Steve Pavlina. 10 mistakes made by novice entrepreneurs

Original author: Steve Pavlina
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For the past 14 years I have not been employed, and during this time I made many silly mistakes in doing business. Many followed after me and started their own business, and I noticed - many of them make the same mistakes as I do. Therefore, these tips are primarily addressed to small business owners and especially those who have just started (or are going to start) their business. So.

1. Sell to the wrong people

Despite the fact that sales are very important for the survival of any business, you should not offer your product to the first person you meet, including your friends and family members. I will say more, it is a waste of time - trying to sell something to a person who simply does not need what you offer.

Selling to the wrong people includes trying to sell to everyone. In addition, it is much easier to sell to some buyers than to others. For example, my wife consults on the use of web-tools for private entrepreneurs, and she learned from her own experience that working with some clients is much more difficult than working with others. If the potential client does not have money or is terribly worried about every cent spent, or if the client wants a site, but does not know why he needs it, or if the client simply does not know what the Internet is, then you don’t like it the way.

So with a light heart, refuse customers who will bring more problems than money. Better let your competitors try to sell them! And you save your nerves and free up time to search for really good customers.

And yet, if someone suddenly wants to become your business partner, then it is not necessary to accept his offer. In the first year of developing my business, I answered “yes” to at least 50% of the people who offered me a business partnership. I spent a lot of time chasing projects that in fact did not deserve attention. I accepted invitations to business lunches from random people who just wanted to "see if we can start some business together." Alas, none of them brought me 10 kopecks either. If you think that the upcoming meeting is meaningless, then most likely it will be so.

Do not cooperate with random people simply because you think you are expected to cooperate. Today, at best, I accept only one of ten such proposals. And if the offer does not immediately capture me, then, as a rule, I reject or ignore it. Indeed, most of the ideas of this kind are not worth paying attention to. Learn to say no to weak sentences, and you will have the opportunity to say yes to those who make you rich.

2. Spend too much money

Unless you have a permanent source of income, do not spend your precious start-up capital until it becomes absolutely necessary. I started my business in creating computer games with $ 20,000 (and it was my own money), they quickly spread, and soon I was forced to borrow into financing my business. Unfortunately, the first version of the business model of my project did not work, and it took as many as five years before this business brought the first money. So I quickly learned that every dollar invested in a business should ultimately pay off through sales.

In 2004, I started my project on self-development with $ 9, although I could spend a lot more on it. No fashionable logo, no luxury web-design, no business cards, no stationery. I paid for domain registration, and that’s it. This was the amount I was ready to pay before the project began to make a profit. All other expenses for the project were paid already from this profit.

Your business must fill your wallet with money, and so before you swipe funds into it, be sure to know exactly how to pull them back.

The beginning of a number of business projects, undoubtedly, requires a lot of money, but in the era of the Internet, you can easily run a highly profitable business on the little thing that was lying in your pocket.

3. Spend too little money

Excessive stinginess is also a mistake. Do not let frugality reduce the efficiency of your business. Use the help of qualified contractors if they can do some things much better than you. Buy quality equipment, but only if it justifies your investment. You should not spend money on fashionable furniture; buy functional furniture that will help you work more productively. Do not buy a prehistoric computer with outdated software that will slow you down, especially if you can afford something better.

Wisdom, which will allow you to determine whether you are stingy or too wasteful, will come to you over time, and if you are just starting out, listen to the opinion of another person. Often, even the thought that it is worth knowing the opinion of another person will allow you to make the right choice. And if you cannot justify the importance of the costs to the person you respect, then most likely the purchase will be a mistake. On the other hand, there are situations in which it is difficult to justify unwillingness to spend money.

4. Pull someone else's mask

Many business projects, managed by one person, position themselves as "we". Many aspiring entrepreneurs do this, although this is not necessary. Nowadays there is nothing wrong with the fact that your business is the business of one person. My computer gaming business has been “we” for many years, but my self-development project is “me”. My wife’s VegFamily’s magazine is “us,” since people work for her, but her web-based consulting is “me.” It’s normal to call your business “I” when you are the only person who works in it.

Saying that your business is “we,” when in fact it is “me,” is a little silly. This will not bring you the respect you would like. Positioning your business as an “I” is even an advantage today, as people know that you are the only link in the chain and if you make a promise, then you are only responsible for its fulfillment. Promises from "we" are often worth little.

And yet, if you are a beginner entrepreneur, then do not try to look different. Set a fair price for your products and services according to your skill level and talent. Some aspiring entrepreneurs think they should be actors. In this case, the business project that they are promoting into the world is a pile of fantasies. Your attempts to deceive the client will cause only negative emotions among potential buyers. And if you are so desperately clutching at your business that you have to lie, you should not have started it.

