(Flickr photo via JMRosenfeld)

Growing up I was surrounded by entrepreneurs. All of my uncles on my mom’s side of the family ran successful businesses, and I learned that working for yourself was a great way to improve your lifestyle.

No surprise then that I now own a few businesses of my own. But I made lots of mistakes getting started, mistakes I could’ve avoided if I’d known a few things.

Here are seventeen mistakes that you should avoid:

Sell Something Legal

Selling something legal may sound obvious to anyone in business, but trust me, when it comes to wanting to make money you will likely consider a lot of ideas… some legal, some illegal and some in between.

While still in high school I sold CDs and black boxes. I was only making a few dollars off of each CD, so I turned to the black boxes, which made me a little more money. Unfortunately at that time I wasn’t clear on exactly what was legal or not so I decided to get out of it.

You don’t want to make a lot of money and then lose it all because you are on the wrong side of the law.

Sell Something People Can Afford

Neil Patel

I once took a job selling high-end vacuums. I enjoyed the challenge of trying to convince people that they needed the vacuums, and it helped that I would shampoo and clean their carpets during my sales presentation for free.

But these were $1,600 vacuums and most people couldn’t afford them. I did happen to sell one to an Indian couple, who are known to be frugal, but they returned it a week later!

Find out what people can pay for a product before you design it, and while you won’t get rich quick this way you’ll definitely find it easier to sell your product.

You Must Market Your Product to Succeed

I enjoyed working and finding new jobs because each time I was making a little bit more money. I liked making more money because I wanted to change my lifestyle and eventually help other people do the same.

But I realized it was going to take me forever unless I figured out how to create a $100 million dollar company.

Monster.com’s business model and the amount of money they made fascinated me, so I decided to build a competing model. I called it Advice Monkey.

I spent five grand building the product and watched Advice Monkey go nowhere. I needed to market it or it was going to sink.

I ended up hiring a total of three companies to help me market this business, but all three wasted my money without any kind of return! That’s why I decided to learn Internet marketing.

In time I grew the site to be pretty popular and even created some buzz in the media, but I ended up having another problem: it couldn’t do credit card transactions.

If people don’t know about your great product, then they can’t buy your great product. It’s that simple.

Make Payments Easy

The lesson I learned from Advice Monkey was that if you wanted to make money you needed to make it simple for people to pay you.

Of course you have to provide a valuable product, something people want or need, but if you don’t make it easy for them to pay you, you’re business will suffer and eventually fail.

I’ve learned that whether you are providing a service like consulting or a product like software, you should provide the simplest, most common and fastest way for people to pay.

If you make it hard then you are simply giving people an excuse to delay paying you or even giving them an excuse to go to your competitor who does make it easy. Don’t do that because it could be a million dollar mistake.

Solve Problems Customers Are Facing

My really first successful company was Crazy Egg. It was successful because my business partner and I realized that the best way to build a business was to find some problem people or companies have and try to solve that problem.

Besides, it makes it really easy to close sales when you can show a potential client what their problem is and how your product solves that problem. The best businesses are the ones that solve problems.

Do It in a Simple Way

Have you ever noticed how simple the best products are? You don’t need a degree in rocket science to understand how to use a bicycle, drill or personal computer, nor do you need one to understand how they can help you.

I’ve seen lots of products and ideas fail because they were too hard to understand. They might’ve solved your problem but it cost too much to do it or they took too many steps to do it.

Remember that people want their problems solved in the easiest way possible, so keep it simple.

Be Patient

My business partner and I thought we had struck it rich when we started Crazy Egg. Here was a product that was simple and solved people’s problem. The money should roll in, right?

Not exactly.

We watched the popularity and interest in the company grow, and knew it was just a matter of time before somebody offered us $10 million dollars for it.

It never happened and we eventually had to bootstrap it to keep it going. We didn’t understand why this was happening, but we loved Crazy Egg and so kept with it.

I’m glad we did because about three years after we started Crazy Egg it became profitable. The lesson I learned is you must be patient when it comes to software companies because it takes a few years for them to take off.

Charge More

I think the tendency when it comes to running a business is to keep your fees low so you attract a wider audience. The only problem with that is you will also attract more people who will complain.

Charging premium prices, especially when you are consulting, does a few things for you:

• You appear as someone who knows what he is talking about.

• You will hear fewer complaints. People and companies who have the money to afford you won’t usually make snarky comments about how much they are charging you.

• You can work harder for one person rather than work mediocre for a lot more people.

• Your reputation will grow as your provide excellent customer service.

Know what your competitors are charging so you can price yourself right. You may be surprised at what people are willing to pay.

Go After the Big Guys

One thing I like to tell people is to offer to do the work for a small paying client for free if they can make an introduction for you to a large paying company.

Does doing work for free scare you? Think about it this way, if that small company is paying you $5,000 a month, but that large company can pay you $100,000, you will make $95,000 more.

That’s a huge increase in income, so think big and go after the big guys!

Conserve Cash

I understand I am young, but I have experienced a lot of bad times in the business world, and the number one thing that I learned is cash is king.

If you don’t have cash coming in, you will not survive. And if cash is coming in, especially a lot of it, you need to learn how to save, both for the business and for yourself.

Because the economy is like a rollercoaster you could enjoy a few years of making a lot of money. But trust me when I say there will come a time when you will not make very much money.

Resist the urge to pay yourself handsomely and buy expensive office furniture. Your business will weather any financial storm and your employees will thank you!

Never Stop Closing

One of the most important things to remember when you are building a business is that you must always be looking for clients and ways to get them to work with you.

