Dangerous Business Habits You Should Stop Immediately
To be honest, I don’t have a high horse to ride. How do you think I found out about these five business-killing blunders? By creating them.
My entrepreneurial journey began with a little grit and a lot of beginner’s luck. I was 14 years old and lived in rural Pennsylvania. The smartphone era was just getting started, and the best smartphones were being manufactured in Europe. I managed to persuade a European wholesaler to accept me as a reseller. I imported sophisticated phones for $300 or so each and sold them on eBay with a 20-30% markup. Bill Gates, beware, or so I thought.
It was going so well that I dropped out of high school to concentrate on the business — until my merchant bank discovered my age and shut down my account. There will be no more cell phone companies.
For the next 12 years or so, I pounded my head against the wall in search of success, freezing my buttocks off in my basement office with a paint bucket for a chair (the 5-gallon luxury Lowe’s version), banging on my keyboard, and pulling out my hair.
When did this long, vexing intermission come to an end? When I got rid of these five bad business habits. I didn’t change my mind on a dime. I had to work hard to get rid of them one by one. Some of them were difficult to break. It felt like I was letting go of a piece of myself.
But, with each habit I dropped, my prospects improved. When I got rid of all five, my agency was on its way to becoming the seven-figure operation it is today.
You don’t have to make drastic changes right away. If you recognize yourself in more than one of these habits, choose one to break before moving on to the next. But, no matter how long it takes, here are my picks for the five bad business habits you need to stop right now. Don’t worry about the order; just begin with one today.
1. Stop putting yourself in price traps.
How do you persuade someone to buy from you rather than a competitor? Isn’t there no charge? Maybe a free trial or a half-price offer?
This may work if your company sells paper towels, but I usually advise my students to do the opposite — charge a higher price. When you go low on price, you set up a trap for your company to fall into, impaled on spikes at the bottom of a metaphorical pit.
Charging a high price necessitates faith in the value of your solution over a competitor’s solution. To compensate for their lack of confidence, aspiring entrepreneurs frequently charge a lower price. They are hoping that the low price will take away some market share because they do not believe they deserve that market share.
The cost may even be so low that it does not justify their time. I frequently point out that, after all, is said and done, I see people making less than $10 per hour at the lowball rates they charge. Why even start a business with such a low-profit margin?
Their response is always the same, and it is a trap. “Well, for the first few clients, I’ll charge a low price, do a great job, get some glowing testimonials, and then I’ll raise my prices.”
I understand. It’s a good idea. In practice, however, this is rarely the case. Much of your early business will come from referrals, and the new guy will always ask how much you charged the previous guy. And they’re not going to pay $3,000 if the previous guy only paid $500.
That is the price trap: people are trapped for years at the low price they set. They burn out, flame out, and give up before gaining the momentum necessary to raise those prices to a level that justifies their effort.
Don’t fall into the trap, and don’t be afraid to charge according to the value you provide. Most buyers, especially in the business-to-business market, aren’t looking for the lowest possible price — they’re looking for the best possible solution. Charge accordingly if you can provide that solution.
2. Put a halt to the creation of websites and business cards.
With the predictability of this conversation I have with my students, you could set a clock: “So you’re going into business. “Did you make a sale?”
“Well, first and foremost, I need to create a website and business cards.” Set up a phone system. YouTube channel, Instagram, and other social media platforms are in the works. Oh, and a great logo!”
Nope. No way, no how. That doesn’t sit well with me. “Stop designing your business card and make a sale,” I say. You don’t even know if you’ve found a market fit. That business card is a waste of time, money, and trees if you don’t have fit.”
I used to be the one. I cringe when I think about how many websites I designed, business cards I ordered, fliers I printed, explainer videos I created, and blogs I wrote — all wasted time, money, and effort because I skipped the step of confirming that the market wanted what I was trying to sell.
The website and business card are frequently used as an excuse. Working on them may make people feel like they are “in business” and productive, but they are merely stalling for time, putting off the difficult and sometimes frightening task of standing in front of customers, extolling your value proposition, and asking for their credit card.
However, the sooner you confront that fire, the better. A website or a business card does not define a company. The sales of a company define it.
How much of an impact did it have on me when I finally gave up this habit? Before I even launched a website for my agency, it had grown to a seven-figure business.
3. Stop developing the product or service before making a sale.
This is related to the previous point. To avoid having to go out and make a sale, they say, “Well, the product isn’t ready yet.” “I want it to be perfect.”
“Why are you building a product you haven’t sold yet?” I replied. “How do you know if anyone will want it if no
one has bought it?”
Should you sell a product before you build it? Many people find it difficult to comprehend. It sounds dishonest, like selling the Brooklyn Bridge to someone (i.e. something that is not yours to sell).
But it isn’t. Companies constantly pre-sell their products. People queue for iPhones, video games, VR glasses, and Tesla’s Model 3 based solely on concept drawings.
My example is more practical. Before I had designed a single module or shot a minute of video content, I sold my first educational program to about 20 people.
I didn’t just ask them if they thought they might want to buy it someday. I looked over their credit cards and everything.
I told them the truth.
“The course hasn’t yet been released, but I plan to release it in 60 days, and you’ll be among the first to have access to it.” If something goes wrong and the course does not take place, I will refund your money.”
You can bet I worked hard during those 60 days to complete the project on time. I didn’t want to refund their money, but more importantly, I didn’t want to make a fool of myself by failing to deliver.
4. Stop doing things on the cheap when it comes to building your business.
Remember what I said earlier: most buyers aren’t looking for the cheapest deal. They seek the best solution. For your business to thrive, you must adopt this mindset as well.
Aspiring entrepreneurs frequently come from a place of scarcity. They are pinching pennies. It’s as if they don’t believe they’ll ever make a sale, and it becomes a self-fulfilling prophecy. If your brand is put together on the cheap — cheap products, shoddy marketing, and so on — why should anyone buy from you, even if you offer the best price? It’s a race to the bottom, and you don’t want anything to do with it.
This does not only apply to things you can touch or see. I make it a point to pay my remote employees more than the going rate for their services. I’m looking for a team that is dedicated to producing high-quality results. This allows me to charge higher prices and attract loyal customers, which is far more valuable to my business than the “excess” wages I pay them. And, of course, it’s the right thing to do.
5. Stop building your business around yourself.
This is one of the most difficult habits to break, particularly for solopreneurs. You will wear many hats and perform many tasks on your own early in your business. It’s easy to believe that no one else can wear those hats as well as you.
Don’t make this blunder. Create every aspect of your business with the expectation that someone else will eventually take over that role. Even if they only do the job 80% as well as you do, you’re ahead. You can still be present to serve as quality control for the remaining 20%. However, you can eventually hire someone else to perform quality control.
If you build your business around you — if you don’t design your business so that you can be replaced — it will own you. If you decide to take a vacation or have a family emergency, it will fall apart. You are not a business owner; you are self-employed, which is a different type of rat race.
Start with the end goal in mind. If you want to sell your company, travel the world, spend more time with your family, retire early, or create a four-day workweek, design it from the start with the idea that it will continue even if you leave.
We’re all human and make mistakes. When your goal is to create the lifestyle of your dreams, mistakes can set you back years. All of the preceding lessons were learned the hard way. My 12 years in the wilderness were not in vain if I can help you shave years off your lifestyle curve.
If you’re making any of these errors, you now know why! Taper them off if necessary, and stop them immediately if possible. The sooner you start, the sooner you’ll succeed.