Home > Start Ups > 4 Major Pitfalls To Be Wary Of When You Are Self-Employed

4 Major Pitfalls To Be Wary Of When You Are Self-Employed

Think you have the next incredible idea that will change the world? Maybe it will revolutionize your industry? I probably receive at least half a dozen emails each year from people who are convinced they have the “next big thing.” It’s quite possible that they do, but there’s also every chance that they don’t.

The problem isn’t in their idea either. It’s quite possible it’s the best thing since sliced bread. The real issue that these folks are so convinced of their genius that they actually cannot see the forest for the trees. They are blinded by their own confidence.

This blinded passion and unbridled belief is an issue many entrepreneurs have in common. Pundits like me love to wax rhapsodic about how great entrepreneurship is. We extol the virtues of entrepreneurs; proclaim their greatness, blah, blah, blah. And we are not the only ones. If you have listened to the presidential campaign much, you would think that entrepreneurs are the solution to all of society’s ills.

While an enterprising spirit may be part of the foundation of our country, left unchecked it’s certainly not the end-all solution some make it out to be. Yes, I love entrepreneurs and entrepreneurship, most people reading this website do. However, what about the pitfalls or the downsides of being a natural born entrepreneur? They are not insignificant, nor are they few.

Just because you believe an idea to be great, that doesn’t make it a great business concept. If you, or someone you know, are in the early stages of conception, take some time and really consider the following pitfalls to ensure that your passion for your idea doesn’t impede your basic common sense.

Pitfall #1: Falling under the ether
My brother sells real estate and this is the phrase he uses when a client falls in love with a property. Real estate professionals love when clients fall under the ether because they tend to stop thinking rationally and instead make decisions based on the emotion of really wanting that property. That can happen similarly when you test-drive that new car, right? Well, entrepreneurs can have a tendency to fall under their own ether.

This is also known as ‘Believing your own B.S.’

To be an entrepreneur – to chuck the job and security, strike out on your own and try and create something from scratch – requires uber-self-confidence. But there is a fine line between being very self-confident and being cocky.

One works and the other gets you in trouble.

Pitfall #2: Overselling
Another aspect of entrepreneurship is that you must enroll people in your idea, whether they are investors, customers, loan officers, or whoever. Because of that, it is easy for some entrepreneurs to overstate the case for their business; they may over-inflate the numbers on their business plan for instance, or talk about a big contract before it is ever signed.

The motto to remember is: Under-promise and over-deliver – not the other way around.

Pitfall #3: Risk taking
My dad loved to say that an entrepreneur is someone who takes a risk with money to make money. So yes, risk is part of the game. It is the juice. The problem is, because entrepreneurs have that gambler’s mentality, they can, at times, underestimate the risk involved. Or maybe they know the risk, but like it anyway. That’s probably even worse.

Think about Richard Branson – as great an entrepreneur as there is out there. Until recent years, he was equally famous for his derring-do: hot air ballooning over the ocean for instance. He stopped such high-risk adventures when he saw that he was putting his life at risk, but the point is well taken:

Beware excessive risk-taking, entrepreneurs.

Pitfall #4: Not taking no for an answer
Yes, my entrepreneurial friend, you are probably a schmoozer extraordinaire, and that’s good. You have to be confident. You have to be creative. But you also have to be a critical thinker who picks up on cues. You need to know when an idea is a bad one, or a sale isn’t going to happen.

Sometimes, no really does mean no.
 

Enjoyed today’s article? We’d love to hear from you! Share your thoughts on the topic in the comments section below.

Be Sociable, Share!

About Steve Strauss

Senior small business columnist at USA TODAY and author of 15 books, including The Small Business Bible, Steve is your host here at TheSelfEmployed.com.


You Might Also Like: