How To Stay Broke Forever

Real entrepreneurs vs. those are who are fooling everyone (but mostly themselves).

So, I’ve noticed a pattern (both in myself and other people). The large majority of people who are aspiring to be entrepreneurs are not actually doing what entrepreneurs need to do.

They are acting like entrepreneurs.

But they are not putting in the work to build a real business.

Instead of solving a real problem, they are living in a dreamland that doesn’t exist. Instead of building a real product, they are building a pretty website and business cards. Instead of trying to get real clients, they are establishing their LinkedIn profile while making sure that there is “CEO” written everywhere. Instead of providing value to people, they focus on building pointless social media accounts.

In short, they are doing lots of things that ‘look like’ the kind of things we imagine entrepreneurs to be doing. But they are really just pointless busy-work.

Other people who encounter them might actually believe that they are running this awesome business. In reality, however, this person is only losing money, not making it.

Because of their great acting skills, the most fitting name for people like that is “actor-preneur”.

Here are some typical behaviours of actor-preneurs:

  • Learning how to code
  • Building a website
  • “Researching” and comparing better technology solutions to problem X
  • Printing business cards
  • Hiring a designer to create … [insert anything here: logo, business card, flyer, website etc.]
  • Writing fantastic copy for your LinkedIn Profile
  • Giving yourself the title: “CEO” and making sure it’s written on any marketing material you get your hands on
  • Going to all sorts of ‘hot’ networking events
  • Hiring an accountant (despite having zero revenue)
  • Pitching hundreds of different ideas to different investors and sending out business proposals
  • Buying all different kinds of online courses for hundreds/thousands of dollars

While most of these activities are a part of what businesses do, in themselves they actually don’t form a business. An ‘incorporated entity’ with a pretty website isn’t a business.

If it is not making any money.

If it doesn’t have any customers.

If it doesn’t have a product to sell.

You see, all of these activities are just ‘consumption’ if they don’t contribute to the generation of cash-flow. One could say that you are an incorporated consumer of services and other stuff.

You’re giving plenty of business to other people. So yeah, in a way you’re doing some good in the world. But you yourself have no business at all. You’re just losing money.

Ask yourself:

  • For how long can you keep this up?
  • What’s the point of doing so? To impress other people? To be proud of yourself for being such a great “CEO”?
  • Is this really the most effective use of your time?

What is an entrepreneur?

An entrepreneur is a person who is building a business. And a business is an automated system that generates cash flow for its owner.

So, what is the task of an entrepreneur?

The task of an entrepreneur is to envision a working system that generates cash flow and turn it into reality. This means that the system needs to be grounded in reality.

That could mean things like:

  • Market realities (i.e. do customers really want this? Are they really willing to pay for this? Am I solving a real problem? Can I realistically compete with these existing competitors?)
  • Feasibility realities (i.e. Is this actually scalable? Can this make enough money to be a viable business? Does the infrastructure exist to turn this into reality?)
  • Personal realities (i.e. can I really build this considering my budget? Do I have the skills to execute on this business? Can I build this before going broke?)

You can come up with great ideas all you want, you can dream up all you want, if it is not possible to turn this idea into a business that generates a reliable (and sufficient) amount of profit, then it’s worthless.

After all, there is only one logical reason to be in business:

To set up a system that automatically generates cash-flow for you without you necessarily having to be involved in it very much. To free up your time so that you can use it in the most useful way possible.

If you then want to use that time in order to do more work on your business and scale it, then that’s fine.

A business is not a business unless it is:

  • Scaleable (i.e. has the potential to either serve a lot of customers or provide extremely deep value for a selected few)
  • Automated (i.e. doesn’t require substantial amounts of time from the owner’s side and can sustain itself in the owner’s absence)
  • Profitable (i.e. makes more money than it costs to maintain AND is financially worthwhile for the owner)

What to do to make the shift from actor-preneur to real entrepreneur?

Again, the real work of an entrepreneur is to envision a business and to take the necessary steps in order to turn that vision into reality. So, the first step is the vision itself.

Not some dream-like la la land kind of vision.

But one that can be scaled, automated and made profitable.

So, the first thing to do is to come up with a proper business model. Not some 150-page long theoretical business plan, but an actual working model (can be shared in a sentence or on a single piece of paper) that is grounded in reality.

You have a working business model only AFTER you’ve already tested your assumptions in the market and made your first profitable sale. Until then, you only have an idea.

Your first priorities in this stage should be:

  • Discovering a feasible target market
  • Discovering a real problem for which your target market is willing to pay if solved
  • Coming up with a product idea that can be automated, scaled and made profitable (the product doesn’t necessarily need to be actually created just yet — a landing page will suffice)
  • Testing your assumptions about the target market by making test offers to your customers
  • Make iterations of your product until people respond to it
  • Making your first profitable sale (that you know is realistically replicable and can be sold to enough people)

For most of these things you won’t need a business card, a website, a social media channel, coding skills, beautifully designed fliers or even landing pages, and especially no accountant.

Oh, and you probably don’t even need a corporate entity (just yet).

The second stage begins once you have validated your assumptions, come up with a product idea that people are actually willing to pay for and made your first few sales.

It is at this stage that you go all-in on the process.

But STILL, you might not need a website, business cards or whatever.

What you need to do is to invest your time into developing an awesome product, slowly building up your customer base and trying to make your existing customers happy.

Only build ‘stuff’ when you really need it.

Only build ‘stuff’ when your business makes you money to pay for that stuff.

Only build ‘stuff’ when it makes your life much easier.

For example, a functioning website and a great sales funnel are fantastic ways to automate part of your business processes. But do you urgently need them if you have zero- or even a handful of sales?

Probably not.

Using a free e-mail automation provider (like MailChimp) to build a landing page might suffice at this stage. It is probably enough for your customers to see what you are offering, make a decision about whether they want it or not, and make a purchase.

Conclusion:

If you want to remain an actor forever, then consider becoming an actual actor. Because then, you might actually have a shot at actually monetizing your skills.

Acting as if you were a CEO won’t do anything for you, though.

It only costs you money to maintain that image of yourself. It only costs you time. It only costs you energy. It only causes you to feel anxious, stressed and useless.

You won’t ever be able to ever make some serious money without a business model that is grounded in reality.

You won’t ever find a working business model without some proper research, testing, iteration and validation.

You won’t ever build a real client base just because you have a pretty website, business card or LinkedIn profile.

No.

What people want is solutions to their problems. Find a real problem that people are willing to pay for, solve it reliably and with profit, and you have a business.

Everything else is just fluff or nice to have.

Unless, of course, you are really dependent on these things right now in order to scale your business, automate it or make it profitable.

Article courtesy of TheStartup