Thinking back on my various failed ventures I can always identify one of the two paradigms below as being the driving factor in my failure. When I talk to would be or starting out entrepreneurs I now more easily recognize when they are equally stuck in one of these paradigms. The biggest issue is that all Entrepreneurs know these two paradigms (or lies) exist but somehow when we are caught up in the excitement of building a business we think we are exceptions to the lie.
Lie #1: If I Build It They Will Come
This is the product lie. Business owners are so in love with and emotionally attached to the product or service that is being built that we can't see past the most prevalent killer paradigm of all. We somehow believe that when we bring this thing to market everyone will show up to buy it and then they will tell all their friends who will be there the next day to buy it and within a few years we will be the next Starbucks. This so rarely happens and yet we attach ourselves to it. If I invent the new mouse trap, if I create a better Facebook, if I launch this new blog, if I provide this service far better than anyone else out there… then I will make millions.
This is a lie because it takes a lot of work to get humans to change their behavior. It requires awareness and desire. Creating both is expensive. So most entrepreneurs who live in this paradigm either give up or go broke when they realize how much money it is going to cost to actually acquire a customer or two.
To give one of my own examples I remember when I launched my first blog. The blog was ground breaking and addressed a topic that was growing and under served. I was convinced that visitors would stumble upon it in droves and the ad revenue would pay off my mortgage. They didn't and it didn't.
Lie #2: Right now I make a little money with this. Somehow I will one day make a lot of money with this
This is the scalability lie. This usually happens to entrepreneurs who have found a simple way to make a little money. Perhaps you figured out you can buy product x at wholesale and sell it on eBay at retail or you can provide a service to friends of doing X thing that you are really good at, or you are really good at making Xs and they sell fairly well on craigslist. Any of these things could be something that could in theory build a big business but not if you continue to do it the way you are doing it.
In order to create a big business and make good money you either have to work 100s of hours a week making or selling product x, OR you have to figure out how to get leverage and remove yourself from the business. Real entrepreneurs do what they do in order to achieve some level of freedom however they define that. Working endless hours is rarely a part of that definition of freedom.
The first example that comes to my mind was a promotional apparel business I started back in 2006 with a partner. We essentially resold apparel services from a local print shop. Profit margins were good enough to justify doing it at the time but not big enough to add middlemen (salesman) to what was already a middle man operation. The two of us only had so many hours in the day so eventually we folded it up frustrated that it never could grow beyond where it started.
This picture is appropriate for this blog post because its a screenshot of a video I made for the blog I mentioned above and in the video I'm wearing a tshirt with the logo of our old promotional apparel business at that time 🙂