- Michael outlines about 6 things that tend to mess up the most when you’re starting new - 0:15
- Why new entrepreneurs are risk adverse -0:46
- Why marketing is critical - 03:38
Good morning everyone! Today we are going to be talking about the top 6 mistakes a new entrepreneur makes. This is just my opinion, not based on study or anything in that nature. This is what I've seen in the real world, from my friends, and from my photography students. These 6 things that tend to mess up the most when you're starting new. This is in no particular order. Some of these are more important than others but I just want to give you my list.
- They are risk inverse. They are afraid to take chances. I talked about this a little bit in the book. I talked about tearing up a hundred dollar bill. The number one problem that new entrepreneurs have is they are fearful of failure. The truth of the matter is if you are an aggressive entrepreneur, you will look at failure as an opportunity to learn. You want to make a mistake quickly so you attack because you want to fail. And then learn those lessons and make the adjustments and move on. But time and again, this is preventing people from becoming business owners, is because they are afraid. There are a lot of fantastic ideas out there for businesses that I've seen from countless associates. But they do not have the courage or the willpower to bring it too far. That is far more important than a spectacular idea for the business. If you look at more common things such as selling pineapples on the side of the road or cleaning swimming pools, that's something my dad does or any kind of lawn care services, it's not really a sexy idea but because they are willing to roll the dice as entrepreneurs, they are able to have that business. That is a critical barrier to entry. In my mind, to become an entrepreneur, you have to be brave and courageous to deal with risks. Live with it and not hesitate because of the chance to fail. The best entrepreneur is looking at failure as a classroom. They have full speed.
- There is no competitive advantage to the business. When I say that, what I mean is if you are going to have a business and is going to be spectacularly successful, and you do not have a competitive advantage, somebody is going to come and attempt to steal it from you. This is not really a place to go on what a competitive advantage is. Think of it as a barrier that prevents people from doing what you're doing. This could be a trademark, or a formula, a brand name, a personality.. things that are not replicable. When somebody comes to me and say. " Hey, Michael. I have a business idea and this is what I want to do." I will say. "That's a great idea but the problem is you can't protect it from somebody else steals it." It's very common to see that. No competitive advantage.
- New entrepreneurs often do not understand what marketing is. I have seen this so many times from very talented and creative individuals who make a product, start a business and they're unable to get it in front of those who are their target market... The people who would buy it. There is one example I am thinking of. In this person's mind, marketing is posting a picture on Facebook or Instagram. They believe that is marketing. Well, that is only soliciting to their circle of friends. The truth of the matter is Facebook and Instagram limit how many people see that. If you guys remember business pages on Facebook when it first started, when you post something, pretty much everybody saw it. What a powerful tool. All the people following your business would see and then they changed it. Now, it's only 1% of your business followers would actually see something that you put on Facebook. The idea is that Facebook wants you to pay and it's worth for them. Yes, you have to pay to get your promotion in front of your followers. That's kind of messed up. Marketing is getting your products and services in front of the people who really want it. This means strangers. People who are not in your pool of customers already. Finding new customers. Finding where they are. It's sort of like fishing, you have to understand what kind of fishing going after, where they exist, how to bait the hook, how to get it in front of them. That is a totally different discussion. Marketing is a very common problem. If you are not able to get your product in front of the people who want it, you're gonna have problems.
- Trying to create a business instead of trying to capture a demand for their products and services. For example, an entrepreneur wants to start consignment clothing store. She focused on finding the place, finding the building, talking about rent, figuring out how to set up the storefront instead of figuring out where are the customers that would come to the store in doing some demographic research. Location in retail is huge. Just because you have a storefront does not mean people are going to come. It has to be in the right place. Let's say somebody wants to start a business who needs a web programmer to make the website. They go out and hire one. Spend a couple of thousand dollars and get the website all set up and is ready to go and they do not understand why they are not selling anything. It is because a storefront or a website is not a business. Demand for services is a business. When you have people throwing money at you for something that you have.. now you have a business. That is a business!
Additionally, if you cannot give a product away for free, chances are, you are not going to be able to sell it. if you a new gadget or widget go to your friends and say " Hey, I have ten of these, who wants them." If I am not able to give away all ten of those, I will not invest a lot of money into trying to create a product. That's how the Maven Adapter was born. I had this 3D printer, and I was putting up these adapters that would allow us to connect cameras to window pulling poles and I spent a lot of time developing that. I didn' know what the demand for the product was so I gave it away. I gave them away for a test, not for marketing. I sold out 40 or 50 of them. Just among my friends, I knew there was demand. What I wouldn't do is continue to sell Maven adapter to my friends on Facebook. Once we made the product, I went to the company called Photo Wow, a newsletter for hundreds of thousands of photographers. We had a deal with them and sent them specials offers. That is good marketing because it was a product directly in front of the customers who want to buy it. So if you cannot give it away, you will not gonna be able to sell it.
- They do not focus on their business. What I mean is if you start a company and after a year or two they're having success and they start to say. "Well, I'm good at this. Let me try to do that." Some other business that is completely unrelated to what they are doing now. That is like creating a brand new business. In a world of entrepreneurialism, the chances of starting a new business venture, if you want to do 10 of them in a row, you will be lucky if 1 or 2 of them pan out. The best entrepreneurs are really good at reading out opportunities because they know that there is gonna be a high chance of failure. There have to be certain things in that business in order for it to work out.
When an individual is an expert in something and they're having success, then they try to go out and start a new business in something else where they don't have the specified knowledge or the skills set to thrive, they merely believe that because they're successful at one thing, they're going to be successful in another. Look at Michael Jordan, a spectacular, number one basketball player of all time. He tried baseball, and he went and played baseball for a little bit and he was good at it but not like he was on a basketball court. So you want to play to your strengths in a business world. You don't want to find the thing that you're terrible at just because you're interested in it. That is not enough to start a business. You got to have specialized knowledge in my opinion.
- They pick business ideas that they are not passionate about. In the long run, this is not sustainable. If you pick a business or some kind of work that you don't really enjoy, At some point, you will get tired of it and that is a huge problem because then it becomes work. If you are doing something that you truly love and you're getting paid for it, What a blessing that is! So make sure that you pick something that you really enjoyed doing.
So let's summarize: people are so risk inverse, there's no competitive advantage, they do not understand what marketing is, they try to create a business front instead of focusing on demand, they do not focus on what they are good at, and they pick something that they are not passionate about.
In any event, thank you guys for listening! And I'll see you next time!