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July 18, 2019

The Risks of Being an Entrepreneur

Exploring the high price of entrepreneurial success and the downsides of owning a business that often get ignored.

Illustration by Dalbert B. Vilarino.

 

Three years ago, Derek Luk quit his day job to start Mimentra, a company that teaches mindfulness practices to people with stressful workplaces. This work is deeply important to Luk, a registered nurse who started Mimentra after he lost a colleague to depression and suicide. But when he took the leap into entrepreneurship, Luk found he had inadvertently created his own intensely stressful workplace.

Like many new companies, Luk’s began with a big idea. He registered Mindfulness Mental Training Inc. as a business at the end of 2014, and the following year he won the ATB Financial Boostr pitch competition, ran a successful crowdfunding campaign and won the People’s Choice Award at the 2015 Startup Calgary Launch Party. At that point, leaving his nursing day-job seemed like the obvious move. Now, Luk regrets his haste.

“I think I drank too much of the Kool-Aid,” Luk says.

The people he was meeting in the startup world kept telling him he just had to take the leap, that he would figure it out as he went. “Rarely did I actually hear people talk about the downside,” Luk says. “You get so excited. You don’t even consider the risks until you meet them.”

 

Entrepreneur City

Luk is one of thousands of founders and business owners in Calgary, a city where the streets flow with entrepreneurial Kool-Aid. We celebrate “mavericks.” We admire “make-it-happen” attitudes. Once, this idea was tied to Calgary’s heritage of pioneers, cowboys and self-made oil barons. Now it’s being repurposed for a new era.

The 2014-2015 economic downturn that shook Calgary’s energy sector occasioned a larger cultural shift. It spurred city leaders and Calgary Economic Development to start forming a new, diversified economic strategy for the city, one that will beef up the high-tech sector and position the city as a global innovation hub. Many oil-and-gas professionals who were pink-slipped during the downturn decided to launch solo ventures, widening Calgary’s already substantial pool of entrepreneurs.

In December 2015, the number of self-employed people in Alberta jumped an astonishing 16,700 from the previous month. In 2016, Alberta’s entrpreneurship rate vied with Ontario’s for the highest in Canada. In late 2017, the Government of Alberta passed the Growth and Diversification Act to boost high-tech training and attract investment, and Calgary City Council approved a $100-million Opportunity Calgary Investment Fund for “catalytic” and “innovative” projects.

Amid this economic reshuffling, it seems Calgarians’ passion for self-starting has only intensified. Today, Calgary is home to more than 30 co-working spaces, business incubators and accelerator programs. Mount Royal University and the University of Calgary both teach innovation and entrepreneurial mindset and skills as part of business training. For people with big ideas, this looks like a great time and a great place in which to chase a dream.

But sometimes the chase is just a chase. Fledgling businesses are vulnerable to failure, especially after the first year. About 85 per cent of Canadian businesses make it to their first birthday and 70 per cent survive for two years. By the five-year mark, only about half of those original ventures still exist.

 

The Fifth Element

Until recently, Alberta Ennest and her husband Dwayne were the co-owners of a small Calgary restaurant empire that included Diner Deluxe, Big Fish, Open Range and White Rose Vegetarian Kitchen and Coal Shed Smoke House. Now they’re employees at Bite Grocery & Eatery in Inglewood, who are enjoying relief from nearly two decades of intense responsibility and coming to terms with the twist their path has taken.

Diner Deluxe opened in 2001 without much of a formal business plan and was an instant success. It afforded the Ennests the chance to learn on the job and to take chances on other projects. When they opened White Rose in 2016, a vegetarian restaurant in Bowness, they poured into it 16 years of expertise. But things happened. Taxes and utility costs doubled and roadworks temporarily blocked access to the restaurant. Customers just weren’t coming in. The Ennests began pouring personal resources into the venture, but eventually there was nothing more to do. White Rose closed at the end of 2017.

Alberta says planning and hard work matter, but they don’t guarantee success or even survival. There’s an intangible “fifth element” that has to be in place, some combination of luck and timing, and it’s not an element that business owners control.

“Even with a lot of experience you’re not always going to be able to predict the outcome of your efforts,” Alberta says.

And what if you have no experience?

