Long-term Thinking in Entrepreneurship

Long-term Thinking in Entrepreneurship

In the previous chapter, we talked about how entrepreneurship is a form of art. If you see yourself as an artist, then you would enjoy doing what you do for work. Art by nature is not stressful.

Many people who start a business purely for the intention of making money cannot sustain through the highs and lows of the initial few years of the business. They will quit early and they will blame a 100 different things which contributed to their failure.

It is not good to accept failure early. Any business takes times to grow and it wouldn’t be fair if the person running it doesn’t give it enough time for it to mature. We have to keep going even when things look bleak and it feels like you are not getting anywhere.

Growing a business is like growing a tree. You put the seed and wait for a while even before it sprouts. And then you wait for years to grow and bear fruit. It is very hard to see a tree grow on a daily basis. There is hardly any visible change, but you know that it is growing.

When people start a business and do not see results in two years, they lose hope. They change strategies and do not persevere through the hard times. People fail to do the important but boring tasks.

After the initial startup enthusiasm goes away, there is a lot of work to be done before you can rejoice again. It takes true grit to make a business succeed and it is not for the faint hearted.

In today’s fast paced world, people often forget the power of compounding. When you keep growing something for a long enough time, the power of compounding gives you a hockey stick growth in the future.

If a business makes $100,000 a year and grows its revenue by 50% year on year, in 20 years, the business would be making $332 million per year in revenue. 50% YoY growth is actually conservative for a startup. Many billion dollar companies have been built this way and there is nothing wrong in growing slowly.

Startups fail to think long term when they have investors and have to show growth in the short term. Their business strategies change to give short term growth at the cost of long term growth.

Many startups die of financial indigestion than starvation. More often than not, it takes time to grow a startup more than money, at least in the beginning.

A human being that has evolved for millions of years still takes almost 20 years to become a contributing member of the society.

A business, which is a collection of people’s efforts, a much more complex being than a human, at least needs 10 years to reach massive success.

Making $100,000 on the first year, $150,000 on the second year and $225,000 on the 3rd year might look like slow growth in today’s hyper invested startup world. But if a startup continues this pace of 50% YoY growth, it will become a multi-billion dollar company in a decade or two.

“You can’t produce a baby in one month by getting nine women pregnant.” – Warren Buffett

Somethings just take time and there is no need to hurry. The phrase “slow and steady” is still relevant, and as technology becomes better, humans have longer to live.

When technology adds a few decades to the average life span of a human beings, there is more time to learn, build, raise a family and experience life.

If you decide to become an entrepreneur and startup, sign up for the long term. Dedicate a decade to your startup to succeed. It takes years to get things right with many aspects of running a company. Somethings are only learned and built with time.

You cannot accelerate learning with books, experience has to play itself out. You cannot accelerate growth with money alone. Deep thought and application through time is required to build a strong foundation for the business.

One of the best ways to sign up for the long term and not put pressure on yourself is to be lean financially and not cost the business.

Frugality, both personally and professionally is not just helpful but mandatory to build a billion dollar company. We will talk about frugality in another chapter.