10 Mistakes Every Entrepreneur Should Avoid

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I like every entrepreneur, so I really hope they don't make these mistakes. But before entrepreneurs are ready to "save the world", it's best to look at the ten problems mentioned in this article.

1. Ignoring the Six-Month Rule

I once served as a director of a company. We spent a month sorting out the company's finances and found that the funds in the bank could sustain the company's operations for six months.

I immediately called the CEO of the company, and he responded, “Sure, we have six months to raise enough money before we run out of money, and we have a lot of contracts with potential customers.”

No you don't.

If you only have enough money in your pocket to support the company's operations for six months, then you are basically standing on the edge of a cliff. Even if you have a good company, you should always remember that you need to raise funds at least six months in advance!

You need to meet with venture capitalists, do road shows, due diligence, go through legal procedures, and finally get funding, which takes one month. Then it takes two months to find new customers, two months to develop products and other work, and finally three months to get revenue. And remember, all of this is the time taken under the best case scenario.

Sure enough, after a period of emergency mode, our company finally failed. We stopped all development work and found a bank to sell the company. When the company was sold, it was estimated that there was only enough money left to sustain operations for three hours. The CEO of this company went from having millions of dollars to bankruptcy, which probably happened in those three hours. Maybe he still doesn't know why he failed!

Question: Does the six-month rule also apply if you’re starting a business in the art world?

Answer: Yes!

Yesterday, someone told me: I am going to quit my job and turn to writing. I know that if I can focus on writing, then my work will be published.

This person is doomed to fail.

No one is waiting for your masterpiece. You need money in your bank account, and life and work can enrich your story. If you are in this situation------"I hate my current job and I really want to get into writing as soon as possible, so that I can become better!", maybe you can give yourself more motivation.

Don't be naive, have at least six months of living in your bank account. This is your first taste of freedom, don't go downhill.

2. Entrepreneurs are overconfident

People always have a cognitive bias and think that their excrement does not smell bad.

The author once founded a company. When he was halfway through product development, he suddenly found five competitors in the market.

I burst into tears. My business partner couldn't cheer me up, my ex-wife couldn't cheer me up, and my good friends who used to play Scrabble with me early in the morning couldn't cheer me up!

But my developers in Bangalore encouraged me and said, “Don’t worry, we will make you better.”

But I still asked myself every day, "Did I really become better today? Is this a feature I really want to use? Is this feature I built better than similar features on other websites?" Our final product was feature-loaded, but it was worth it. We sold the company a few months before the market peaked, and all our competitors went bankrupt.

You need to ask yourself every day, "Am I overconfident?" Otherwise your bias will surely say, "I own the best company in the world, there's no way we can go bankrupt."

Question: If you start a business in the art world, does overconfidence also exist?

Answer: Of course, we are always immersed in self-confidence.

Scott Adams, the famous author of the comic book series Dilbert, told me that when he was working for a loan company, his boss told him, "If someone tells you that he or she loves their job, don't lend them money."

Reason: Because passion is unreliable. It can blind you to your own shortcomings, causing your art, your products, your company, and even your friends to lose their way.

But it’s hard to actually do that, and even now, I sometimes get overconfident. I’m looking for new opportunities every day, and many of them make me very excited. Hi! Hi! Hi! Um…..!

You need to find someone who doesn't care about what you do, but can remind you all the time and tell you "you are a little too confident", or at least question you reasonably.

3. Beware of bad partners

Your business partner is your worst enemy.

Your business partner can be even worse than your competitor, because if you fail in the end, it may not be because of your competitor, but because of a bad business partner.

Being in a business partnership is like a marriage.

When I first started my business, I gave my partner 10% of the company. But a day later, he quit to write a TV show for MTV. We didn't blame him. Damn, it was so cool that I almost wanted to work for him.

But joking aside, we had to borrow money to get him to give up his stake in the company. This put a lot of pressure on everyone in the company, and of all the people who were blamed, I was the first to bear the brunt because I was the one who invited him to join the company.

I just had an investment that I sold at a low price. The main problem was: the partner didn't agree.

In fact, every company may encounter unreliable partners. Even if two people love each other, they will encounter various problems after marriage. So you can imagine, how can there be no friction between two people who do not love each other but have to work together every day in the hope of making a fortune?

There are two solutions here:

1. Everyone needs to have a clear role. Never set up a position like "co-CEO" in the company. Make a clear division of labor in advance. You do this, I do this.

2. If partners do not invest money in the company, their shares should be gradually diluted - meaning that over time, their shares will become smaller and smaller. Usually four years is a time period. If they resign or exit, they will only have a small portion of the shares, or even no shares at all.

4. Entrepreneurs hire bad employees

Sometimes you need to recruit people.

But please think twice before you act.

It is said that it is easy to invite gods but difficult to send them away.

If there are things you can do yourself, then it is best not to hire someone to do them. For example, if you need to book a flight or a hotel, there is no need to hire a secretary to do it, you can do it yourself.

As for recruiting sales staff, the founder of the company should be the company's first salesperson, and the first 10 million in revenue must be earned by the founder himself.

Don't hire five programmers. Studies show that one good programmer is much better than ten bad programmers.

Therefore, when hiring someone, you must make sure that he/she is good enough. It is better to pay more for an excellent programmer than to pay for five mediocre programmers.

If you want to make your business successful, if you want to be successful in your personal connections, in fact, no matter how successful you are in any field, the key lies in the kind of people around you.

If someone is not the best, don't recruit them. They may become great in the future, but don't recruit them when they are not great enough.

If you don’t have enough money in your bank account to keep your company afloat for six months, don’t hire.

5. Bad entrepreneurs worry about useless things

Should your business be a corporation or a small corporation?

Who cares.

Do you want to design a logo or publish a company mission statement?

Who cares.

I never felt like I had built a very successful company until I sold my second one. Did I have a logo or business cards? I don't even remember.

As a startup, all you really have to worry about is whether your product can actually help users and whether you have enough money in your bank account to keep the company running for six months.

Of course, you should constantly ask yourself whether you are too confident about the above two questions.

So what should you worry about? For example, what will cause you to have less money in your bank account than it takes to keep your company going for six months? And which unreliable employees should you fire?

These are the things you should worry about.

This will force you to build better relationships with your customers and ensure that your company has a steady cash flow. It will also force you to keep track of your company’s financial status and ensure that all product features are tested before the funds run out.

6. Bad entrepreneurs always take risks

The numbers prove that entrepreneurs are risk takers. That’s why 85% of entrepreneurs fail. They believe in the power of numbers, and they are told that their lives are like “bulldogs” that can survive any situation.

Well, making people happy is not an easy thing. It is easy to cook a good meal at home, but it is very difficult to open a restaurant on the street. It is easy to build a website to attract people to log in, but it is difficult to build a platform like Twitter that everyone can visit.

A very good friend of mine once had a very good entrepreneurial idea. Protein water, add 10 grams of protein, high-quality protein, to pure water. It would be very beneficial for people to drink such protein water after exercise.

Subsequently, the well-known organic supermarket Whole Foods began to sell this protein water on the shelves, and everything seemed to be going very smoothly.

However, he never tested whether people would actually buy the drink.

Put an ad at the top of your Facebook page that says, "Pure Protein Water, 10g Protein, 0 Calories." If someone clicks on it, send them to a page detailing the benefits of the drink and add them to your email marketing list.

If a lot of people click on your page, maybe your business will be good, so develop the product quickly.

If no one clicks, change careers.

My friend ended up going bankrupt.

Bankruptcy is no joke, nor is it a “learning experience”; it is extremely painful and can make one feel like they are dying.

What I am about to say is probably the most difficult thing to say in the world.

7. Bad entrepreneurs sleep with their employees

Believe it or not, I see this happen all the time.

The CEOs of companies are generally very personable, but when they start fooling around with their employees, it basically spells the death penalty for the company.

I would definitely not invest in a company if the CEO of the company was cheating on his wife (or her husband).

This is not to say that they are untrustworthy, this is not why I don’t invest in them, I have no intention of judging, nor do I want to get involved in other people’s lives.

But one thing I can confirm is that their private lives will definitely be a mess. As an investor, I will not invest money in someone who cannot concentrate on starting a business.

If you don't listen to my advice and invest in these people, then you'd better quit after you lose some money. I still stick to my opinion on this matter.

8. They Forgot Their Loyalties

The vast majority of entrepreneurs are not good people.

When you are an employee, you do whatever your boss asks you to do, and you can also help others. At the same time, when you leave the office, it means that your work for the day is completed.

