Starting a business is a challenge, and probably one of the most intimidating things that a potential entrepreneur can face. But budding entrepreneurs often make the mistake of thinking that a business is more expensive to start than it actually is! The key is to be conscious about what you are spending money on, and to avoid the pitfalls of focusing on everything except your revenue.
After reading Loralee’s blog post on running her business on $30 per month, I was inspired to build on her idea. What are the obstacles—mostly self-created-- that prevent a startup from succeeding?
To Succeed, Avoid These Things
Here are the top 5 mistakes I see entrepreneurs make when they are starting their new business:
Emphasizing Anything Over Connection. The number one thing that all startups have to do is AQUIRE CLIENTS. If you’re prioritizing taking a class, building your website or putting together your newsletter BEFORE you prioritize prospecting, you’re not thinking like an entrepreneur. Talking to existing connections and meeting new people should always be the #1 priority to building your business.
Not Working Close To The Revenue Line. Working close to the revenue line means consciously choosing to engage in those activities that affect profitability BEFORE taking care of business. When you look over your To-Do list for the day or week, you need to ask yourself, which of these tasks lead to revenue the fastest? And then complete those tasks first, always!
Bright Shiny Object Syndrome. When you’re in business for yourself, it can be isolating and sometimes lonely. That makes us especially susceptible to believing that the next course, class or coach is going to be the end-all solution to speedy profits and a six-figure income. We can waste thousands of dollars when we abandon our solo plan and opt to follow the newest distraction, because often we’re not equipped to implement immediately anyway.
Not Trusting Self. No matter how little you think you understand building a business, you can never delegate or defer strategic decisions to someone else. If you don’t trust yourself, the next step is never to allow someone else to make the decision for you, the next step is to educate yourself so you never second-guess yourself in that area again. I wish someone would have told me this about 15 years ago; I cringe at the amount of money I have wasted wishing someone would just hand me a solution!
Perfectionism. Everything is a work in progress, yet new entrepreneurs often hesitate to put themselves out there. The perfect name, website, program . . . you’ll wait forever and never get to actually helping anyone if you wait for perfect! You must retrain your brain to believe that perfect is the enemy of moving forward, and “good” is good enough.
How To Decide Where To Invest Your Money
Once you have identified where your business thinking might be wasting money, you can start to assess your planned spending more rationally by asking yourself these three questions:
Am I making a business spending decision based on emotion or need? You’ll know because emotional spending shows up in other places in your body, whereas just buying stuff you need evokes zero physical reaction. For example, I’ve never gotten nervous buying yellow pads or re-upping my hosting fee for the year. If you’re having an emotional reaction, STOP and figure out the deeper need you might be trying to fill.
Do I need to buy this to get more clients? When you operate on a shoestring budget, every extra cent you make should be funneled back into revenue production. So if the expense doesn’t help you build your list faster, meet and convert more prospects, you can probably avoid the purchase for a while. And you need to be specific as to the “how” it’s going to help you and how you’re going to track and assess your return on investment.
Am I purchasing more than I can implement? I find most people over estimate the amount of tactics they are able to implement. So buying a product that promises 10 Ways To Build Your List is overkill . . . you can focus on ONE tactic for a year and see major changes. Concentrate on going deep on each individual tactic for a longer timeframe, instead of “dabbling” in multiple tactics; you’ll save money AND become much more effective in your chosen strategy.
ACTION THIS WEEK:
- Make a list of the things that you need to do consistently to work closer to your revenue line
- Review your current expenses; is there anything there that doesn’t serve you anymore?
- Vet any planned purchases through the 3-Question Review process.
If you want to learn more about conscious spending and how to find the best use for every dollar that comes into your business, consider reading my ebook, Getting Started with Conscious Spending.
In the comments below, tell me…
- What are some of the ways you’ve wasted money in the past?
- What action do you plan to take this week to become more conscious about your spending?
Mindy Crary (MBA, CFP® practitioner and financial coach at Creative Money) helps you become a lot more educated (never inundated) about not just your money — but the whackjob behind it. Check out Creative Money and sign up for more valuable money tips.