Steve Pavlina on 10 Stupid Mistakes Made by the Newly Self-Employed:
1. Selling to the wrong people.
I’ve done this. Boy, does this hurt the bottom line. A few years ago, I tried to enter the Web Hosting business. Since I host all Outer Level owned sites on a dedicated server with plenty of Bandwidth to spare, I thought I would help defer the costs by selling Web Hosting to small businesses. In order to compete with all the competition out there, I needed to be cheap. The problem with selling $10 per month web hosting is that you tend to attract technically challenged customers. The amount of hand holding required to help someone setup their first web site, hook up their email clients, and trouble shoot their firewall settings will never be covered by $10 a month. It didn’t take me very long to become pretty picky with who I took on as a customer.
2. Spending too much money.
This is an easy one to fall into. “I just have to have that new MacBook Pro to do development”.
3. Spending too little money.
I wish I had this problem. I definitely tend towards #2 above. Though in the past 12 months, I have noticed that my tendencies are starting to lean more in this direction.
4. Putting on a fake front.
For whatever reason, people think that using “we” instead of “I” is more business-like. I definitely tend to revert to doing this and need to make a conscious effort to not stray back into this practice.
5. Assuming a signed contract will be honored.
This is definitely true. I have run into this several times in the consulting world. Unfortunately, as a small business owner it’s usually cheaper to move on with your life than to try and put up a legal fight.
9. Failing to focus on value creation.
This is good advice and something I’m definitely trying to concentrate as I add software products to what Outer Level does. Providing value as a consultant is what it’s all about. But actually providing value with products is harder than it sounds. It’s easy to come up with “cool” ideas, but do these ideas actually provide value to potential customers?
10. Failing to optimize.
I’ve taken a few steps in this direction, but when it comes to the most time consuming portions of running a business such as paperwork, this is easier said than done. How do you automate opening mail and filing government paperwork? Some of this can be outsourced to a payroll service, a book keeper, or an accountant. But, much of the time it’s cheaper and quicker to push through it yourself.
I’d like to add one more to the list. One that I fall into more often than any other:
11. Over Analyzing
Running a business includes making tough decisions. One of the things that makes a successful business owner is the ability to quickly make the tough decisions and not look back. Taking too much time to make a decision is often worse than making the wrong decision.
I have the tendency to worry too much and too long over one solution over another because of cost or complexity. This deliberation usually is more expensive in time and money than picking the more expensive or complex approach.
The other way I suffer from this is reading too many business books, blogs, and articles. After a certain point the return on investment is not worth the time. I’m not saying that getting educated and keeping up on information is bad, but I spend too much time reading how others are doing things instead of doing it myself.