10 Deadly Mistakes Entrepreneurs Make
That Can Put Them Out of Business
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10 Deadly Mistakes Entrepreneurs Make that Can
Put Them Out of Business
Author:
Wessam Mohie
Entrepreneurs Coach
Middle East #1 Certified Guerrilla
Marketing Coach
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Mistake 1: Never Taking the First Step
This is a very common mistake. There is a large number of people who dream everyday of starting their
own businesses. They however keep on procrastinating and postponing their dream. I have personally
heard all kind of excuses from several clients I worked with. Does any of the following excuses sound
familiar to you?
•
•
•
•
•
•
•
I don’t have enough money
I will start when I get promoted to a manager or
When I get married or
When I finish my MBA or
When I figure out all the details of doing it or
When I feel more confident or
When the economy picks up
What usually happens is even when the above things happen you will still keep on finding new excuses
and you will never start out. Be honest with yourself. Are you really not starting your business because
of any of the above excuses or because of your fear of failure or fear of embarrassment? If it is the
latter, then you are in good company. I want you to know that no one started his business feeling fully
confident or fully ready with all the resources. If you wait for circumstance to become perfect, you may
not start at all. So regardless of your circumstances, you should overcome your fears and start NOW.
Now is the best time to start. This might be the best thing that happens to you in your whole life
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Mistake 2: Falling in Love With a New Business Idea for the Wrong Reasons
Many aspiring entrepreneurs would fall in love with a business idea for completely the wrong reasons.
Do you like your business idea because it is the same idea your friend started a business with and he
seems to be doing well so far? If that is your case, be careful, because you never know how passionate
or talented he is in implementing this idea. If he turned it into a profitable business that does not mean
that anyone else can do the same with his idea. As long as you are not aware of the details, figures and
circumstances under which your friend operates his business, don’t just copy an idea because it “seems”
profitable to you
Is it a totally a new idea where you would like to be a pioneer in? Again this is a common mistake I
have seen over and over again. People get excited about totally new ideas that have never been tested.
In order to achieve success, your business idea needs to have market appeal. There need to be a hungry
market looking for your product or service. It is advisable to operate in markets where demand on a
particular product has been proven and tested. Don’t worry , there are multiples of ways to differentiate
yourself from the competition that I discuss in my coaching program How to Launch A Successful
Business . For the time being however, you only need to go for ideas that have proven market demand.
Pioneering an idea can be very costly to test and can take a very long time.
In my home country in Cairo there is a very common misconception. People would advice you: if you
want to open a successful business, open a restaurant because people will never stop eating. That
cannot be further from the truth. Of course it is prudent to think of who is going to buy from you, but
when you consider the huge influx of new players in the restaurant market , most of which probably
where influenced by the widely accepted misconception, you would be wiser to stay away from this
crowded market unless you have a very strong unique selling proposition (USP) that would differentiate
you from the masses.
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Mistake 3: Spending Too Much Money U
Upfront
What is the first thing you should do when you start your business? If you are like the majority of new
entrepreneurs you have probably answe
answered: print my business card, print brochures, rent an office, buy
a stock of stationary, design a fancy website…etc. While you would nee
need
d all of these in your business,
business
they are definitely not the first things to think of. The one first thing you need to think of is Your Clients.
You need to be very clear on them
them. You need to be able to describe them in details (who they are,
where they live, how old, what do they read, wh
what are their likes and dislikes,, how do they spend their
leisure time, how educated they are….etc) . A flashy website and stationary never
ver build a successful
business,, but a continuous flow of clients does
does.. In fact you can start out with very modest stationary
and office, and allow
w your business to upgrade this infrastructure
re as you grow. Nourishing your image is
important, but unless you have a steady stream of clients, your image alone will not move you forward
in business.
You need to know that the easiest thing in any starting business is to spend money.
money As a business
owner you need to adopt a frugal business mindset about every penny you spend. Most new
entrepreneurs are limited in budget by definition. That doe
doess not have to be a disadvantage,
disadvantage unless you
mismanage your cash. In my “Break Free From The Daily Grind
Grind” coaching series,, I discuss in details
several ways of how can
an you save money in you
your business when
hen you are on a limited budget and how
being small can be advantageous
advantageous. If you want to find out more about it,
it please check
http://startaservicebusiness.com .
If you are like
ike some of my clients in Dubai
Dubai, you might have got a generous budget to start with. Yet, the
rule still applies. You still need to be very mindful about every penny you spend. You need to think of
your businesss as a separate entity from you. EEvery penny you spend on your business has to be
purposeful to avoid blowing thousands of dollars.
