The reading level for this article is Novice
The way we think is conditioned by our life experiences. If we’ve spent our life in a classroom, we tend to think as a student or teacher. If we’ve spent our work life as an employee, we tend to think as an employee.
Many new entrepreneurs talk-the-talk of the entrepreneur — but their thinking is still grounded in their life as an employee. This can be deadly to their goals and aspirations.
Most employees don’t think about where the money comes from to pay their weekly wages and benefits. Or how the cash must flow to meet next month’s payroll. Or what accounts are becoming payable, or when tax deposits, rent, and loan payments are due. Or where the money will come from to allow the company to deliver a large order just received from its largest customer…
It’s difficult for an employee to learn to think “outside the box” — whereas the entrepreneur thinks only outside the box, because the box is the venture, and the entrepreneur needs to keep the box firm, clean, full and together.
New entrepreneurs must learn to continually question their assumptions. The decisions that are most likely to come back and bite them — perhaps put them out of business — are typically NOT the consequence of bad judgement or faulty reasoning — but the consequence of applying perfectly sound judgement to wrong assumptions.
The following are a few all-too-common “wrong assumptions”.
Everyone will love my product/service as much as I do.
They will NOT! Period. They will not see ANY of the advantages and benefits you see — until you make them stop and recognize and think about them — each and every one. That’s called selling — and that requires a great deal of time and energy, and more than a little money — if only to keep food on the table during that time — which you can safely figure is going to be 10 times longer than your most conservative estimate.
A good product/service will sell itself. …or… If I build it, they will come and buy it.
Don’t let these assumptions trick you into spending most of your resources in “getting ready”. At least as much — and probably more — will be required after you are ready. Get that “reality check” early. Get out and talk to customers — not friends, neighbors, or even end users, but the people that you’re going to be selling to — distributors, retailers, purchasing agents, etc. — before you spend ANY resource — and then keep talking to them — through development, through test, through manufacture, through delivery — and after.
In this business, I must purchase (build, own, have rent, show, etc.) _______________.
Not if you can’t afford them! And affordability isn’t limited to just not having the money. If such acquisitions would seriously reduce your margin for errors, if they would decimate your life savings, or expose you to impossible debt, or put you into business with investors you neither know nor understand — you’d better stop and think hard about whether they really are “affordable”. If you decide they’re not affordable, that doesn’t mean you have to give up. It just means you have to look for “better ways” — ways to do what you want to do with what you CAN afford. And in the process, you just may discover that the new ways you find — albeit through necessity — result in better value — including quality, service and/or price — to your customers.
My competitors have ______________; therefore I must also.
Your customers are looking to buy the best VALUE — from either you or your competitors. If you simply copy your competitors, where’s your edge — where’s your added value? Going in, your competitors have all the advantages. They’re better established. They have more capital, more resources, more contacts, more knowledge… You need an edge. And you find that edge by looking for things they’re doing — preferably things that cost them considerable capital or operational resources — that you can “invent” ways of doing as well or better for less.
My customers expect me to have ___________________.
Your customers expect you to own a factory? To have an expensive office? To entertain them lavishly? Don’t believe it! Excellence in delivery — in quality, service, and price — will overcome these “handicaps” every time. Yes, you may have to sell a little harder without the expected trappings to buttress your selling, but it’s not impossible, nor even particularly difficult — and it beats either of the alternatives of doing nothing or going broke.
My business plan is so good, it just can’t fail.
Danger! Great business plans fail every day. Things never happen the way they’re planned. Sales will not grow as quickly as you project, costs will be significantly higher, times will be significantly longer… Think of your business plan as a compass — not as a road map. Let it point the way — but don’t let it blind you to the “unexpected”. Your success — or failure — will largely be determined by how well you see and handle the unexpecteds,
It’s important that I not make mistakes.
Wrong! It’s important that you not persist in mistakes — that you recognize your mistakes early and “correct” them (i.e., try a different approach) before they get out of hand and become costly mistakes. You’re going to make mistakes. In fact, you want to make mistakes. You learn from your mistakes — not from your successes. If you’re not making mistakes, you’re suffering “opportunity loss” — which can be just as detrimental to your business as any operational loss.
These are just a few examples of assumptions that can — and have — derailed otherwise viable businesses. Every decision we make is based on assumptions — most of which we’re not even aware of until we stop and think them through. The way to minimize bad business decisions is to minimize bad business assumptions. And the best way to minimize bad assumptions is to stay constantly aware of how susceptible we all are to them.