But when you become an entrepreneur, you have to do:

Keeping your customers happy means waking up at 3 a.m. every morning to answer their emails and comment on their reviews.

l Ensure that employees are positive and creative. This does not mean that you have to say some morale-boosting words all the time, but it means that you need to help employees find something meaningful and understand them, help each employee find a balance between work and life, and ensure that they are happy physically and mentally while complying with discipline.

Keep your shareholders happy so they can write you an emergency check when you run out of money to keep the company afloat for six months.

The above items are the tasks you have to do every day. At the same time, as the CEO, Chief Sales Officer, Chief Marketing Officer, and project manager of all projects, you must have the ability to handle everything.

So what does "getting everything done" mean? It doesn't mean that you have enough money in your bank account to run your company for six months. That's too easy. It means that you have enough money in your bank account to run your company for at least two years, and you have a stable source of customers.

Then again, does this also apply to those who start businesses in the art and writing worlds?

Of course, if I write, then the “client” is the reader. I have to work with marketers, designers, researchers, Amazon, other writers, podcasters, talk shows, mentors, and any other marketing channel.

This means you need to communicate constantly. I collaborate during the day, so the afternoon is my "business time."

Create a loyalty list. This loyalty does not mean you will be fickle. The people on this list are the ones who can help you succeed. You must be loyal to them to achieve the ultimate success.

You need to be in touch with them every day, in some way or another. Not just now, this is a constant that never changes.

9. Bad entrepreneurs choose confrontation blindly

I often ask entrepreneurs who their competitors are and how they are doing, and you know what? The worst answer they give is, “My competitors suck.”

You know what the best answer is? "Oh, yeah, I just had breakfast with the CEO of my biggest competitor." You and I, we've been in the same business for a long time, and we're going to grow together.

Sometimes, your employees will become your competitors, they may even become your boss. When their company is acquired, they may come back to acquire your company, and sometimes, they will come back to be your employees again.

You need to learn from your competitors and get entrepreneurial inspiration from each other.

Animation company Pixar may have learned how to tell stories from Disney, and Disney learned how to use technology from Pixar. After they merged, Disney's stock price doubled.

PayPal, founded by Peter Thiel, and X.com, founded by Elon Musk, competed until they merged and were then acquired by their biggest competitor, Ebay.

Now? Look at how the “PayPal Mafia” has come to dominate Silicon Valley. (See chart.)

In the 1970s and 1980s, Francis Ford Coppola and Martin Scorsese were constantly "running" each other. One made "The Godfather" and the other made "Taxi Driver". One made "The Cotton Club" and the other made "The Color of Money". Did they hate each other? Of course not. Scorsese even wrote a theme song for Coppola's film "The Outsider", and the two of them also worked together with Woody Allen to shoot the film "New York Story".

Your competitor is actually like a mirror, so you must respect your opponent!

I've found that the entrepreneurs who fail or disappear completely never build a community around themselves or with their peers, let alone friendships.

10. Finally, we come to the tenth point. Entrepreneurs should not over-promise or over-fulfill.

The author wants to tell a personal story here, so I plan to think about it carefully.

I'm not the best entrepreneur, and I'm not the worst. But I've seen a lot. I've started 20 companies, and 17 of them failed. I've invested in over 30 companies myself. I've also run a venture capital firm. I've seen countless companies fail, and a lot of people cry.

I want people to succeed because then there’s this magical feeling, a sense of déjà vu where you’re like, “That’s it! This is actually going to work!”

It was such a great feeling at that moment! I could see how people felt and their lives changed.

I recently found a company I invested in that had zero revenue and in just eight months had gone to $10 million and was profitable. Now they can plan for the future.

They can plan new products, help others, and every day they receive thank you letters from those who have been helped.

In fact, many thank you letters are sent by their competitors because they have worked together, and some letters are sent by shareholders because they want to ask for help.

Once they get past the first peak, new problems arise, but I’ll explain this in detail in a later article.

Today, I’m going to be interviewing Susan Cain, the author of “Quiet,” and putting her on my podcast.

I felt a little awkward because, I didn't know if I should be quieter than she was? Should I look at my feet? Podcasting is part of my job now. I hope to be able to do live interviews every time, which will make me feel confident.

Artists, employees, and entrepreneurs should ask themselves every night, "Who helped me today?" The answer to this question will help you answer the above questions.

If you fail, don't commit suicide, you can always start over.