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Today I have an awesome guest post from, author and business coach, Arman Sadeghi. Be sure to check out his free PDF in the first paragraph! Enjoy…
The facts are in: most entrepreneurs never make as much income operating their own business than they did as an employee working for someone else. This may shock you because we see entrepreneurs on television, featured in magazines, and we constantly hear stories of massive success. It turns out, however, that these stories of massive entrepreneurial success are the exception and not the rule. There are five important reasons why most entrepreneurs never turn a profit and why entrepreneurs fail.
1. They get comfortable
By the time most of us turn 18, we have spent the majority of our lives in school being told what to do on a daily basis by our parents, teachers, and even coaches. They tell us when to wake up, when to go to sleep, what time to be in class, what time to eat lunch, and how many hours we can play outside. For those who continue on to college, we get to experience an extra four or more years of the same treatment. We then enter the job market and spend even more years being told when to wake up, when to get to the office, when to leave, and even how long our breaks and lunches can be.
By the time most people become an entrepreneur, they are more interested in freedom than they are in success. While they talk a lot about becoming a “successful entrepreneur,” they are more interested in being a “free” business owner. However, there is a reason why we had so much structure for the first quarter-century or more of our lives. The fact is that without structure, most human beings do not follow through on the most critical tasks and new entrepreneurs are the ones who display this characteristic the most. Don’t fall into the trap of thinking that you are now free of wake-up times, time clocks, and everything else that you have endured for so many years. As an entrepreneur, you will have to grow even more disciplined than you were when you worked for someone else.
2. They spend too much time and money on infrastructure
When most entrepreneurs and small business owners start, the first thing they do is create infrastructure that makes them feel like a business owner. This typically starts with things like websites, business cards, brochures, desks, leather chairs, and other trappings that people associate with being a business owner. Unfortunately, while these items typically cost the entrepreneur thousands of dollars, and more importantly, many weeks or months of time early in their business, they add little to no value to a budding business.
Instead of focusing on creating things that make you feel like a business owner, direct your focus toward selling products and services using whichever means you have available to you so that you can generate revenue coming into your business. Revenue is the only thing that will allow you to sustain your business.
3. They try to hire someone to do the important things
Many entrepreneurs make the mistake of thinking that they can just hire their way out of their problems. They often hire someone to do their sales, they try to hire someone to do their book, and they even try to hire someone to do the work required to generate revenue. While this can work if done the right way and with the right amount of capital, it is a recipe for disaster when entrepreneurs think that they are going to be able to hire an “expert” to do the work they are unwilling to do.
This does not work for many reasons, but the top reasons are that business owners cannot manage a person doing a task that they themselves do not firmly understand. Additionally, with limited revenue early on in a business, it is unreasonable to pay those high salaries. Early in your business, spend time putting your hands into as many different areas as you can, especially the finances. When you do start hiring people to manage different aspects of the business, you fully understand what they need to be doing so you can adequately manage them.
4. They don’t spend enough time selling
There is no other way to think about this…the only way you will ever generate revenue and a profit for your company is if you sell. Unfortunately, most entrepreneurs spend far too little of their time selling and far too much time sticking their head into the operations of the business. While operations are important, spending a disproportionate percentage of your time dealing with operations as opposed to sales is a recipe for financial ruin.
Focus on spending as much time as possible selling your products and services and then focus on the operations that can support those sales.
5. They don’t balance the 3 crucial aspects of being a CEO
As I have written about in my book, The Business Bible, and in multiple articles, there are three aspects to every CEO. These three aspects must all be embraced in order to have success. You must identify which of these traits you possess the most and which you possess the least. You must focus on tapping into all three of these resources and eventually hire someone who can fill the gaps for you.
- The Artist – This is the CEO (or part of the CEO) who is most focused on the “art” behind the business. In a restaurant, this is the person concerned with the exact recipes used to make food. In a real estate business, this is the realtor focused on learning and understanding the various aspects of the market.
- The Operator – The operator is the person focused on the systems that make the business run. This is the CEO not just interested in the recipes, but focuses on how to make sure that each recipe is used exactly the same way by all employees to make consistent food that presents well to patrons.
- The Entrepreneur – This is the person who takes massive risks, who pushes forward, and focuses on growing the business at all costs. This is the person who takes on more than he or she can handle and tries to figure out how to make it all work after the fact.
Figure out which of these three you possess the most of, which is second for you, and most importantly, which you lack in your day-to-day operations of your business. Once you have identified which of these you lack, try your best to tap into that part of you and focus on making sure that this is not ignored. Eventually, the goal is to find a person who can fill this gap for you. Keep in mind that when you find this person, you will need to give them the autonomy and authority to do what needs to be done, because they will almost certainly butt heads with you and disagree with you on many aspects of the business.
While most entrepreneurs never turn a profit, many do! If you want to be one of the entrepreneurs who creates massive profits, grows a company, and enjoys massive success, focus on growing every day, learning every day, and modeling other successful CEOs. By avoiding these five mistakes, you will be well on your way. Enjoy being a profitable entrepreneur. You have certainly earned it.
About the Author:
Author & Business Coach
Titanium Success, Inc.