So you want to start a growth business? Welcome to jail

Written: 2015-04-09

There are two main types of businesses. 1) Growth businesses (build revenue then later EBITDA rapidly) with a view of eventual full or partial disposal (exit), or 2) Lifestyle businesses - a business which you run yourself as a job (as a manager) and withdraw the profits and live a comfortable life. The common phrases which differentiate the two are “working on” or “working in” your business respectively, which many a patronising consultant will repeat.

An example of a lifestyle business is a shop owner who owns a single shop and never expands. A growth business would be one who starts off with one then continues to replicate it in multiple locations.

The dream of every hyper-ambitious man is to build a growth business then cash out. If you are not born with this ambition, don’t have an addictive personality, and don’t have a big pair of balls (immense appetite for risk) then I personally wouldn’t recommend business. If that offends you, stop reading now. You’re in the wrong place. I’m a very direct person.

I know little about lifestyle businesses or salary jobs nor would I ever want to be part of one due to my innate laziness (more on that later). But I do know that there is absolutely nothing wrong with salary jobs or lifestyle businesses (after all, I had employees who I all fully respect) but it’s simply not my style so I won’t talk about it in this blog. Don’t get me wrong, I have full respect for either choice, but this post is based on my own experience as an intellectual eccentric who chose the growth business option in life.

People often (naively) say they want to start their own business because they want to “be their own boss”. Well, guess what? When the doors open you’re not the boss. Your bosses (in order) are 1) your suppliers, 2) your customers, 3) your employees, and then 4) your potential acquirers.

Then, often overlooked is the level of animosity with your bad competitors. With this comes sleepless nights and emotional hostility. Maybe you’re a tough bastard who can brush it off whilst in the firing range, but I doubt it. Business is a huge sacrifice. No market has a single player. Business is war, and growth rate and cash are the primary metrics of firepower.

Once a growth business (or “startup” to coin the American term) is started, you effectively put yourself in for a prison sentence. This applies to both your social life and family. You create risk which is hard to reverse. Your ass is on the line and you can’t take a holiday - I don’t mean a holiday where you fly to Spain, I mean a mental holiday where you absolutely cannot think or talk about anything but your business. Why? Because it’s you versus the competition. And success I would define by the following equation:

Addiction * Intellect = likelihood of success

Don’t worry, I’m not forgetting the luck factor, which is why I include “likelihood” in the equation.

If you’re not addicted (and I mean 24/7 wake-up-every-hour-pen-and-paper by the bed addicted), your competitors probably will be. And, in that case, they will probably screw you.

You will have detractors, doubters, and you will lose friends because they won’t understand your lack of availability (business induced unreliability, be it meetings or simply stress). The jail sentence you create is inescapable; the decision irreversible.

Your personal (and family’s) finances are on the line. Unless of course, you find a VC or angel who is prepared to share the risk. The likelihood of not having to put your own balls on the line? Low. Or maybe you have an ingenious (and perhaps patented) idea. Or you have a friend who likes a gamble. In either case, you give up share. Loss of share would likely reduce addiction.

Bear in mind that I am an all-or-nothing man, so my views may seem heavily aggressive and polarised. Trying to build a growth business while maintaining a balance which includes family and social life is likely to lesson growth ratein a startup. I know a few people have done it, and I bow down to them. I find the concept very hard to comprehend but I stand corrected by many examples where it has been done. To me, I say f*** knows how they did it, but I bet their family life wasn’t so great despite their claims. Maybe I just sucked at delegating? Either that or they were simply better men than I. Regardless, I stand by my belief that the frontman needs to be a Rambo for maximal growth. Remember, I’m talking about startups here (e.g. up to£50M sales), not being a CEO of an established company.

This post sounds negative on review, but thinking back, growth business was fun as hell. Until I broke. I lost my mojo. Business bruised me. I had to escape.

What I think: requirements to start a growth business:

Balls (appetite for risk), addiction, intellect, ability to sacrifice. Agree? disagree? Are you one of those who managed to build a startup while maintaining a normal life? Tell me about it below.