If you can’t appreciate the real value of the product and its fair price, do not play a game called business. And it’s better to practice your skills a little more.

5. Do you think that the signed contract will be fulfilled

I have made such mistakes much more than I could afford. I signed contracts with seemingly reputable corporations, but these papers were not worth a penny, if the CEO suddenly wanted to refuse the transaction (even if the reasons for the refusal were not very respectable). Of course, the truth was on my side, but did I want to go to court to prove this? No, I preferred to do a more meaningful job.

A signed contract is just a piece of paper. There is always a relationship behind a contract. And if the relationship goes bad, then the contract will not save you. The purpose of the contract is to clearly state the rights and obligations of the parties. But relationships, not paper, ultimately reinforce these commitments. And when I realized this, I concentrated on the relationship and began to worry less about what was written on paper, and my transactions began to go more smoothly. And as soon as you wallow in papers - your transaction is in danger.

Creative deals are often very far from the contract that describes them. One of my lawyers, who worked with a bunch of deals in the field of game development, told me that not a single deal he ever worked with did match the contract exactly, and many were far from it. But in most cases it was a big deal. Business relationships are similar to all other relationships between people - and are subject to exactly the same ongoing changes.

A signed contract, of course, is necessary, especially if the deal is with a large corporation, where people come and go, but still the relationship is primary. Make no mistake considering the contract a deal. A contract is just a shadow of a deal. The real deal is a relationship. Maintain your business relationship and you won’t have to worry about what is written on paper.

It is not sad, but it is a fact - there are many scammers in the business world. And many of them hold positions with impressive names: CEO, President, CFO. Of course, there are people who think only about money, they lie, cheat, steal, that is, they do everything possible to get it. Of course, in recent years, many scammers have already come under investigation or behind bars. But there are still many people for whom the word honesty means nothing.

For example, in the field of computer game development, large publishers often show ostentatious interest in certain games and drive developers by the nose. They are trying to create for the developer the illusion that the transaction is pending, but all that the developer gets is deadlines and broken promises. In fact, publishers want to delay the release of the game on the market as long as possible in order to keep them from competing with their product. They hope that the developer will skip the Christmas season or run out of money and the game will be canceled. That happens. Business, especially entertainment, is not for timid people.

6. Do not listen to your intuition

Intuition is as important in business as it is everywhere. You will be very surprised if you find out how many transactions of giant corporations are given green or red light, depending on the feelings of the CEO. You may think that the language of business is logic. But the reality is different. If you base your transactions on strict logic and ignore intuition, then with a high probability you will get into trouble.

To begin with, we humans are not very logical creatures. We simply do not always have enough information to make a logical decision, because transactions depend on people, and there is still no logical system that would accurately predict human behavior.

The inability to predict the behavior of other people is a serious gap in our logic. And intuition should fill this gap. People’s behavior is what determines whether a deal will be closed or not. And the assumption that everyone will behave as you expect is far from reality. Not a single deal goes perfectly.

It is very difficult to refuse a tasty and promising-looking transaction, only because the inner voice says "you will later regret it." But then, more often than not, I understand that intuition was right. It happens that some people cause me negative feelings, and after a few years I hear complaints from my friends that they were deceived by these people.

Intuition is the most important part of the decision-making process in business. And since deals also depend on relationships, you need to feel the people with whom you plan to make a deal. If your feelings are negative, leave. If positive, follow on, but carefully.

7. Too formal approach.

I repeat once again. Business is built on relationships. Sometimes a certain degree of formalism is, of course, appropriate, but in most situations a too formal approach only interferes. A business will be much better when there are normal friendships between partners.

I also think that formalism is wrong even when you are only looking for a new business partner. If someone sends me a letter that begins with the words "Dear Mr. Pavlina", followed by a long ornate explanation of his business proposal, then usually such a letter is sent to the trash, especially if "we" are constantly found there.

It is much better to start the letter with the words “Hello, Steve” and just ask if I am interested in the proposed project. This will save a lot of time and open the door to normal human relations. People do not want to do business with faceless corporations. They need normal relationships with other people ... and sometimes with animals, I suppose.

Consider your business relationship as friendly (or potentially friendly). Formalism erects walls, and walls do not favor the development of partnerships. Nobody likes walls ... well, except, of course, the Great China.

Formalism is boring and boring. People want to enjoy their work. And if someone turns to me like a computer, I will answer to match him - I press delete. But if someone demonstrates real interest and a good sense of humor, then partnerships are very possible.

8. Sacrifice your individual traits

In the first years of the existence of my computer business, I acted too seriously, I was sure that it was necessary to adhere to the "business style" ... whatever this was meant. After all, working for yourself is a very big responsibility, and other people value me. Or pan, or gone, right?

