18 Jul Three ways being an entrepreneur will re-wire your brain
I arrived home from work one day when my wife proudly announced that she had just made $200 by selling old clothes, household items and children’s accessories. She beamed and waited for me to reciprocate her pleasure, or offer congratulations. Instead, I did some quick math in my head and responded (I thought politely) that she had actually lost almost $2,000 in the transaction. The items she sold had cost us over $2,000 when we purchased them, and now we had sold them for $200. “We simply recognized the depreciation of assets we previously purchased,” I mentioned helpfully.
As I sat in front of the house waiting for her to let me inside, I pondered how being an entrepreneur changes the wiring in your brain (for better or worse, but mostly for better — I hope). Entrepreneurs look at the world through a different lens. Here are three ways entrepreneurship changes the way you see things:
First, as described above, entrepreneurs understand that every penny is either consumed or invested. Accountants think in terms of expenses and assets – expenses are the costs of a business that are consumed when you use them — printer ink, travel, electricity, payroll, meals, etc. – and assets have a value of more than $0 regardless of what they cost the company. Entrepreneurs understand if money spent increases money earned than it is an investment. For instance, dinner with clients to finalize a deal, a continuing education course for an employee and are intended to create value in the future. Entrepreneurs run everything through a cost vs. benefit analysis or an expense vs. investment analysis.
Will a luxury car create any value in the future? Perhaps the answer is “yes” — if your industry is highly image-conscious. Will sending your kids to college increase the likelihood of their success? Will making a key hire (or acquiring better software, or updating your website) increase value in the future? We get so accustomed to doing this analysis that we may not be consciously aware of it. But it’s the first way entrepreneurs think differently than most people. (For the record, entrepreneurs can drive luxury cars; they just understand that they’re consuming, not investing. And yes, my wife eventually let me in the house.)
Second, entrepreneurs know there are no experts … in anything. Confident of this, they stop seeking approval. If someone doesn’t like your idea, even someone with significant experience in your field, that doesn’t mean they are right. They just see it differently than you do. In fact, I’d suggest there is an inverse correlation between the number of experts who believe an idea is good prior to it working, and the actual likelihood of success. In other words, no good ideas come from experts — they come from contrarians. Think about any product or service that exists today. It was created by someone who saw the world differently than the status quo and realized there is no such amorphous mass of experts called “they.” “They” don’t exist. Quit being afraid of them.
As an indelicate aphorism puts it, opinions are like a certain body part: everyone’s got one, and most of them stink.
Finally, entrepreneurs see opportunity everywhere. As an Angel investor I give a lot of weight to a founder who has started and grown a previous venture.
Without encouraging marital tension or a bean-counting mentality, let me encourage you to develop an entrepreneurial viewpoint. It will help you assess value properly, to think correctly about what kind of value is being gained in any given purchase or expense. Most important, it will help you break free of status-quo thinking. You are the expert. Entrepreneurs don’t let anyone talk them out of that confidence.
Entrepreneurs think differently http://www.effectuation.org/sites/default/files/research_papers/what-makes-entrepreneurs-entrepreneurial-sarasvathy_0.pdf and https://www.amazon.com/Effectual-Entrepreneurship-Stuart-Read/dp/0415586445