10 common mistakes in the mindset of an entrepreneur
Introduction
It is a common tradition that 9 out of 10 new businesses fail within the first 2 years. This article aims to outline some of the fundamental mistakes budding entrepreneurs often make.
There is more to business than having a good idea
I remember when I started on the entrepreneurial route. I was under the impression that coming up with a good idea was the most important part of building a successful business. The number of business ideas I have generated over the years that have failed due to a failure to recognize the amount of work required to actualize them. In the grand scheme of business creation, very little of the hard work involves coming up with the idea. Most of the effort comes from working on all the key processes that make a business successful. Project management, marketing, product development, customer relationships, the ability to replicate your business, are just a few of the areas that are intrinsic to running a profitable business.
Please don’t fall into the trap of thinking that a good idea naturally equates to the foundation of a solid business. Ideas are obviously the initial seed from which all successful businesses grow, but they are not the only important ingredient involved in the business-building process. In the world famous book ‘E-myth revisited’, Geber draws on the important distinction between creativity and innovation.
‘Creativity thinks of new things. Innovation makes new things’ Professor Levitt
Proposing ideas is worth nothing without the knowledge and experience of how to implement them. Innovating is where most of the hard work begins.
The problem of selling your time
There is a big difference between working in your business and in your business. Many unsuccessful entrepreneurs make the mistake of spending a significant portion of their time working on their business and not on it. Unfortunately, there are only a limited number of hours in the day available to the businessman, which is why time must be spent building systems and strategies that execute themselves. Companies that operate with a set of rules based on objective evidence over time become self-sustaining and scalable. A scientific approach to business is recommended, because allowing subjective discretion to creep into the running of your business impedes its growth.
“Discretion is the enemy of order, standardization and quality” Geber
When the entrepreneur adopts this objective mindset, building systems and strategies become the focus of their attention, allowing for the replication and orchestration of a profitable business. Building systems that add value to your business is the most productive way to spend your time
easily distracted
Many unsuccessful entrepreneurs make the mistake of trying to focus on too many things at once. Not being able to stick to one project at a time is where many budding entrepreneurs make mistakes. I have been a victim of this many times. Spotting multiple business opportunities, you would foolishly try to capitalize on them all. My mind was filled with ideas, strategies, and plans to the point where it all turned into a big mess. In the end, my lack of focus caused me to miss out on all these trading opportunities. Make sure to focus on one business goal at a time. Make sure you achieve your first goal before moving on to the next.
“If you chase two rabbits, they will both run away” -anon
make unfounded assumptions
Some budding entrepreneurs forget that the business process must be scientific and rational. Many startups make unfounded assumptions about their future success, without objectively testing them. Maybe you have a solid estimate on the success of a business idea, but unless you test your plans, you’ll never know for sure.
never marry your opinion
Come up with ways to objectively assess all the structures you intend to implement in your business, no matter how small. If, for example, you plan to introduce customer service in your company, get feedback from a sample of your customers about the intervention before rolling it out on a larger scale. This will provide you with information to critically assess the potential effectiveness of your planned intervention. Evaluating the key processes within your business significantly reduces the risk of failure.
Being opportunistic and ignoring the processes
Many unsuccessful entrepreneurs make the mistake of worrying too much about the goal of making money. Obviously making money is the main goal of all businesses, however thinking about making money does not give you insight into HOW to make money. Being consumed with this result will divert your attention from all the key actions and processes that need to occur to create the desired result. Focusing on the bottom line of having a successful business is not the same as knowing how to build a successful business.
The results are simply by-products of a set of processes that precede it. If the processes are flawed, so will the results. Keep your focus glued to the key processes that form the backbone of building a successful business. If you can’t figure out these key processes within your business, find someone who can help you or really look into whether this business is right for you.
“If you can’t describe what you’re doing as a process, then you don’t know what you’re doing” W. Edwards Deming.
Generally speaking, focusing on results and processes can parallel opportunistic and systematic thinking styles.
The opportunist mindset is so obsessed with the rewards and riches that come with running a successful business that they sacrifice valuable thinking time to come up with process-driven systems and strategies.
The strategist, however, adopts a process-driven mindset that focuses on the mechanics and key actions that go into making a business a success. If the systems and strategies behind his business are effective, positive results will naturally follow.
Aim to be a strategist and not an opportunist.