If you are reading this article, you probably fall into one of two camps. Either you are contemplating leaving your nine to five in order to strike out as an entrepreneur, or you are already an entrepreneur who is struggling with the harsh realities of the lifestyle.
If you are new to this lifestyle, let me tell you something the rest of us have already figured out. Striking out on your own is difficult. It’s stressful, emotional, and way more time consuming than you anticipated. Plus, it often induces starvation.
Making a living as an entrepreneur might not ever be easy, but it does not need to be as difficult as many of us have made it. Much of the misery entrepreneurs endure is self-inflicted. You can save yourself a lot of headaches by avoiding the following five mistakes.
Mistake 1: Accepting Any (and Every) Opportunity That Comes Your Way
The entrepreneur’s lifestyle comes with a certain amount of uncertainty. There are inevitably going to be periods of downtime. This persistent state of flux can be difficult to process. Your need to feel busy; however, this urge can be your worst enemy.
There are always opportunity costs associated with any client/prospect/job you accept. That is to say, in order to accept one, you have to sacrifice others. If you accept low-paying clients/prospects/jobs just to keep yourself busy, you’ll be using valuable time that could have otherwise been spent networking or knocking on doors.
Saying “yes” to any and every request can be one of the most difficult habits to break. But any successful entrepreneur must, at one point or another, learn to turn down the opportunities that do not advance his or her career in order to make room for the ones that will.
Mistake 2: Relying on Handshake Agreements
“It will be alright. He’s a nice guy. He won’t stiff you.”
Contracts can feel like an unnecessary hurdle. The pressure to start working as soon as you’ve received the green light from a client can lead to costly disputes down the road. Regardless of the client or project, having a basic agreement in writing is essential.
Contracts not only help assure you get paid, they also protect you against changes in the scope of a project. Plus, a contract can help preserve your relationships if disputes do occur.
Your written agreements don’t always need to be elaborate legal documents. A brief outline that defines the scope, timeline, costs etc. is, in many cases, all that you’ll need.
Mistake 3: Being the Cool Guy
As an entrepreneur, you may very well have a personal relationship with your clients. As the only point of contact, you’re likely to put in a lot of face time. You’ll often feel more like a friend and less like a business associate. It’s important that you do not allow this dynamic to cause you to do favors without being paid.
Doling out unbilled favors, no matter how small, will set an unwanted precedent and undermine your ability to claim your time as valuable. Even if the hassle of invoicing is more time consuming than the amount you bill, requiring payment for ALL work that you do (or products you sell) is important.
I recommend addressing the terms for add-on and ongoing work in your initial contract. That way, you do not need to have the awkward conversation about cost each time the client reaches out to you. Establishing these rules will increase your profits and cut out a lot of the time consuming micro-tasks that can easily bog down your productivity.
Mistake 4: Being a Jack of All Trades
When you begin life as an entrepreneur, you’ll want to have money coming in as soon as possible. It might be tempting to offer more services/products than you feel comfortable. In fact, you might even get requests for services outside of your core competencies.
Turning away work that is not within your field of expertise can be a dangerous proposition. Not only are you forfeiting a payday, but you may also be encouraging the client to establish a relationship with your competition.
However, you are usually better off to pass on work that isn’t your specialty. Here’s why.
Let’s look at a classic example. The internet has sparked a huge group of entrepreneurial opportunities. Many people venture out on their own in the areas of web development, web design or online marketing. Many people fail to see a distinction between these areas; or if they do acknowledge the differences, they see them as unimportant.
The truth is, each discipline requires entirely different skillsets, software and frame of mind.
Trying to be proficient in too many things will dilute your effectiveness and require you to spend time struggling with learning curves. You also run a greater risk of disappointing clients by delivering sub-par services or products.
In many cases, your best option will be to pass on opportunities that do not fall within your primary sphere of competence. If that’s just not something you’re willing to do, you should outsource all work that you aren’t experienced in handling. There are essentially two models that can work well.
The first outsource solution is to offshore the tasks. Sites like Elance and oDesk are great resources that make it easy to hire someone overseas freelancers to handle portions of a project for you. In many cases, the hourly rate will be a lot lower than what you charge for the service or product, allowing for a healthy margin. Maintaining quality with offshore labor can be a challenge, however, so this option is not without its risks.
The second, and my preferred, solution is to work with talented local freelancers and entrepreneurs with skills that complement yours. Not only is the quality of work less of an issue, the relationship will often produce reciprocal referrals. Meeting the perfect counterpart can be difficult, but attending local Meetups and joining industry-relevant communities in your area is a great place to start.
Mistake 5: Waiting for the Work to Come to You
All entrepreneurs, regardless of specialty, have the same struggle – trying to bring in the money. Once you’re established, referrals and word of mouth can be enough for you to sustain you. In the beginning, though, you’ll need to put some work into establishing relationships and building your brand.
Get out there and shake hands. You’ll be amazed the types of connections you can make from walking in the front door of a business. You’ll need to get good at handling rejections, but many business owners and clients prefer face to face introductions. It won’t take long for you to find someone interested in working with you.
The entrepreneurial lifestyle offers a great amount of freedom and provides opportunities for immense personal growth. It can, however, be a struggle and an unreliable source of income. It takes a special breed to be successful entrepreneur. By avoiding some of the largest mistakes, you can increase your chances at success.