 

Life Takeover

Kari Gordon is the executive director of Startup Calgary, a support organization for early-stage entrepreneurs. She organizes workshops and networking events, pairs fledgling entrepreneurs with mentors and facilitates collaboration between business founders. Gordon says it’s hard to prepare for the demands of business ownership. Non-work relationships and activities tend to disappear. “You eat, sleep, breathe your project and your idea. I’m not sure people are always prepared for the intensity of what I would call that life takeover,” Gordon says.

Entrepreneurs are required to be extremely productive, to perform at a high level and to make constant decisions that have big implications. No matter what’s happening behind the scenes, they must present a confident, positive face. They also need to be resilient, not only to manage the workload, but to weather regular rejection from investors, advisors, critics and clients. These are the basic requirements for an entrepreneur whose venture is running smoothly. Struggle, loss of control and failure can feel catastrophic for entrepreneurs, even the most experienced among them.

 

The Cost of Stress

The Ennests are still emerging from the cocoon of stress that enveloped their last couple of years as business owners. Dwayne says he still wakes up some nights with his heart pounding. For months, the first thing he did each morning was check his bank balance to see if the White Rose could stay afloat that day. He was teaching himself to do the restaurant’s plumbing and electrical work on top of his duties as chef and business owner. He was spread so thin it affected his creativity as a chef.

Alberta says the fear of letting people down — staff, suppliers, investors who trust you — locks you in a heartbreaking cycle. “Those are terrible days. They’re sleepless nights. You can never see the end of it,” she says. “The worries became so imposing they eroded the reasons we were in the business in the first place. That, I think, was more tragic than anything else.”

Luk says there have been days when business set-backs made him feel like he couldn’t get out of bed. “You invest time, money, sweat, energy and finance, you put up a lot of risk and it doesn’t pan out — no one talks about that,” he says. He’s heard stories about entrepreneurs who, like his former nursing colleague, have chosen to end their lives.

In recent years, such stories have become unsettlingly common. Several high-profile entrepreneurs have died at their own hands: Austen Heinz, CEO and founder of Cambrian Genomics; Aaron Swartz, a developer of Reddit; and most recently Kate Valentine Spade, founder of the Kate Spade fashion brand. In 2017, Alberta’s business community lost Edmonton entrepreneur Ruth Kelly, founder of Venture Publishing, and Calgary investment banker George Gosbee. Each of these tragedies had its own complex set of circumstances, but in each case, depression was cited as a factor.

Such losses have sparked conversations about whether entrepreneurship and mental illness could be connected. Does the creativity and drive that helps entrepreneurs succeed also make them vulnerable to conditions like depression and anxiety? A 2015 study from the University of California Berkeley and University of California San Francisco investigated the prevalence of mental health conditions in entrepreneurs. Of the study sample, 49 per cent of entrepreneurs self-reported having a mental health condition like depression, substance abuse or bipolar disorder compared to 32 per cent of non-entrepreneurs. The results are interesting, but at this point, they don’t point to any universal truths.

More compelling is the evidence that intense, long-term stress, the kind associated with being an entrepreneur, has health consequences. Dr. Karen MacNeill,
a Calgary-based performance psychologist who works with business leaders and top-tier athletes, says the uncertainty of entrepreneurship creates an ongoing state of stress. “It’s that feeling of not having control. The system doesn’t like that. We like to operate on certainty,” she says.

According to MacNeill, ongoing, unrelieved stress sends the amygdala (the part of the brain that scans the world for threats and signals the “fight or flight” response) into a state of constant vigilance. Stress elevates cortisol, a hormone that, when chronically elevated, can interfere with learning and memory, lower immune function and even cause heart disease. Severe stress manifests in a range of physical symptoms that can include shortness of breath, muscle aches and fatigue. Mentally, it causes people to get locked in negative thought cycles. Some people can’t sleep; others do little else. Avoidance can become a coping strategy, sometimes by hiding from people and situations, sometimes by retreating into substance use.

MacNeill says business leaders can learn from Olympic athletes, whose training schedules always incorporate recovery time. Many entrepreneurs feel like they have no time to spare, but those who fail to embed recovery periods in their daily schedules — like 15 minutes of mindfulness practice or half an hour for family dinner — are more vulnerable to stress and less likely to perform well.

