Wright Foundation | July 23, 2019

The Biggest Mistakes Entrepreneurs Make

Young professionals believe the world is their oyster.

Do you know the biggest mistakes entrepreneurs make? Learn how to detect and avoid these pitfalls for a successful business.

They get out of grad school and they’re ready to hit the ground running. They expect to do what they want, when they want, and find success.

While this mindset is positive, it’s essential to learn a few practical lessons to avoid getting yourself in over your head. If you want to set yourself up for success, you need to prevent foolish errors that will cost you dearly in the long run.

Here are the biggest mistakes entrepreneurs make (often at the beginning of their careers). Learn how to shift your mindset to purpose-driven leadership.

The Big, Costly Mistakes Entrepreneurs Make

I was talking with author Jack Stack, who wrote and founded the Great Game of Business. We were discussing the young professionals we work with and the common mistakes we see in their career paths. Jack told me every week, he’s approached by young MBAs seeking his help. Often, they went through his program and followed the steps: get an idea, finance the plan, eventually go public.

The entire process breaks down once they’ve mortgaged their home, cashed in their savings, and convinced their parents to mortgage their house as well. Suddenly, they’re stuck with a bunch of financial obligations, but they haven’t really proven they can earn money with their plans.

According to Jack, once they’ve reached this point, it’s already too late to turn back. They’ve missed the mark in the first step by not examining the deeper purpose behind their great idea.

It’s heartbreaking for any of us to see a young professional go through this situation. It’s one of those issues they could avoid if they were aware of the common mistakes many entrepreneurs make.

Mistake #1: They Quit Their Day Job Too Soon

The entrepreneurial spirit is indomitable. Most successful entrepreneurs jump in because they believe in it. They know they have a great idea and it’s a solution to the problems of the world.

But, while jumping in is excellent, you shouldn’t quit your day job right away. While it means long hours and hard work, your regular job is your safety net. So many entrepreneurs have a reactive purpose when they start a business. They don’t want a boss, or they want money, but they don’t realize how much it actually costs to run a business. They may love a challenge where they really grow, and they feel a boss stifles their ability to shine.

It’s important to realize there’s no situation where you won’t have a boss as long as you’re working with other people.

Even as an entrepreneur, your clients and customers become your boss. If you don’t think of them as your boss, you’re adopting the wrong mindset, and you will fail.

If you see money as your road to freedom, you should realize it’s a hollow path. Money becomes a trap in which you’re trading your freedom to earn a little more. You must have a stronger purpose for your business than “be free and earn lots of money.” As you’re working the purpose out, keep working on your day job. Starting a business costs much more than you realize.

Mistake #2: They Finance Without a Timeline

Hand in hand with the idea of quitting your day job is the idea of taking on more than you can reasonably pay off. I’ve seen so many professionals who go out, hustle investors, liquidate their assets, and throw everything into starting their venture.

But when the rubber hits the road, they don’t know how to lead a company to success. As Jack says, they don’t ensure everyone has a stake in the game. They don’t harness the resources at their disposal. Within every company, there are people with brains and hearts—ideas and passion. These people want to become stakeholders. They want to help your business succeed (provided you’ve carefully chosen your team and sufficiently motivated and inspired them through your leadership).

Young entrepreneurs often don’t understand accountability in business. They don’t know how to account for how or why they’re running their business, or where they stand in relation to their future success. They don’t know how to move from where they are to where they want and need to be.

If you don’t have a clear-cut plan and path to pay off your financing, don’t take it on. Find a way to work around it. Slow down your timeline, steady your approach, and focus your efforts. Even if you find an investor or financing opportunity who’s unwise enough to lend you money without a plan for payoff, don’t do it.

Mistake #3 They’re Unprepared for Sales

The first job in any entrepreneurial adventure is sales. If you don’t know how to sell or don’t enjoy sales, entrepreneurial endeavors aren’t your best path.

Even if you don’t see your business as a traditional sales job, you’re going to sell your concept continually. As a business leader, you’re sharing and selling your vision to your team.

You’re motivating your stakeholders to buy into your ideas. You’re selling new ideas to clients. You’re selling your talents and promoting others to invest their trust in your plans.

Perhaps you’re not on the phone closing deals (although, keeping your sales skills sharp is a good practice for any business leader), but you’re still selling daily. As an entrepreneur, you must lead and inspire. You must touch the hearts and minds of your team, your clients, and your investors. You need to reach your people.

If you focus on the service aspect of sales—the way your sales serve the needs of your customers, clients, and even employees—you will find success in sales. Sales is service. How are you meeting the needs of your people? How are you enhancing their lives?

Mistake #4 They Don’t Build their Leadership Skills

Of the biggest mistakes entrepreneurs make, one of the most critical is failing to lead. Authentic leadership always comes back to purpose. A company mission rings hollow and means nothing if no one relates to it.

As I wrote in my book, Beyond Time Management: Business with a Purpose:

“Purpose refers to a wonderful capacity in each of us to joyously take our place in the progress of humanity and do our part to help all reach full potential. Purpose is the heart of the matter. The ‘why’ behind what we do. It summarizes our reason for doing what we’re doing. A clear life purpose gives meaning to all activities. Life purpose is the container into which we fit our goals. If we think of a projector shining concentrated light through film onto a screen, purpose is the lens through which life flows to project our highest vision.”

In leadership, people often look at a decision or function rather than realizing leadership requires you to bring everyone to the same page and back to an aligned purpose. Leadership is about your capacity to influence the thoughts, feelings, and actions of others.

To that end, anyone can become a leader. You don’t need to wait for a position to justify your leadership; you can lead from behind and still lead well. You can lead as a stealth “ninja” by throwing directions into productive decisions. You can lead by taking risks. You don’t need to wait for someone to open the door and hand you a leadership role.

It’s not the first mover who creates the most significant change. Lots of the first movers take on endeavors that fall flat or never truly launch. It’s the second mover who supports the first mover and brings on collective action who finds success. The power is in the second investor or the second person who leads your groups. Their buy-in shows you’re creating something lasting.

Entrepreneurs often fail to recognize that their ventures come with a great deal of accountability. When a team is relying on you, it’s not just about coming up with a fabulous idea and getting people to give you money to support your dream. Entrepreneurship isn’t even about the freedom of becoming your own boss.

At the end of the day, becoming an entrepreneur is about purpose. It’s about discovering why you’re doing what you’re doing. It’s about doing the needed legwork and putting in the time upfront to ensure you have a stable and successful outcome in the long term.

If you’re working toward an entrepreneurial endeavor, I would suggest you check out the Great Game of Business to learn about real accountability. I believe in Jack’s program so strongly because two of our senior staff members are becoming GGOB coaches. We’ve been using overlapping GGOB technology and concepts within our program for the past few years. It’s a great resource.

For more ideas on leadership and success, please visit the Wright Foundation. Join us for a More Life Training weekend, where you’ll network with others on their path to success. We’re excited to announce that many of our courses and classes are available for download at a special introductory price. Don’t miss this great opportunity!

The Wright Foundation for the Realization of Human Potential is a leadership institute located in Chicago, Illinois. Wright Living performative learning programs are integrated into the curriculum at Wright Graduate University.