This is Why Most New Entrepreneurs Don't Succeed

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Who doesn't want to start a business these days?

In 2017, we’ve all got entrepreneurial fever. Everyone and their mom wants to start their own business.

The temptation of passive income, location independence and financial freedom is too attractive to resist.

But why is it that over 70% of businesses fail within the first ten years?

What’s obvious to me is that there’s a huge gap between expectation and reality. What people expect entrepreneurship to be like, and what it’s actually like are two completely different things!

The task of building a successful business is no easy feat. It takes a mastery of your own psychology more so than learning tips, tricks and strategies to implement in your business.

Over the next few paragraphs, I'll be exploring why most people find it so tough when it comes to getting ahead in business and how you can avoid some of the most common pitfalls people experience in this space.

Let’s get started!

THE EMPLOYEE/ENTREPRENEUR TRANSITION

For most people, getting into the world of entrepreneurship comes from pain and lack. A pain they experience in their current situation with their job. A lack of freedom and flexibility in their lifestyle.

There are many reasons why people choose to take the plunge into the world of business. For most people, it’s a shift they make from employee to entrepreneur. This is a quantum leap of change in all aspects of life. As an employee, life is very different to that of an entrepreneur and this is where the problems start

From the cradle to the grave, we’re taught how to live our lives as employees. You go to school to get good grades so you can go to college. You go to college so you can land a high-paying job and a great 401k plan.

Trading dollars for hours becomes second nature. So much so that people find it incredibly difficult to price and package on the value of their service when it comes to business.

Trading dollars for hours is silly. There’s no way of incentivising value-added work by paying someone an hourly rate.

To make matters worse, most newbie entrepreneurs underestimate the level of focus, self-accountability and commitment required to succeed. They’re full of pride, take advice from the wrong people and lack personal accountability.

THE FOUR FINANCE QUADRANTS

These four quadrants showcase how one relates themselves to the world when it comes to finances and work/life balance.

They are as follows:

E = Employee S = Self-employed B = Business owner I = Investor The employee quadrant

The majority of people live the entirety of their lives in this financial quadrant. As mentioned earlier, our education and culture train us to operate through the “employee” mindset. This is why most parents want their kids to go to college so they can get a stable job. Of course, they only mean well but this expectation can be a bitter pill to swallow for a young aspiring entrepreneur.

THE SELF-EMPLOYED QUADRANT

This is the route most people take when they strike out on their own. Driven by the desire for more freedom and flexibility, they quit their jobs to pursue the American Dream. The people in this quadrant range from freelance writers to highly paid consultants and public speakers.

The crux of the S quadrant is that you’re still trapped in a way, you’ve fired your boss and hired yourself as an employee. You don’t get the workplace benefits that you would in a traditional job, and If you take time off, you lose money.

In this quadrant, you don’t really own your business, your business owns you instead.

THE BUSINESS QUADRANT

This is where things start to get really interesting. The business typically includes big businesses with a lot of staff where you have systems and processes established. In essence, your business works for you. This is where you typically learn how to make passive income

More recently, a new contender has entered this quadrant...

The lifestyle business.

This type of business can be handled by just one or two people and enjoy the same passive income benefits as large entities that cost millions to start. The people that operate from this quadrant control their sources of income and enjoy real financial security.

THE INVESTOR QUADRANT

This is one that most people don’t reach until later in life, heck, most people don’t get here at all!

Pretty self-explanatory, the investor quadrant is all about using money to make more money. This could be through venture capital investments or things like real estate, stocks and bonds.

Changing your core financial values

Most people spend the entirety of their lives stuck in the E or S quadrant. They may change jobs or start a new venture but they typically have the same problems because they haven’t taken the time to change their relationship to money.

Breaking away from typical job structures and creating our own stream of income puts you in control of your financial future. You’re no longer relying on a boss or a business to pay you for your work.

Your core financial values determine the quadrant you find yourself in. Each quadrant relates to fundamental desires within you. People in E desire security, people in S crave independence, people in B are looking to build wealth and I is all about financial freedom.

Shifting quadrants is all about changing your mindset. Something we all know isn’t easy. It’s worth noting that shifting quadrants doesn’t guarantee financial success either, there are broke people in every situation. But if you find yourself struggling with your entrepreneurial venture, take a step back and observe your expectations.

Are you still thinking like an employee? Are you expecting immediate results? Are you assuming you can spend your profits without reinvesting at the start?

Asking yourself these questions will help you identify your thought processes behind your actions that aren’t serving you. Once you identify these you can choose to make a mental shift for the better.

 
 

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