“Start a jiu jitsu school,” they said. “You’ll have the easy life,” they said.
I’m not sure who said that, but I’ve certainly heard a lot of … interesting opinions about business ownership, and plenty of unsolicited advice related to how a business could be run better.
In sum, I’ve heard plenty of myths about business ownership that I want to address today, at least briefly. I thank you in advance for this indulgence.
Financial Myths
I think it’s fair to say that I’ve got some experience running a business. Over the last 25 years, I’ve steadily evolved from wannabe entrepreneur to full-fledged business owner, with plenty of nasty bumps in the road along the way.
One thing that’s been consistent: people almost always assume I make more money than I do, or that I’m richer than I am, or something similar along those lines. Why?
I think a lot of it stems from a game people play. Let’s call this game “Top Line .” You win the game by guessing how much income a business has, and then by pretty much ignoring everything else. Top Line is a tempting and fun game to play, since you only play it in your own mind, and you don’t really ever run the risk of being disappointed by reality.
The reality is stark. Top Line often overestimates the actual revenue of a business, while utterly ignoring the expenses. Sometimes a more advanced version of Top Line is played, where the player takes expenses into account, but drastically underestimates them.
The average salary of a small business owner is, in fact, about 3% higher than the annual mean wage in the US. I can vouch for how much disparity there is among owners, too: if you’re building a business, you might make nothing (or next to nothing) for several years in a row.
On the flip side, small business owners notoriously work long hours, sometimes in the range of 80 hours a week.
For almost the first ten years of Revolution BJJ’s existence, there was no money to be made. This was not a profitable venture, even though we took very conservative safeguards to make sure we didn’t lose money. We even tried to draw a salary much too soon, and paid the price by discovering the painful lesson of the US tax code.
Taxes
Taxes might seem complicated even if you’re not a business owner, but they certainly “level up” in complexity when you’re running your own show. One painful lesson we had one year was when we finally paid ourselves a decent salary, only to learn that we had “made too much money”, and that forced us to scale back for the next few years.
Wait, what? Too much money? We … made too much money to pay ourselves?
That’s right, kids. Welcome to the wild world of capital gains, where you can “grow” as a business without actually bringing home any money, and you end up owing taxes on these gains.
Oh, you don’t enjoy thinking about our tax code? I’m terribly sorry, you’re a business owner now. Too bad!
Other Things You Don’t Enjoy
Being your own boss is the American dream. You can do whatever you want with your time, and nobody gets to tell you what to do!
Except, none of this works like that.
First, your customer is certainly your boss. You do business with them, so you need to treat them like a friend. You can’t say the first thing that comes to your mind most of the time, and so you’re sort of “on” all day.
Was there an emotional exchange between one of your employees and a customer? You had better go and put that fire out. You didn’t see yourself as a psychologist or marriage counselor? I’m sorry, you’ve misunderstood what it is to own a business.
Don’t like being a janitor? I really don’t know what to tell you. You have to be willing to do it all, and the idea that you’ll get to do what you enjoy with most of your time is simply inconsistent with my own observations.
If I had to put a number on it, I think I probably get to do what I really want about 15% of the time. I really, really enjoy teaching and training jiu jitsu, and I do get to do this for a few hours every week. This work is meaningful and enjoyable.
The other 85% of the time is a mixture of things I now enjoy doing that I didn’t used to, like planning a new program we can roll out, or coming up with a different concept that ultimately improves the training experience, and stuff I really don’t much care for.
I’ve got a lot more to say about this concept—that folks see only the tip of the “problem iceberg”, but imagine a positive side that’s far beyond reality—but this is getting long, and tomorrow is Sci-Friday, so I’ll begin winding this down now.
Still A Lottery Winner
After all this, you might be thinking, “Man, this guy really has sour grapes! He gets to write his own schedule, and all he has to deal with is a little drama here and there.”
First, I hope I’ve somewhat dispelled you of the notion that all a business owner has to do is a tiny bit of troubleshooting here and there. Now, I know not all businesses are the same, but I’ve met with hundreds of different business owners over the years, many times over lunch. I’ve gotten to know their challenges, and I’m here to tell you that this is universal. Every business owner I know has a similar perspective.
Second, I really don’t have sour grapes. I don’t think the grass is greener, and I don’t have any interest in going back in time to convince Past Andrew that he should stay on his path to become an engineer.
Instead, I’m quite cognizant that I’ve won the uterine lottery in many ways. Having a flexible schedule means I can write here on Substack every single day. I get to see my ideas, and projects I’ve worked on closely with others, come to fruition all the time. There’s tremendous reward in knowing that we have built a community, and that we empower a handful of people to make careers out of jiu jitsu.
But life is tough, and so is running a small business. Even the businesses I own and have less to do with present their own unique challenges, and while there is plenty of reward, there’s also plenty of peril.
Business owners out there: what really grinds your gears? Non-business owners, was anything I wrote surprising? Let’s carry the conversation forward in the comments.
"Waaah waaah waah!"
Cry me a river, Monopoly Man.
Sitting on your giant pyramid made out of pure gold and swimming in your diamond-encrusted bathtub. Living the easy life.
Note: I didn't read the article yet, but I'll have a lot more angry things to say when I do!
EDIT: Oh...welp...that was awkward, wasn't it?
Oh yes, the tax code...and paying 15.3% of your earnings to social security. Employees don't realize how many expenses are paid on their behalf until they are responsible for covering those expenses. And what about paying quarterly estimated taxes on earnings you are not even guaranteed to see? But, with all of the headaches of running my company, I could not ever imagine working "for" someone else again. It's been nearly 25 years since I did it and I won't ever go back to it! Thanks Andrew for sharing a little perspective!