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Mistake 4: Getting Bogged Down Into Details
One of the biggest mistakes that I have seen my clients doing over and over again is getting bogged
down into details, or failing to strategize and see the big picture. This alone can be a deadly mistake to
your business. Your job is not to manage the details. Your job is to set the big picture and organize the
way all the details fit together. If you became overwhelmed by the details, your business will end up
with a scattered set of activities that are completely disconnected and do not belong to a big strategy.
You need to have a long range plan so that you are not just looking at what you are going to do this
week, month or only this year. You need to ask yourself what you really want out of your business 10
years from now. Do you need a decent business that will cover your costs, generate handsome profit
and allow you to stay more time with your family or do you need to launch a million dollar business that
would totally change your life style? There is no right or wrong answer to this question. Both are valid
dreams and worth pursuing. You just need to identify yours. This would help you manage your fears,
moods, emotions and concerns in the present because you will be focused on your long term
commitment to succeed. In other words, thinking big will help you act big, while thinking small will lock
you up in your comfort zone and in short-term frustrations.
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Mistake 5: Avoiding Sales and Marketing
One of the things I’ve noticed about self-employed professionals is that selling and marketing our
services is one of the least attractive aspects of the job. If I had a pound for every time I’ve heard people
say ‘I love serving customers, it’s just getting the work in the first place that I don’t like’ – I’d be a very
rich lady by now. When I first started out, I really felt the same. Not only did I not have a clue about how
to get business, the thought of picking up the phone, talking to companies and trying to get an
appointment filled me with dread.
I’m sure you don’t need me to tell you that how we feel and behave towards something is dependent
upon the beliefs we hold about that thing. So, what are the beliefs that business owners have around
selling and marketing that could possibly be holding them back and getting in the way?
One of the self limiting beliefs is “I am not a natural sales person”
I think we all have an image of the pushy sales person who would call you repeatedly and was very
persistent in his attempts to sell you something. We all swear to not be like them when we are in the
situation of having to sell our services.
I’ve heard people say this a lot – in fact a few months ago I was talking to a guy who had actually had his
own training business for a couple of years and it was doing well – and we were talking about it and he
told me that he was applying for jobs again. I asked him why and he said ‘Well, I’m just not a natural
sales person and I really hate all the marketing’. I thought it was such a shame as he was obviously doing
a lot of things right – but his own perception and his own beliefs about the situation was that there was
such a thing as a ‘natural sales person’ and because he felt he didn’t fit, it put him off.
We really have got to face up our fears around selling and marketing, stop shying away from it and just
get on and do it – because no marketing equals no clients. I would like for you to be in a situation where
you actually really enjoy the process of going out and getting clients of your own. This will not happen
until you give up your self-limiting beliefs about sales and marketing. And let’s face it, unless you employ
someone to do it for you – you are going to have to spend a lot of time doing it – so you might as well
enjoy it!
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Mistake 6: Trying to Do Everything on Your Own (A.K.A. not valuing your time
highly)
This mistake is closely linked to mistake 4. The more you do everything on your own, the less strategic
you will think about your business. I personally was guilty of this mistake and it cost me a lot of my most
valuable and most irreplaceable asset, that is my time. Feeling multi-talented I was trying to do
everything on my own, pledging to get them done on time. Of course that never happened and 6 month
down the line I was so exhausted and burnt out and sitting with myself to figure out how to improve the
situation. I learned the hard way that you can never grow a business without a team. As an
entrepreneur you need to think about and manage your time in a totally different way than most people
do. You need to be constantly thinking about the highest and best use of your time at the moment.
Highly successful business men count and plan their time by the minute, while the majority of people
plan their time by the week, month or even year. I noticed what most entrepreneurs miss is that they do
not link the use of their time with their earning potential. You time is a big determinant of what you will
achieve 10 years from now. Tell me how you spend your day and I will tell you where you will be in
few years time.
