Pricey battles with insomnia and exhaustion

Robert Stickgold, who studies sleep at Harvard Medical School, speculates that the brain begins a process called memory consolidation just before we fall asleep. As we nod off, it is as if our brains "put stickers on topics for later processing."

For entrepreneurs, the best reason to get enough shuteye may be to avoid making dumb, costly decisions. Matthew Walker, a Berkeley sleep researcher, recently gave three groups of subjects the same bits of information. Those who walked away and spent at least seven of the next 12 hours sleeping were able to make broader and more logical connections, he says, than those who didn't get much (or any) sleep or those who tried to analyze the data immediately.

"Many successful CEOs talk about having good instincts," says Walker. "I would argue that all they're doing is allowing themselves at least 12 hours to marinate the information they take in - and if those 12 hours include some sleep, they get even better results."

Battles with insomnia

Nick Friedman, 26, couldn't agree more. President of College Hunks Hauling Junk, a junk-removal company based in Washington, D.C., with 11 other locations nationwide and more than $2 million in 2007 revenues, Friedman started suffering from insomnia shortly after he and a partner launched their business in 2005.

"Usually I could fall asleep, but I'd wake up at 1 or 2 A.M. and start thinking about everything I had to do," he recalls. He often went into the office at three or four in the morning, so that he was already worn out by the time everybody else showed up.

Unlike Cynthia McKay with her missed flight to Australia, Friedman can't point to any one moment when he knew he needed to start sleeping more. But he does remember feeling overwhelmed and anxious, getting bogged down with minutiae, and having occasional panicky realizations that he was losing his big-picture focus, he says.

Happily, Friedman fixed his sleep problem before it did any real harm to his business. (To read about a business owner with a more destructive sleep disorder, see our sidebar, "A business owner's nightmare.") At a meeting of the Entrepreneurs Organization, a networking group, Friedman mentioned his insomnia to an acquaintance who suggested that Friedman try an over-the-counter sleep aid. So he bought a generic brand and, after some dosage tinkering, found that half of one tablet at bedtime was enough to sink him into a deep sleep that lasted for about seven hours. (Read about sleep aids' potential benefits and hazards.) Now that he's getting enough rest, Friedman has noticed a big change in how he works. For one thing, he's better at delegating administrative tasks and concentrating on his goal of opening 12 new locations by year-end.

"The more responsibility you have, the more lack of sleep hurts you," says Shawn McAllister, 33. His commercial construction firm in Charlotte had 2007 sales of $30 million. He argues that entrepreneurs need more sleep than most people, not less, yet rarely get enough, especially in these turbulent economic times. "There's a mindset that values burning the midnight oil," he says. "But once you realize how it affects you, deliberately depriving yourself of sleep is actually kind of dumb."

Like Friedman, McAllister used to find himself at his desk in the middle of the night because he couldn't sleep. After years of dodging the sandman, he was so exhausted that he could barely get out of bed. He hired a personal trainer to help him get his life under control with a combination of diet, exercise, and "learning how to shut my doors at 5 P.M. so I can wind down."

Every now and then, if he's particularly tense - no more than once a week, he says - McAllister takes a prescription sleep aid. "If you've always been sleep-deprived, you don't know any better," McAllister observes. "But once you start sleeping enough, you notice the positives." One night a few months ago, he worked well into the wee hours to meet a last-minute deadline. "Now that I'm aware of the effects of being overtired, I remember feeling slow and dumb at 4 A.M. I forgot where I put my gym bag the day before, and just wanted to yell."

Cynthia McKay's Australian debacle led her to cure her insomnia. After a few months of trial and error, she succeeded. Her formula includes daily Pilates workouts, the calming influence of a golden retriever she brings to work, and a ban on caffeine after 11 A.M. McKay is also a big fan of power napping, which she says boosts brain function and relaxes her so she sleeps better at night. She finds a short snooze during the day so beneficial that she installed an office sleep room for her staff.

Being able to function better during the workday is great, but what about those entrepreneurs surveyed by Staples who said they actually get work done while catching z's? When FSB went searching for "sleepworking" business owners, we turned up plenty. Roshelle Jones-Hirvonen of Coconut Creek, Fla., who founded welcome2college.com, is typical. Jones-Hirvonen, 43, thought up almost all her site's current features while asleep.

"The initial idea was a site to help freshmen adjust to college," she says. "But in my sleep I've had ideas for expanding its scope, such as drawing in parents, sponsoring alumni events, and including local part-time job listings for students." Her newest features - a channel to teach kids about campus safety, a campus voter-registration drive, and a project with eDiets.com to help newbies avoid gaining the "freshman 15" - were notions she scribbled down soon after waking.

The great thing about sleepwork is that you can tackle it while lying down - perhaps beside a loved one, with big, fluffy pillows under your head. "I enjoy sleepworking so much that I've trained my mind to do it," says J.W. Dicks, 58, of Altamonte Springs, Fla. (Read more about sleepworking tips.) A partner in the law firm Dicks & Nanton, he has also founded several other businesses, including a real estate development company and a NASD-registered securities firm. But no matter how busy Dicks gets, he makes sure to get eight or nine hours of nightly sleep.

Dicks has grappled with all manner of complex legal and financial issues while wandering in the Land of Nod, but he says his most vital sleepwork has been strategic - how to structure his businesses, which markets to invade and conquer, when to take a calculated risk. Entrepreneurs tend to get so busy that they don't sit back and take stock or focus on long-range goals, says Dicks. "To me, that's what the night is for."

Sweet dreams.

Maggie Overfelt and Shuchi Saraswat contributed to this article. 

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