Business Startup

Mistakes that will kill your business

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Below, you will find six mistakes you should avoid whether you are a freelancer or a business owner. Every mistake in this post comes from real life situations. Yes, I made all of them. In some cases, I was such and idiot or have so low esteem that I even repeated some of them … And not only once. Specifically, mistake number one, two, four and five was made almost on a daily basis. Use my example and mistakes I made to learn from, so you don’t have to repeat them.

Warning: Contains explicit language.

Fear of doing any mistake

Before letting you explore individual mistakes I made in my business and freelance career, I want to stress one thing. Doing mistakes is not something you should feel bad about or be afraid of. It can actually be pretty funny, in some cases. What you should understand is that every mistake you do, no matter how stupid it is, is a great learning opportunity for and chance to grow. Sure, you can read shit ton of books about business and the do’s donts.

Move fast and break things.

However, the best and fastest way to learn something is often through experiencing mistakes on your own skin and falling on your own mouth. Be grateful for every lesson you will get and be ready to take another one and learn from it as much as you can. As Mark Zuckerberg said, move fast and break things. Or as I say, be bold and audacious in everything you do. Without any more delays, let’s continue with mistake number one.

1. You are selling yourself short

Let’s start with most common mistake you can make … To sell yourself or your business short. Setting your price(s) too low can kill your business like nothing else … Or it can at least make your life a living hell. When it comes to pricing, you need to understand two important things. First, you are setting expectations about your skills and the quality of your work. Second, what you charge you will get.

Your price will immediately influence how your client sees you. He can either see you as a cheap labor with average skills, or he can see you as someone confident in his skills and bold to ask for more. Often, just this difference in pricing will influence whether you will get the deal or not. On the other hand, if you are faking it, remember that sooner or later you will have to eat what you cooked. So, don’t be a wimp. If your skills are on high level and your work is great, be bold and ask for more.

“If you are faking it, remember that sooner or later you will have to eat what you cooked.”

2. You are working for free

The best way to 10x the first mistake is to work for free. We already discussed this in earlier post, but it is important to at least mention this mistake many people do. I have two quotes for you to remember. First is from great graphic designer Paul Rand. If you know the logos of IBM, Apple, abc, Yale, Next and more, you know him as well. The quote is very simple so it will be easy for you to remember it, especially the second part.

“I will solve your problems and you will pay me.”

Unfortunately, I have no idea who is the author of the second quote, but it is great and goes right to the core.

“If I wanted to work for free, I’d choose to be a volunteer. Not a freelancer. Learn the difference already.”

Feel free to change the freelancer to businessman if you wish, but make sure to stick it into your memory and recall it every time you will feel that stupid idea to work for free. You can also try this little test on shouldiworkforfree website to help you decide … Or just create something worth paying for.

3. You don’t have an agreement

Great job man, you just got another deal. What’s the first step you will do? Ask the client for sending the instructions and necessary materials? Prepare the tools? Do some research to get ideas? Wrong, wrong, wrong. You are doing another mistake that can sink the whole deal faster than German U-boat and endanger your cashflow. The first step you have to do, after calming your mind, is to get the client to sign a contract or agreement with you.

You should never ever, under no circumstance, start any work or even think about that work without having client’s signature on contract. It doesn’t matter drunk you are, don’t do this bullshit. Among the things contract should cover, next to your butt, is what work specifically you have to do. In other words, client will have no chance to turn you into his slave. Next, circumstances under which you or the client can withdraw from contract (legally).

Another point that should be included is amount of deposit and under what circumstances you can keep the deposit, in case the client will decide to cancel the deal. There should also be a place describing additional materials and assets you have to deliver and if you will cover their cost from the project budget or not. Don’t be your client’s piggy bank. These are just a few things that will help you protect your business.

One more thing … Remember to always consult your legal documents with attorney. This mistake of relying on yourself or “friend” can be very expensive in the end. Let’s close this mistake with a quote by Mike Monteiro from his great talk “F*ck you, pay me”:

“Starting work without a contract is like putting on a condom after taking a home pregnancy test.”

4. You compete with others

Some people say that if there is no competition there is also no business. I, and Peter Thiel as well, think that this is a bullshit. Whenever you find yourself competing with someone else, you are doing a big mistake and probably killing your business. Your professor of Economics might tell you that competition is healthy. Well, healthy for whom? In competition, no one is the winner. It does not matter if you will do the sale or not. You will lose anyway.

Why? In competition, your price and offer is influenced by your competitor. This is the crucial mistake you are making–allowing someone else to dictate your prices. What’s more, this “price war” affects your customers. Don’t buy that shit about customer benefiting from competition. I don’t know who came up with this idea, but it is a hoax. In the real world, customer often suffers the most. For example, take a look at food industry or electronics.

With so many competing companies on the market, the prices are often so low and the need for marketing so high, there is no chance the manufacture can afford to use high quality materials. In case of electronics, you have to replace your device every couple years because it doesn’t work anymore. In case of food industry, most of the processed food you are putting into your body is full of shit and you need Ph.D from chemistry to read the label.

So, please show me where exactly are the benefits for the customer. By the way, if you haven’t read Peter Thiel’s book Zero to One where talks about competition yet, do it.

5. You are a people pleaser

“You should do what is in the deal and you should be paid for it.”

Doing your job is one thing, but working your ass off while working on something you were not supposed to is another. What’s more, this mistake is often the one not being paid. When you take on new project, you should always have a contract (mistake no.3) and do only work that is described in that document. Then, if client will want some additional work to get done, either extend the project (increase the price) or start new one with new agreement.

Avoid falling into the “just one more thing” cycle at all costs. Remember that you are in the business and this is your job. This is what you do for living, so don’t starve yourself. It doesn’t matter how much you like the client or if it is your mother, father, brother, sister, friend, family’s friend or you want to get laid (pretty cheap by the way), you should do what is in the deal and you should be paid for it.

6. You don’t manage your finances

“Freelancer or businessman without bookkeeping is either masochist, idiot or both.”

The last thing you will learn about today is to always manage your finances. Not taking care about your bookkeeping is that kind of mistake that can slowly close your business. It does not matter how boring you think accounting is or that you think you don’t need it yet. If you are in the business, you need to keep your finances intact from day one. Remember, freelancer or businessman without bookkeeping is either masochist, idiot or both.

I understand that if you are a freelancer or small business owner just starting out your budget is already tight. However, nobody says you need to hire an accountant, yet. For now, you can use the DIY approach and take care about the bookkeeping, just make sure to have a solid knowledge about this subject. In finances, one small mistake, like miscalculated taxes, can be very costly and can even result in legal issue. So, work hard on your bookkeeping and Economics skills and get an accountant as soon as possible.

Final words

In business and life, there are basically two ways to approach any mistake. You can either see it as a threat to be feared and avoided or you can see it as a chance to learn and grow. In other words, you can use every mistake as a building block to make your business (or life) bigger and stronger. My advice for you is to choose the later and build business that will allow you to dominate and live the life you want.

What are other mistakes freelancers or business owners should know about?

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