Now I do hear most of you saying I cannot afford a personal assistant, or I cannot afford a support team,
and I am here to tell you nobody did when he started out. We all were very tight in cash. Starting
entrepreneurs are tight in cash but are usually abundant in time and creativity. In my Break Free From
The Daily Grind Coaching Series, I teach proven strategies to build your support team even with a limited
budget. If you want to find out more, please check: http://startaservicebusiness.com
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Mistake 7: Running Your Business from a Position of Desperation
This is in my opinion is by far the most common mistake and the most deadly one of all. If you avoided
all the above 6 mistakes but remained in a state of desperation with regard to your business, you will
hardly move forward. Running
unning a business can sound like riding a roller coaster. You willll be faced by daily
challenges. Some
ome of them are fami
familiar others are totally new to you.
u. You need to make decisions and
move quickly all of this amid a great deal of uncertainty and incomplete information
information.. You need to learn
new skills and improve constantly. You need to manage your cash flow daily or risk going bankrupt.
Things might not turn out as you have expected them. And you will need to go through a long learning
curve that might take years of trial and errors. If you do not have the tenacity to go on amid all these
turbulences, you will have a very slim chance to operate a succ
successful business.
Running a successful business is 20% effort and 80% attitude. All of the above challenges can easily
make you quit. It can easily set you in desperation mode or can make you doubt yourself and your skills.
It shouldn’t be like that. It is ok to make mistakes and you will do plenty of them. What matters most is
your ability to lift yourself up every time you fall. It does not matter how many times you fell as long as
you still have the ability to stand on your feet after each time. The wors
worstt thing you can do is to operate
your business while being totally unhopeful of achieving something meaningful. If you speak to clients
from a position of desperation, they will quickly sniff it and avoid working with you. You need to keep
your head up high
h regardless of what you are going through in front of clients. No one wants to work
with someone who is desperate. The sense of desperation can also push you to take some irrational
decisions in your business like dropping prices significantly when you sh
should
ould not be doing so, or cutting
marketing costs at a time your business is in dire need of new clients.
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Mistake 8: Not Pricing Properly
This is usually a problem that results from not knowing your target market or not understanding your
client needs. Most entrepreneurs would be too humble in pricing their service. I have rarely met a
starting entrepreneur who errs on the high side of pricing.
The mistake that most starting entrepreneurs do is to look at experienced business people and the
prices they are charging and then say: I am less experienced and less known, so I must offer a price
lower than that. That is not the right way you should approach prices. Your prices should be based on
the VALUE of what you have to offer not on your insecurities. If what you offer is very valuable to
clients, how much others are charging for their products is irrelevant.
Cheap prices can also negatively impact your image and positioning in the market. Would you want to
visit a surgeon who charges very low rate per session? I bet you would hesitate to do so. You would
probably classify him as a low quality surgeon, otherwise he would have charged higher fees for his
service. You would also be happy to pay the high fees of a more expensive surgeon because you would
probably associate it with the high quality of his service and would feel safe using his service.
Some of you might say but I need to lower my price in the beginning and then start to raise it later.
That is probably a reasonable strategy to penetrate the market by offering some sort of discounted
prices until you build a database of clients and then you can raise prices. But that is not what I am
talking about here. I am talking about people who do not value their service properly , who feel insecure
about charging what they deserve, and who think that the only way to compete in a market is through
cutting prices below the competition. You can always choose to lower price or offer discounts if these
moves are purposeful. But you will never build a sustainable business if you choose to compete on price.
That is because there will always be someone else who will be willing to offer even lower prices that you
do. To escape this price war, you need to differentiate yourself and offer something different from the
competition that your target market value and would be willing to buy it regardless of price.
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Mistake 9: Thinking that Too Much Advertising Expenditure will Grow Sales
I attended a finance workshop last year whereby the instructor was discussing the relationship between
different financial variables. The example he used to illustrate the relationship between a dependent
variable and an independent variable was particularly very interesting to me. His example emphasized
throughout the session that the higher the advertising expenditure (independent variable), the higher
the sales (dependent variable). While the instructor had definitely good intentions, the example he used
reflects the very common thinking that many starting entrepreneurs subscribe to.
Let me tell you that the success of your advertising hinges upon several factors, the money you spend in
it is the least influencing factor on the effectiveness of your advertisement. Advertisement can be
expensive and is not usually the best option for new entrepreneurs to promote themselves. As part of
the “Break Free From The Daily Grind” coaching program, my clients receive a complimentary worksheet
which shows them 100 low-cost, high-impact ways to promote their businesses. If you want to find out
more, please check http://startaservicebusiness.com
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Mistake 10: Being Impatient About Taking Money from the Business
I know how you feel. You probably started out a business in the first place to achieve the freedom of
leaning on this business to cover your expenses whenever you want. That is absolutely a valid objective.
You just have to be more patient before it happens.
