Psychological Margins

Psychological Margins

“People this hurt I feel inside, words can never explain. I just wish it would rain. (Oh, how I wish that it would rain)”– The Temptations, I Wish It Would Rain


Profit margins are the epicentre of business. They’re what help define success. It’s the metric we monitor forensically in our own business; and often what we must know first when inquiring about the business of others.

But as an entrepreneur there is another margin that receives but a glancing acknowledgement: our psychological margins. Psychological margins are the physically intangible product of the complex mental transactions an entrepreneur brings upon themselves in choosing to go it alone. They’re not mentioned balance sheets, won’t be tracked by a bookkeeper, and aren’t found in the teachings of MBAs.

It’s an aspect of entrepreneurialism that is less talked about. We think of the financial impact: How will I afford rent? Will I have enough money to pay my bills? If the company fails will I be able to support my family?


But what of the psychological impact?

Parting with security of full time employment is a significant upfront psychological cost, putting you in the red on the psychological balance sheet. The initial excitement of the new, self-guided path quickly pushes you back into the black. But that wanes. The trials mount. Psychological margins teeter.

Am I doing the right thing? Will the market validate my idea?

You expend psychological capital via with each significant decision you make. You earn it in the reward that comes with success, sales, and market validation. The life of lone entrepreneur leaves you alone with your own thoughts, detached from the world. No one outside the confines of your self-constructed solitude truly understands the mental strains solo business exerts. It becomes difficult to separate your identity from your business. Even as you harden and manage the self-doubt, external forces continue to eat at your psychological margins.

Conscious thought and determined action can help maintain positive psychological margins:

  1. Divorce your identity from your business. You are not the success of your business.
  2. Know you were loved and liked by friends and family before you started a business and know this remains no matter the outcome.
  3. Clear the head. No revolutionary suggestions here: Meditation (The Honest Guys are my go to meditation guides), exercise, and time with friends are vital to remaining in the psychological black.
  4. Don’t fear discussing your psychological struggles. They’re not an admission of weakness.

Psychological margins ought to be monitored with the same verve as those of financial form.

Take action to maintain high psychological margins and you and your business will benefit.