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In this episode, I will discuss the top 5 mistakes I made as an early entrepreneur.
#1 - Lack of Confidence in What I Was Doing
It has been decades since I began my first tiny business. It was way before the internet and the ease of access to do things yourself.
I opened a small craft and flower shop in the small town where I lived. I didn't have fresh flowers, only silk, which was a very big deal at that time.
I spent my time doing the craft items and floral arrangements I made. I kept my bookkeeping up to date in a large ledger book, though.
But, with marketing back then, you were limited primarily to local newspapers, radio advertising, and word of mouth.
I tried newspaper advertising. My business was in a very small town that had no newspaper, so I tried the larger town about 45 miles away, and another about 30 miles away.
The ads were display ads and were very expensive for someone with a small business like mine.
I tried one or two and stopped. Because I knew nothing about marketing, I quit. I was convinced that they weren't working and would not work.
I never even tried radio advertising. It was much more expensive, and I cringed at the thought of spending more money on something that would not work.
Most of my business came by word of mouth. The small storefront in that small town got noticed, and I had many curious people walk in.
I was good at flower arranging and had done a couple of weddings for family and had pictures.
I began to get quite a few weddings, and that was the majority of my business.
Even though I knew I was good at floral arranging and knew how to do fresh flowers, I never ventured out to get the necessary permits and coolers for fresh flowers.
It was a financially challenging time in our family, so I was trying to do everything on a budget. However, I believe that I just flat out lacked the confidence to spend that much money on the equipment.
I think somewhere inside of me I just lacked the confidence that I would succeed and go the distance.
And I didn't. The oil boom busted, and our small town nearly dried up and blew away. And I gave up too.
I was pouring all my money back into my expensive 'hobby' and not earning an income which our family needed.
So I closed the doors right before Valentine's day. People wanted to know where I was because they wanted to buy flowers from me.
I didn't understand the ebb and flow of business. I closed in January and would have flourished in February.
I lacked confidence in what I was doing. I didn't know enough and not knowing crippled me.
#2 - Working as a Sole Proprietorship
If you are a Sole Proprietorship, you are only one step above a hobby.
You can deduct your supplies and some expenses, but the IRS gives you just a few years to show a profit or they deem you a hobby and you can no longer claim the deductions.
In my opinion, being a sole proprietor is a sure sign of a lack of confidence. Give it a try for a few years and if it doesn't work out, then quit.
One foot in and one foot out.
There is something to be said about the commitment of forming an LLC. Back when I had the flower shop, it was much more complicated.
You had to have an attorney form it for you. Now you can easily do it yourself.
The best, in my opinion, entity to form is an LLC. You can have the maximum tax benefits, especially if you request to file as an S corp.
This lets your business work as a 'pass through' entity, funneling money to you. You are not taxed twice, once as a business and then as an owner.
I am not a CPA, so I recommend you talk with your CPA about those benefits.
But you can create an LLC by yourself and also file the 2553 form yourself. I did not have this luxury several decades ago.
Honestly, I probably wouldn't have done it anyway if I could have. That first business was honestly a glorified hobby.
I knew nothing about running a business and it showed.
Through the years, I had many more businesses, but never did an LLC until 2008 when I formed Dreams Do Come True, LLC for my real estate business as an agent.
It was one of the smartest business things I've ever done. And yes, I had some nerves knowing there was a commitment to what I was doing.
But, I have also learned that now an LLC is as easy to dissolve as it is to create. The fear of commitment doesn't need to be there any longer.
#3 - Not Persisting When Things Got Tough
When you have a lack of confidence in what you were doing, you automatically have a lack of commitment.
Going into a business timidly is the death knell of any endeavor.
You have to believe enough in what you are doing in order to be committed so that when the tough times come, and they will, you can ride out the storm.
When the oil boom busted and I felt the shaking of the financial ground around me. I honestly didn't know what to do.
I hadn't learned about business and I usually put all my money back into the craft and floral supplies I needed. That was the fun part for me.
I had completely stopped advertising. I didn't even foster word of mouth like I did in the beginning.
I had made a few mistakes along the way and was devastated by them emotionally. Brutal thoughts kept pounding at me. I had decided I was a failure long before I closed the doors.
I have to say that during that time the oil field bust devastated our household because my husband had worked for many years there, and that was our income.
Also, during that time, my father was diagnosed with cancer and eventually passed away.
