The Dark Side of Entrepreneurship

75% of startups funded by venture capital failed to return the capital invested in them, not to talk of generating any profit, according to a study conducted by Shikhar Ghosh of Harvard Business School.

If you own or run a business and you are facing difficulties, please know that you are far from being alone in your experience, regardless of the sector or country you are operating in. Reality backed by hard data shows that the road of entrepreneurship is very rough. You will be shocked to know that many of the businesses you think are doing well may not be thriving well as you think.

Majority of start-ups fold up within 5 years regardless of whether they are operating in developing countries like Nigeria, Ghana and Philippines or in advanced economies like the US and UK. Most that survive beyond the first five years are struggling.

Yes the media is awash with the success stories of famous entrepreneurs who started from virtually zero or with family support and went on to build multibillion dollar businesses. Talk of Bill Gates, Iyinoluwa Aboyeji, Richard Branson, Aliko Dangote, Jeff Bezos, and Mark Zuckerberg.

The challenge here is that these media stories do not offer the full picture about entrepreneurship. There is a reason for this. In our world today, we organise success seminars where we invite successful people to talk about their successes so that we can be inspired by them and learn from them and that’s fine. But have you ever heard of a failure seminar being organised where people who fail are invited to share their experience of why they think they failed? When awards are presented or press interviews granted and news covered, the focus is usually on successful people. And the bigger the success the bigger the attention. Even when the successful people talk, their talk is usually dominated with their victories and triumphs. There is usually not enough time to talk about their failures and mistakes.

What makes the entrepreneurial journey tough?

First time entrepreneurs often lack the security that comes with having a paid job – guaranteed monthly pay, paid leave, sick leave, health insurance, pension and many other perks associated with being an employee.

Not only do most entrepreneurs suffer from lack of guaranteed income, many actually earn far less than employees who are in paid jobs. In 2000 Barton Hamilton of Washington University did a comparative analysis of income distributions of employees and entrepreneurs in America. He found out that entrepreneurs earned 35% less over a ten-year period than employees in paid jobs.

Then there is the emotional strain that comes with running a business. There are moments of loneliness and anxiety. There are periods of racking one’s brain in order to be up-to-date with filing tax returns and meeting other statutory obligations.

I have seen many entrepreneurs work so hard, rack up huge debts, sacrifice relationships yet with nothing to show for their efforts.

I am however confident that your case and mine as entrepreneurs is not irredeemable if we would follow the right principles. I say this because I have seen many entrepreneurs get so excited about the prospect of becoming the next Mark Zuckerberg that they are not taking appropriate steps that will lead to the destination of their business dream.

In my follow up article I will be sharing some practical tips to help you cope with the dark side of entrepreneurship.  Stay tuned.

My name is Ayo Adebamowo. Author, Speaker and Techpreneur. I’m here to walk your success journey with you. Subscribe to my newsletter for regular nuggets or check out other empowering articles on my blog to help in that journey. My latest book is Accelerate, a primer on personal and professional development.