I’m not going to scold you. Well, not much.
If I’m being honest, I have no high horse to climb on. How do you think I discovered these five business-killing mistakes? By making them.
My career as an entrepreneur started with a little moxie and a lot of beginner’s luck. I was 14 living in rural Pennsylvania. The smartphone era was just kicking off, and the best smartphones were made in Europe. Somehow I got a European wholesaler to give me an agreement as a reseller. I imported sophisticated phones for $300 or so a pop and sold them with a 20-30% markup on eBay. Watch out Bill Gates, or so I thought.
It was going so great that I dropped out of high school to focus on the business — and then my merchant bank discovered my age and closed my account. No more cell phone enterprise.
For the next 12 years or so I pounded my head against the wall, trying to get the slightest bit of success, freezing my butt off in my basement office with a paint bucket for a chair (the 5-gallon luxury Lowe’s version), banging on my keyboard and pulling out my hair in search of a way to make a living.
When did this long, frustrating intermission end? When I eliminated these five bad business habits. I didn’t turn on a dime. I eliminated them one by one through painstaking effort. Some of them were hard to break. It felt like letting go of a part of my soul.
But with each habit I shed, my prospects got brighter. When I shed all five, my agency was on track to becoming the seven-figure business it is today.
You don’t have to change overnight. If you see yourself in more than one of these habits, pick one of them to break and then move on to the next one. But however long it takes, these are my picks for the five bad business habits you need to stop immediately. Don’t worry about the order of things, just start with one today.
1. Stop setting price traps for yourself
How do you get someone to buy from you instead of a competitor? Charge less, right? Maybe a free trial or half off?
This might work if your business is selling paper towels, but I usually guide my students in the opposite direction — charge a higher price. When you go low on price, you set a trap for your business to fall into, impaled on spikes at the bottom of a proverbial pit.
Charging a high price takes confidence, a belief in the value of your solution vs. a competitor’s solution. Aspiring entrepreneurs who lack that confidence often assuage their insecurity by charging a lower price. They hope the low pricewill peel off some market share because in their heart of hearts they don’t believe they deserve that market share.
The price might even be low enough that it doesn’t justify their time. I often point out that when all is said and done, I see folks making under $10 an hour at the lowball rates they charge. Why even go into business at that margin?
Their answer is always the same — and it’s a trap. “Well, I’ll charge a low price for the first few clients, do a great job, get some glowing testimonials, and then I will raise my prices.”
I get it. It sounds good. But in practice, it rarely happens. Much of your early business will come from referrals, and the new guy will always ask the last guy how much you charged him. And they won’t pay $3,000 if the last guy paid $500.
That’s the price trap — people get stuck at the low price they set for years. They burn up, flame out, and give up before they can really build the momentum they need to raise those prices to a level that justifies their effort.
Don’t set the trap, and don’t be afraid to charge in accordance with the value you provide. Especially in the business-to-business arena, most buyers aren’t looking for the lowest possible price — they are looking for the best possible solution. If you can provide that solution, charge accordingly.
Related: Don’t Be the Cheapest, Be the Best
2. Stop creating websites and business cards before you make a sale
You could set a clock with the predictability of this conversation I have with my students:
“So you’re going into business. Have you made a sale?”
“Well, I need to make a website and business cards first. Get a phone system setup. YouTube Channel, Instagram and the works. Oh and a really nice logo!”
Nope. Nope, nope, nope. That doesn’t fly with me. My response is “Stop designing your business card and make a sale. You don’t even know if you have a market fit yet. If you don’t have fit, that business card is just a waste of time, money and trees.”
It used to be me. I cringe to think of the number of websites I designed, business cards I ordered, fliers I printed, explainer videos I made, blogs I wrote — time, money and effort, all down the drain because I had skipped the step of confirming that the market actually wanted what I was trying to sell.
The website and the business card often become an excuse. By working on them, people can feel like they are “in business” and being productive, but they are really stalling for time, procrastinating the hard and sometimes scary work of standing in front of customers, extolling your value proposition, and asking for their credit card.
But the sooner you face that fire, the better. A business is not defined by a website or a business card. A business is defined by its sales.
How much did it impact me when I finally dropped this habit? My agency became a seven-figure company before I ever launched a website for it.
3. Stop building the product or service before you make a sale
This goes hand-in-hand with the above. To avoid going out and trying to make a sale, they say “Well, the product isn’t ready yet. I want to get it just right.”
My answer: “Why are you building a product you haven’t sold yet? If no one has bought it, how do you know if anyone will even want it?”
Sell a product before you build it? Many people can’t wrap their heads around that. It sounds dishonest, like selling someone the Brooklyn Bridge (i.e. something that is not yours to sell).
But it’s not. Companies pre-sell products all the time. iPhones, video games, VR glasses, Tesla’s Model 3 — people line up for these products based on concept drawings alone.
My example is more down-to-earth. I sold about 20 people my first educational program before I had designed a single module or shot a minute of video content.
I didn’t just ask them if they thought they would maybe one day want to buy it. I ran their credit cards and everything.
I was honest with them. “The course isn’t launched yet, but I plan to launch it in 60 days, and you will be among the first to have access to it. If something happens and the course doesn’t come to be, I will refund you.”
You had better believe I hustled during those 60 days and got it done on time. I didn’t want to refund their money, but even more than that I didn’t want to look stupid by failing to deliver.
4. Stop building your business on the cheap
Remember what I said earlier — most buyers don’t look for the lowest price. They look for the best solution. For your business to thrive, you will need to start thinking this way as well.
Aspiring entrepreneurs often come from a position of scarcity. They pinch pennies. It’s like they don’t have the confidence that they will ever make a sale, and it becomes a self-fulfilling prophecy. If your brand is clearly put together on the cheap — cheap products, slipshod marketing, etc. — why should anyone buy from you, even if you offer the lowest price? It’s a race to the bottom, and you want no part of it.
This doesn’t just apply to physical things you can touch or see. I make a point of paying my remote employees more than the market rate for their labor. I want a very loyal team that does excellent work. This enables me to charge premium prices and attract loyal clients, which is worth far more to my business than the “excess” wages I pay them. Oh, and it’s simply the right thing to do.
5. Stop building the business around you
This is one of the hardest habits to break, especially for solopreneurs. Early in your business, you will wear many hats and perform many tasks yourself. It’s easy to slip into the mindset that nobody can wear those hats as you do.
Don’t make this mistake. Design everyaspect of your business with the expectation that eventually, someone else will take over that role. Even if they only do the job 80%as well as you do, you’re in the money. You can still be on hand to act as quality control for that last 20%. But eventually, you can hire someone else to perform quality control.
If you build your business around you — if you don’t design your business to the point where you are replaceable — then it will own you. It will fall apart if you decide to take a vacation or face a family emergency. You really aren’t a business owner — you are self-employed, a different kind of rat race.
Begin with the end in mind. If you want to sell your business, travel the world, spend time with your family, retire early, or build a four-day workweek, build from the beginning with the idea that business will continue, even if you leave.
We all make mistakes. When the goal is to build the lifestyle of your dreams, those mistakes can set you back years. All the above lessons, I learned the hard way. If I can help you shave years off your lifestyle curve, my 12 years in the wilderness were not in vain.
If you are making any of these mistakes, now you know! Taper off if you need to, and stop them immediately if you can. The sooner you do, the sooner you prosper.