I worked with several starting entrepreneurs to develop their business plans. Without exception, in the
salaries section of the business plan, each of them would factor in a hefty monthly salary for themselves
for managing the business. And that is from the first year of business operation. Of course the salary
they assigned for themselves would drag down the cash flow like no other item in the expense list. I
wouldn’t blame them for that. After all, most of us are coming from a corporate world background
where the most common way of compensation is a monthly salary. What I have noticed is that most
people take time to shift from this employee mentality of receiving regular salary into the business
owner mentality of being compensated with profits.
Whether you like it or not, the truth is you will most probably not take any serious money from your
business in the first year of operation. Even if you managed to breakeven from year 1, or generate some
generous cash flow, I would still advice that you invest most of the cash back in the business to build its
assets and raise public awareness of it. Of course you will have to budget for that, which means you will
have to have another source of income to support you (personal savings, part time job, family support,
….etc) before you can take serious money from your business. But the worst thing you can do to the
business is to start milking it too early and deprive it from necessary cash in its early stages of
development.
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BONUS:
3 Biggest Myths about Starting a New Business
Myth 1: You need to feel completely comfortable before you start your business
The truth is you will never feel completely comfortable about starting or running your business. And that
is part of your job as an entrepreneur, to be able to operate under stress and amid uncertainty. The
problem with this myth is that it can lock you up in the analysis phase and never launch you into the
action phase. I am sure you have heard before about the “paralysis of analysis” disease, where people
keep on analyzing situations intensively before taking any action that they end up feeling so comfortable
in what they do and avoid taking action at all. The analysis phase is a safe phase, that is why it is easy to
remain in it for a long period of time and fool yourself that you are making some progress. In the action
phase however you get your ideas out to the world for a real life test. Most people procrastinate on that
because action can expose you to rejection and nobody likes being rejected.
My advice to you is to read and research for a while and then start implementing what you have learned
step by step. You will never learn everything before you start taking action. There are lessons that you
will never learn until you experience it yourself through action. Action is a great teacher. My second
advice is not to take any rejection personally. That is not a rejection to you that is a rejection to an
unsound business idea and it is best to know sooner than later if that idea works or not to be able to
change/improve it before it costs you too much.
Myth 2: Find your passion and the money will follow
I am sure you have heard that saying before. The problem with this myth is that it makes it sounds as if
the only requirement for making money is to follow your passion. Of course working in an area that you
are passionate about is necessary but by no means is sufficient to ensure financial success.
Financial success takes a lot more than just following your area of passion. I have seen so many talented
and passionate coaches in my life who are broke or who hardly make ends meet. Obviously that is not
the kind of life style you would want to create for yourself by starting a business. So , beware from the
very beginning that working in the area of your passion is a good first step. But turning this into a
profitable and sustainable business is another story and requires additional skills. Remember always
that a work idea without a profit plan is at best a hobby.
Myth 3: The worst time to start your business is during an economic downturn
Well, that is a big myth. Statistics show that there are more businesses that were successfully launched
in economic downturns than in economic booms. Setting a successful business model that generates
cash is the real challenge, regardless of where we are in the economic cycle. During economic booms
there is usually a place for everyone to survive and make money. During economic downturns, those
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who have not built a strong business model to start with will quickly go out of business. A tough market
will select only those whose business models and systems can support their survival during any kind of
economic conditions. In other words, an economic downturn is a real test to your entrepreneurial skills.
One advantage of starting a business during an economic downturn is that every one avoids it. If you
managed to build the right business blocks during the downturn, your business would be ready and best
positioned to make profits as soon as the economy turns around. You would be at a great advantage to
others who would be just starting out during the boom. Those would probably waste most of the boom
time figuring out a workable business model; while you would be busy maximizing profits from the
tested workable model you created during the recession.
You may also be glad to know that some of the largest global businesses like McDonalds, Disney, and
FedEx started during economic downturn. In addition, the number of millionaires made during the Great
Depression was greater than the number of millionaires made during any other period of American
History.
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Thank you for reading this report
P.S. Please feel free to forward this report to any of your friends and colleagues who might be interested
to start a new business. All i ask for is that full credit is given where credit is due.
P.P.S As a reader of this report you will be automatically subscribed to my free newsletter. Each
newsletter contains practical advice to help you create a successful business as well as recommended
resources.
P.P.P.S. If you liked the content of the report and are interested to start a professional service business
but not sure how, Break Free From The Daily Grind program may be your best way to get started. Check
all the details here: http://startaservicebusiness.com
For inquiries, feel free to email support@wessammohie.com
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