to start a business, and if you want to get a job that’s fine as well. Many of us have been indoors and have had time to think about where the next few months are going to lead us. That could be building a high growth startup or a business which we slowly build on our own. Taking time to think through the type of business you want to build and envision the end in mind will help you mitigate the risks involved with entrepreneurship. There is no one way to build a business, but there are best practices. Just know the difference before you embark on this journey.

About the Panel

The Department of Service Learning is hosting a student panel event for one of their minors, Sustainable Community Food Systems. The panel will consist of student alumni discussing their scholarship within the minor and the opportunities the minor presented them with both professionally and academically.

How to Participate

The panel will be hosted through WebEx and will take place in the first week of the Spring 2021 semester. For more information, visit the SCFS website at https://sl.engagement.uconn.edu/scfs/.

To register for the event quickly, fill out the following Google Form:
https://forms.gle/4UdJzRGgGDYMQUF99.