I started my gaming business when I was a little over 20 years old, and people who are around 20 are always a bit bizarre. But it seemed to me that the business owner should not be strange, and that this was unacceptable. Therefore, most of my business letters looked as if they were written by the same people who created the Microsoft license agreement. The position of "president" firmly stuck in my head. I learned to depersonalize myself.

It took a very long time, but in the end, I felt good only when I was myself, especially after my business began to make a profit. And now, when I run my blog, it is my personal characteristics and unusual experience that are his driving force. It is my personal oddities that make my blog unique. If I were more serious and wrote more formally, then he would be lackluster and chances are high that I would lose most of my audience.

Being yourself and charging your business with your unique spirit is great, especially if you are a teenager or you are 20 with a ponytail. Don't be afraid to be like Steve Jobs and not like Steve Ballmer. Do not try to be who you are not. In the end, you will enjoy your work much more if you attract partners who want to work with you, no matter who you are - with all your shortcomings. Send people who want to work with robots to their competitors. They will find a common language with each other.

And if some people do not like your eccentricity - this is their problem. Better focus your attention on those people who like you.

9. Do not concentrate on creating a valuable product

It is very easy to fall into the trap - and decide that the goal of the business is money. In fact, the main goal of a business is to create a valuable product. Of course, you can make quick money without creating a valuable product, but for long-term projects - this is unrealistic. Even criminal structures must create a valuable product for someone. And if you know that your business only draws values ​​from the rest - and does not give anything in return, then this will destroy your self-esteem, and there will be little pleasure from the business.

What is your business for? The purpose of the business is to create a valuable product (service) for both you and your customers. The better you understand what value you want to give to your product, the better you can concentrate. The core value of my computer business is intellectual entertainment. The main value of StevePavlina.com is personal development.

Often, business owners do not think about what value their product brings. They just sell and hope for the best. This is a losing business model. The world does not need ever-increasing sales and goods. The world needs truly valuable products, and that is where efforts should be directed.

There are currently over 400 free articles on my website (StevePavlina.com). And they really have great value. Thousands of people go there every day to get something of value. The main goal of my business is to help people who want to grow.

10. Refusal from optimization

Although creating a valuable product is very important for a long-term business, it is naive to believe that it is enough to just focus on it, and everything else will come by itself. You can build a business in which there will be a valuable product, but you will lose your money in it. As the owner of your own business, you need to find a way to ensure the value of the product by effectively managing its value.

It is possible your first attempt will be far from ideal. You can spend a lot of time, money and resources trying to make your product valuable. And this is normal. So many business projects begin. The most important thing is to leave this path in time.

Highlight a separate business process and optimize it from time to time. Look for a way to make it more effective. Can this process take less time? Require less money? Maybe it can be repeated not so often? Maybe it should be transferred to the side? Or maybe you can refuse it at all?

I had the habit of manually processing credit orders in my gaming business. I started my business in 1994 and received checks by mail or through my website. I used certain software and passed them through a modem. And at the end of each month, I manually reconciled. Everything was fine, while sales were negligible, but the process became very onerous when new products were released and sales increased.

And a few years ago, I improved this process so that online sales became fully automatic, and even games could be downloaded instantly. All payments were stored in a database, and I could view real-time sales reports for each product. Of course, this required some work, but it was worth it. This improvement allowed me to save a lot of time and energy, and I did not have to spend money on hiring third-party order processing services.

Do not fall into the trap. Do not use outdated methods for performing routine tasks that can be automated: inventory, billing, bookkeeping, payment orders, communication tools, and sales themselves. If you suddenly find that you are doing the same tasks from month to month, be sure to make some efforts and optimize them. Lack of optimization is equivalent to throwing time and money down the drain. And often it’s much easier to save time and money than to create them.

An online business has many opportunities for optimization, since it is very easy to try something new and evaluate the result. In the first year after launching my site, I experimented a bit with Google Adsense. Many people don't like the way I place ads on the site, but this is the most effective option I've ever tried. And I use it because it works.

The donation page is another optimization. Some people click on ads, others just send me money, and some just both. Despite the fact that creating a valuable product is the first goal of a business, a business must still generate income in order to be long-lived. After all, if I do not eat, I do not write. And money means more resources to constantly support product value. Thus, the creation of a valuable product and the optimization of business processes go hand in hand.

Building a successful business requires considerable effort, but at the same time gives a wonderful personal experience. Many of my friends left work and organized their own business. Many didn’t succeed as perfectly as they expected, but I don’t know a single person who would regret it. After all, there is simply no other way to control your own destiny.

Translation (c) Elena Grezina, Andrey Vedenyov

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