Several years ago I ran a research project that surveyed more than a thousand small business entrepreneurs.
I was interested to see why these folk were so willing to engage in risk. If anyone bothered to look at the stats, they’d never form a start-up or open the doors to their new small business. Government agencies tell us that failure is the most likely outcome within the first 10 years of operation, whether you’re in the US, the UK, or Australia. Anecdotal evidence suggests the failure rate is even higher and especially in certain business sectors.
Even more troubling than the rate of businesses that close up shop, many of those businesses that do survive end up in a state of month-to-month existence, stagnating rather than growing.
I realize all of this sounds a bit depressing. And yet, despite these hard realities, entrepreneurs keep opening their stores, launching their apps, and building their SaaS platforms. I wanted to know why they seemed so impervious to the well-known risks?
I discovered some of those answers. What I didn’t expect to find is that despite all of the risk, failure, and turmoil, entrepreneurs are happier than their friends in steady employment.
At first I thought this might be just something to do with the smaller size of SMEs and start-ups. A report conducted by PWC showed that while just 27% of employees at large companies are happy at work, 43% of small business employees report being happy. Those smaller workplaces seem to have a big impact on worker contentment.
It also turns out that business ownership is a critical factor. A study from the Wharton School of Business looked at 11,000 MBA graduates, and found those running their own businesses ranked themselves happier than all other professions, regardless of how much money they made.
So, it turns out that working in a smaller business makes you happy (whether you’re the owner or an employee). On top of this, being the boss who owns that small business makes you happier than the other employees.
What I additionally discovered was that among all the entrepreneurs I surveyed, three common traits emerged among those who reported more day-to-day happiness than other business owners.
I should point out that while these findings weren’t statistically powered to show causation, the correlations were strong. That said, I listened intently and saw the faces of these business owners. This gave me a real qualitative sense that there’s something to learn from these principles. Interestingly, only one of the three ideas relates closely with money.
- Entrepreneur Happiness is Stability and Predictability
This is the first of the three traits that may link to wealth and cashflow, but it certainly goes beyond just dollars and cents. These happy business owners reported having a sense of rhythm in their business and fewer drastic feast-and-famine cycles. Interestingly, they didn’t seem to relate their happiness to moments of euphoria, such as landing a huge client or successfully pitching for funding. Although my study didn’t look into it, the pursuit of these large momentary rewards may fuel some of the addiction to entrepreneurship that many of us can identify with. Even so, these big adrenaline rush moments don’t seem to deliver day-to-day happiness.
In general, these happy businesspeople had often been operating more than five years and had a thorough knowledge of their industry. They had some sense of the patterns of ebb and flow in their business and could see around corners to predict what was coming next. One subject told me “I’ve been working in this industry for over twenty years, and I’ve owned this business for nearly ten. I’ve seen almost everything that there is to expect and I rarely get surprises these days.”
It seems that happiness may have something to do with finding ways to avoid the uncertainty and anxiety common to many in small business.
- Entrepreneur Happiness is Having Good People Around
The next theme was a social one. Happier business owners seemed to genuinely like spending time with business partners, employees, and suppliers. Many also spontaneously described liking their customers on a personal level.
This makes sense. We are social animals and being able to celebrate wins together, or support each other through tough times, has a positive effect.
This group also identified having a spouse or partner (or whole family) who were enthusiastically supportive. The family member didn’t have to be involved in the business directly (although many were), but they did seemingly need to understand the atypical life of the entrepreneur and provide encouragement from the sideline. Unfortunately, the converse is also true: those who felt their partner or family didn’t recognize their effort or the dynamics of business ownership reported much more day-to-day stress.
- Entrepreneur Happiness is Thinking of Others First
If the first two themes seem intuitive, this final one caught me by surprise.
Whether it be grand acts of altruism, such as fundraising for a cause, or small acts of generosity such as going beyond to support employees, focusing on a good outcome for others with no obvious return to the business seemed to correlate with entrepreneurial happiness.
I collectively refer to these types of inspired actions as Social Good in my upcoming book. Fundamentally, these are efforts that the entrepreneur makes that benefit someone other than themselves and align with a value that they deem to be personally important.
For example, some business owners prioritize environmental impact even where this might increase costs. One business owner I spoke to ensures that her vegan restaurant not only serves vege dishes, but financially contributes to animal welfare causes. Another entrepreneur in the educational space contributes scholarships to kids in lower socioeconomic areas. Several business owners support people living in poverty through direct donation or asking their customers to make a contribution. In my own case, I constantly nag my clients and CORE Marketing Method students to join my Kiva team to provide micro-finance loans to entrepreneurs in developing countries (you really should join).
These acts of generosity did not need to be thematically linked to the type of business, either. Some business owners decided that their revenue would support a local school, church or community group. Others simply found satisfaction knowing that their employees were always taken care of and loved working for them. Many also derived genuine happiness from seeing their customers lives improved, seemingly without a focus on how this might impact their own bottom line. It’s a concept that has been laid out well in the book co-authored by Bob Burg and John David Mann, The Go-Giver (you may want to follow Bob Burg at his site or on his socials at Instagram and LinkedIn).
When I conducted my study, it struck me that many of these entrepreneurs felt that their acts of Social Good had permanence and resonance, even when other challenges in business were temporary. One tech start-up founder chose to pay over the normal hourly rate to his offshore developers and provide other types of support. He described it this way: “Even if we have a bad month in revenue, I can always sleep at night knowing we do something good for these guys working for us. If this thing never ends up succeeding, their lives will definitely be better for having worked for us.”
In the CORE Marketing Method I incorporate this concept as one of the three 5 Year Goals that guide an entrepreneur toward growth.
Along with Money Goals, and Time & Lifestyle Goals, I encourage students to identify Legacy Goals. These are the things that you’ll proudly tell Grandma when she asks how your business is going. She doesn’t care about your fancy car or the VC pitch, she wants to know that her grandchild is a successfully decent person. Sure, the Legacy Goals may include accolades, awards, achievements and recognition, but it should also seriously consider an impact for causes that are important to you and improve the world for others.
This isn’t in an effort to be a saint, but because it seems to deliver happiness. And like all of us, you want to be happy.