 

Surviving the Worst

In 2009, Calgary entrepreneur Kevin Franco co-founded Enthrill, a tech startup for the publishing industry. Under his leadership, the business grew into a multi-million-dollar company, working with massive retailers and being lauded in business papers. Yet by November, 2015, the intangible “fifth element” had started to work against Franco, and Enthrill was floundering. In January, 2016, Franco made the wrenching decision to let his staff go. He moved the entire office into the basement of his home, and used his own credit cards to keep the lights on until he was able to sell the company a year later. He lived a nightmare, meeting most of his investors one by one to tell them their money was gone.

Franco found himself struggling with depression. Losing the business was one thing. Feeling like he’d disappointed the people who depended on him most — that was devastating. “I felt as though I let all the people who believed in me down: my wife at the time, my family, my investors, my staff and my friends. I didn’t realize how much I put at risk — it wasn’t until it was all gone that I felt the full impact,” Franco says.

During his most successful years, Franco had been careful to give credit where due and to avoid wrapping his ego around his company. When the business failed, however, it felt personal. “I took it all on myself. The buck ends at the CEO, and despite the actions or inactions of others, despite market factors, despite everything, it’s your responsibility as a leader to deal with it all,” he says.

MacNeill says it’s common for individuals in high-pressure roles to have their personal identities consumed by their “performer” identities. When this happens, a poor performance becomes a crushing personal failure instead of a learning opportunity. “It’s not necessarily the dollars and cents of the business,” MacNeill says. “It becomes, ‘if I fail at this, this means I’m a failure as a person, versus, ‘it’s just a business that did not go for a variety of reasons.’”

According to MacNeill, it’s important for top performers like athletes and entrepreneurs to define who they are and what they stand for outside of their professional roles. For athletes, it’s not about getting a gold medal, it’s about executing the best possible performance on a given day. For entrepreneurs, it’s not about profits, it’s about cultivating the hardiness to endure difficult conditions.

In the end, Franco found he was hardy enough. After the fallout of losing his company in 2016, a mentor warned him about experiencing depression as a result of failure. Franco never forgot this warning, and it helped him to maintain perspective as the foundations of his life began to shake. It reminded him that failure is not catastrophic. Failure is normal — it’s part of the process.

 

Talking About Failure

Despite the fact that failure is incredibly common in the entrepreneurial world, we still give the most attention, the most column space and the most TED-talk time to the stories of exceptionally successful people. Franco finds this unusual. Success stories have few lessons to offer, he says, whereas failure is incredibly educational. “Sometimes hearing from someone who has been there, even if they’re telling you how they did it wrong, can provide great insight,” Franco says.

For years, Franco has been a mentor to other entrepreneurs (he’s had many coffee sessions with Luk, in fact) and he believes experiencing failure made him a wiser, more empathetic guide.

In Calgary, the narrative about failure is evolving, but slowly. Gordon says she’s observing more open conversations about struggle than ever before, and it’s becoming easier to find founders who are willing to share their more difficult stories. She says many entrepreneurs think mentors and peers will only want to be involved with a business when it’s thriving, but that’s not so. “I have seen that the community is there through thick and thin,” Gordon says.

Luk knows he can rely on his mentors when he’s struggling. His expertise in mindfulness helps him manage stress and monitor his own warning signs. In Twitter, he’s found an excellent support system where founders let their confident masks slip and share poignant, honest details of their experiences. Lately, Luk has taken to building IKEA furniture as a mindfulness practice. It’s a simple process with a tangible result. It feels good to complete something.

It raises the question then: if entrepreneurship is so stressful that it makes building IKEA furniture feel like therapy, why does anyone do it? Despite the stress, Luk is proud of Mimentra. He’s working on mindfulness training programs with the Calgary Police Service, the Wellness Centre at the U of C and with female inmates at Lethbridge Corrections — achievements that wouldn’t have been possible had he refused to take the leap. Franco’s experience, while devastating, afforded him the wisdom to help others and to assess his own options. Not even MacNeill has been unable to resist the lure of entrepreneurship — she’s involved with a custom mental-health media startup called Headversity.

Alberta Ennest says the experience of business ownership made her and Dwayne stronger, but they’re done now. She believes people are seduced by the idea that business ownership means freedom and independence, but that’s often a misconception. When you’re the boss, she says, you’re utterly tied down. Now she’s free.

This article appears in the October 2018 issue of Avenue Calgary. Subscribe here.

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