Being truthful with myself, though. Those were not the reasons my business failed.
If I had known then what I know now, I am confident that even back then without social media, I could have planned and weathered the storms.
I would understand the ebb and flow of business and plan for it.
The business had no debt. I only paid about $30 a month for rent. Yes, that is how long ago it was, but it was also a very small old building.
So, without a strong financial strain, it should have been easy for me to have weathered the storm.
But, eventually we needed for me to actually make enough profit to contribute to our household. So I closed the shop and got a job.
#4 - Not Learning What I Needed to Know
As is true with most people, I didn't know what I didn't know.
How do you know unless you are taught? There were no online classes back then. If you wanted to learn about business, you could go to college and get a business degree.
But, I think there are a lot of minor details of the day to day actual running of a business that are left out.
Vocational school might have had something, but the business courses I took at vocational school taught only bookkeeping, typing, and shorthand. Nothing about starting and running your own business.
So, I have to give myself some slack here. I just didn't know that I didn't know as so many still today.
If I had been smart, and not so timid, I would have gone to business owners and asked their advice and opinion well before beginning.
Honestly, I was afraid to tell anyone I was starting a business. That is just how much I lacked confidence.
Today, there is no excuse to learn. There are so many online courses that give you the knowledge you need as well as help you understand what you don't know.
There is YouTube, there are books in abundance. Knowledge has increased and is still increasing. Let me encourage you to always be learning something!
#5 - Not Spending the Necessary Amount of Time on the Business and Marketing Side of Things.
I had taken bookkeeping, but I didn't understand that I needed to focus far less time on the items I made and more on the business and marketing side of thing.
This includes not just time but money as well. Because I was so timid from a lack of confidence, I stopped the ads that didn't appear to be working.
The truth was, any type of marketing must be done repeatedly, over and over again, to gain recognition.
I once opened a toning and tanning salon in another small town from where I had had the flower shop. I took out a huge one-page ad in the local newspaper.
The one-page ad was for a huge open house I was having. There was food, prizes, gifts, the works.
I was ready and excited on that day and almost no one came. I was crushed.
My mom was a go getter. She finally took some flyers I had printed and went up and down the main street and went into every small business.
When she came back, she said that no one had seen or noticed the huge 1 page ad. I wondered how they could have missed it.
But, because she had taken those flyers to the dozen or so businesses, by the end of close which was around 8 that evening, we had a ton of people come through.
I felt rejected, and that my business was unwanted. But the truth was just that no one knew!
This scenario happens daily on social media. I hear a business owner say, "I posted 3 times this week."
As hard as it is to believe, remember that social media are, for the most part, 'scrolling' platforms.
If the audience looks away and your post scrolls by, they will miss it. We never see every post posted.
With business accounts, it is even more difficult to work with the algorithms in such a way that your posts are not only seen, but seen by enough people to make a difference.
I should have been running smaller enticing ads, letting people know what was coming and getting them ready and excited. Then, when the big 'ta-da' ad came out, they would have noticed it.
The same thing is true today with social media.
While having that business, I took what I had learned before and applied it to that business.
I budgeted my money much better. I was more confident when I saw I had repeat customers that enjoyed coming. I fell in love with everyone and it was a wonderful experience.
I spent much more time on marketing. I planned for it, budgeted for it, and it worked.
I planned for my business expenses and weathered lean times.
I did finally close the business, sold it actually, and went on to the next chapter of my life.
Now, I spend at least 1/4 of my time working on marketing and business. Thankfully, with programs such as QuickBooks, my bookkeeping is easy.
And even though my marketing budget is quite small because there are so many free options right now, I spend my time keeping it going and consistent.
There are so many ways to advertise and do it well, even beyond social media. I try to do it all, and have devised a very organized system that works.
My point is that through the decades, I have learned that just doing what you love as a business requires you to spend the necessary time and money on business and marketing.
I hope these top 5 mistakes will help you evaluate what and how you are doing things. Hopefully, you will be better able to succeed in the beginning than I was.
I believe that my course, How to Go From Hobby to Business for Next to Nothing, is valuable.
Through the years I've learned by trial and error and education. I've had to start businesses on a budget and keep them going.
My course doesn't just help you get started on solid footing, but I go all the way through to help you get your marketing started.
Check out my free eBook, How to Go From Hobby to Business for Next to Nothing to get started.
It is at GoFromHobbyToBusiness.com
