The No. 1 Mistake Young, Aspiring Entrepreneurs Make
There’s just one thing which really matters in business, and that’s exactly the thing which most aspiring entrepreneurs forget.
What’s that one thing? Money, of course.
A business is a business only when it is capable of generating revenue. Or, even better, profit. And still, most young entrepreneurs hardly have any clue about how to make money.
In fact, they often don’t even consider it.
Instead, they focus on the hyped up stuff of today:
- coding & technical skills
- storytelling
- technology
- leadership
- growth hacking
- etc.
If you don’t know how to generate money, none of these things have any value at all. They are support structures which can help you to run your business, but in themselves they are not a business.
Sure, if you are in the actual business of storytelling (e.g. a copywriter), then you need to have storytelling skills if you want to make money.
But not if you run any other type of business.
Having storytelling skills certainly helps you to market your products, but that’s all. Plus, you can just as well outsource this part to somebody else, who can do it better than you.
After all, that’s what a business is all about. You focus on your core capabilities, and outsource the rest.
Before you do anything else, learn how to make money
Even if you are clear on how you actually want to make money with your business on the long-term, don’t focus on that in the very beginning, if you haven’t learned yet how to predictably generate an income.
Start out by doing something completely different. Something that is going to make you some money now.
But make sure you are treating this task like a business, not like a job.
One of the best places to start for that is Chris Guillebeau’s “The $100 Startup”. In it, he describes how to start out by taking $100 and trying to make as much money out of it as quickly as possible.
Essentially, in this way, you are forced to set up a system with just $100, which will continue to create revenue for you without your own active involvement in the process.
And that’s the definition of a business, isn’t it?
A business is any kind of system consisting of elements which work together, and which generates revenue on a regular basis. without any particular person’s active involvement. in the process.
This could be anything, really.
For example, you could start with a drop-shipping business. Here, you essentially list third-party owned products on your platform. You then purchase- and ship the product once a customer orders comes in.
You can start such a business with hardly any upfront costs at all, and it is pure practice when it comes to selling stuff online.
And yes, your storytelling skills might actually help you here to sell some more products on the long-term.
But they certainly are not the skill to have.
At what point does something like ‘storytelling’ actually turn into a business?
So let’s just say that you are passionate about writing and you actually want to turn your storytelling skills into a business. You have done your homework and learned how to set up a system that generates you cash on a regular basis.
How do you turn that into a business?
Well, it would actually start with you writing stories for other people. But that is not called a business — its called freelancing.
At this point, you are essentially trading our own time for money. It is just that you are not a full-time employee. Instead, you are finding new clients on a regular basis and working for them.
But then, what happens when you suddenly hire five people who are doing the writing work for you?
You are providing them with a system on producing content of the same quality like the one you produce (using guidelines, policies, training etc.), and you have one person who is doing the quality assurance part of it.
Plus, you have other people involved who are taking care of other aspects of the business, including things like customer acquisition, administrative work and so on and so forth.
Congratulations, you now have a business that actually exists around the thing you love so much — storytelling.
It’s just that at this point, you yourself as the owner of the business, certainly do not have to do any of the storytelling work yourself anymore.
Do you get the point?
To become an entrepreneur, you essentially only need one skill. And that skill is to set up a system which is capable of generating money for you even in your absence.
Of course, there is an unlimited number of ways to generate such a system.
So what is a business idea, really?
An idea is essentially one of these unlimited ways of generating a business system. But then again, without the practical skills of turning this idea into a system that functions, the idea itself is worthless.
You see, the problem is that due to the start-up hype of today, young entrepreneurs are trying to set up incredibly complex systems.
For example, systems which are revolutionizing whole industries such as the taxi industry (yes, I’m talking about Uber here).
But these same entrepreneurs haven’t even learned how to set up the most simple of business systems yet (e.g. a lemonade stand). God, most of them haven’t even learned how to generate one dollar through real, automated business-processes.
Somebody tell me, how is that supposed to be a realistic goal?
I know that youthful passion, energy and drive make up for much.
But it is simply unrealistic to expect that a lot of people will succeed to create complex business systems, when they aren’t even able to create simple one’s which generate a basic level of income for them.
My question is, why do we keep encouraging young entrepreneurs to build incredibly difficult start-up projects from scratch, instead of suggesting them to practice by turning simple business models into reality first?
Get out there and practice
Do yourself a favor and learn how to set up business systems that generate money for you before you do anything else.
Not only will this experience help you tremendously in setting up your ‘dream’ business later on, but it will also solve the main problem that most young entrepreneurs of today have.
Yes, that’s right. I’m talking about the problem that these young entrepreneurs are constantly broke.
Sorry, but you are not an entrepreneur if you are not making any money from your ‘business’.
I would even go as far as to claim that a start-up which has $3,000,000 in investment money, but still does not make any revenue, still can not be considered a business.
Because it still doesn’t fulfill the definition of a business.
It still didn’t succeed at building a system which generates revenue.
And if that start-up fails to create such a business system and make some real money, then eventually it will die. Even if its slow death takes 10 years, because it is constantly getting pumped up by more investment money.
Business is all about money. Never forget that.
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