Never get comfortable because you have a handful of clients locked down or you have momentum with your software product.

It’s so important to constantly network, look for business and sell people on working with you. And if you get in a situation where you can’t handle the extra workload, hire temporary help to handle it until you can justify bringing in more people.

Focus

Boy, was I all over the place during the time I was learning all of these lessons about business. And I think that hurt me because I was spreading myself too thin.

One of the reasons Steve Jobs and Apple were so successful was they focused. They didn’t have a bunch of products, even though you might think they did. They had only a handful.

That allowed them to do several things very well:

• They could listen closely to what their customers were saying.

• They could create the products to meet the needs and desires of those customers.

• They could make those products the best in their category.

If you are not focused you will not be able to do a good job on your business. Find the things in your business that make you the most money and focus on them. Eliminate everything else!

Always Find Your Passion

When I was doing Internet marketing for companies I was making a lot of money. I was very grateful for that and I was very grateful to the people who helped me build that company.

But it wasn’t very much fun. It felt like a job, and I knew that if I was going to be successful long-term I needed to find what I really enjoyed doing.

Why is this important?

I work 70 hours a week on my businesses, and I’m sure most entrepreneurs work that hard. Some may put in more hours, some may put in a few less.

But I don’t really think of it as work because I enjoy what I do. I really have a passion for it. If you’re not passionate about what you do, stop right now and think about what you really want to do.

Learn, Learn and Learn Some More

Even when I was in high school and working on my own business, I was taking classes at the community college. My uncles had taught me that entrepreneurs never stopped learning.

I loved learning so I kept doing it.

Learning is hard work and I can’t say that I’ve always enjoyed working so hard to learn. And sometimes I even felt like I knew everything about a certain business or topic, so didn’t need to learn anything.

How wrong I was!

I encourage you to keep the mindset that you can learn from anybody no matter who they are, and that in the end you don’t know everything. If you do this I’m certain you will grow wise in the ways of business.

Good Help Costs Money

When I was starting out I didn’t pay much attention to who I hired. Sometimes I’d hire people I knew or I’d hire someone based upon a recommendation from a friend.

I learned that was not the right approach to hiring people. Some times people are just looking for a job and need a paycheck, and soon they take you for granted they don’t work as hard as when they first joined.

Spend time finding good help and don’t be afraid to pay them good money. Think of it as an investment, where you need to figure out your ROI on that person. And then measure their success.

Do this and I’m pretty sure they’ll turn out to be a great benefit to you.

Emotions Rule

It would’ve been really great to know that people buy things based upon emotion when starting out. What I mean by that is the purpose most people buy a product is because of a feeling they have, like fear or pride.

For example, people buy car insurance because they are afraid of losing all their money if they get in a wreck. Parents send their children to Ivy League schools because they want to brag to their friends.

What you have to do is figure out what emotions will resonate with your customers when it comes to your product.

And don’t let people who say they don’t make emotional decisions about money fool you. Even the most analytical accountants or engineers make decisions with emotions.

Listen to Your Friends and Family

Starting a business can suck up all of your time and energy. It becomes your life and that will not end well if you don’t listen to advice.

I have the best family and friends not because they are fun to be around, but because they also care about me and want to help me when I’m making a mistake.

Unfortunately because I was so busy I would ignore them, only to have my problems come back around and bite me. If I would’ve listened to them in the first place I would’ve never had that problem to begin with!

If you don’t like what they have to say, that’s fine. But at least give them the benefit of the doubt and hear them out.

Conclusion

I hope that by sharing these experiences with you that you’ll be able to avoid some of the mistakes that I made. I can’t promise you that you won’t make some of your own mistakes, but if you do, I encourage you to learn from them.

What lessons do you wish you would’ve learned before you started your first company?

Neil Patel is the co-founder of KISSmetrics, an analytics provider that helps companies make better business decisions.

More from Neil Patel on GeekWire: Seven signs that you might just be an entrepreneur Eleven things every entrepreneur should know about innovation

Comments

  • http://twitter.com/golikebright LikeBright

    Fantastic advice from someone who has built successful companies. And honored he is a mentor for LikeBright

  • http://twitter.com/golikebright LikeBright

    Fantastic advice from someone who has built successful companies. And honored he is a mentor for LikeBright

  • http://twitter.com/backngroovemom rachel h blaufeld

    Thanks – these are awesome tips! I especially like the one about solving a problem! So many time, I see others desperately trying to convince me that what they are having really solves a problem…either it does or does not! Rachel 

  • Mo

    Thanks Neil.  Great advice.  TwoChop.com is my first startup.  It is kinda amazing that I literally made 3 of the same mistakes that you listed out in my first 2 months.  Part of me thinks that you could be told not to make those mistakes, but entrepreneurs will continue to make them and must learn them by themselves.  

  • http://twitter.com/EnvyInk Charles Ivy

    Good read, thank you for sharing Neil! You make some really good points that I never thought of. Hopefully I’ll be successful one day and I can share my advice with others also.

  • Shelterdoggies

    Nice piece. I enjoyed the part about ‘make it easy’. That is ever so important. I learned that one the hard way!
    My new start-up is trying to conserve cash and make it easy! (http://www.shelterdoggies.com)
    Not always easy to do in the same breath.

    Doug

  • http://universityofmotivation.com Teddy

    This is such a good read for anyone in business.  Sort of like a starting your own business 101 class.  These are the things you must do to succeed.  If you do not do the following you probably will not succeed over time.  Thanks for this return to basics article

  • http://blog.chillantro.com/appsperience/ Aleksandra

    Great  article.

    I agree, some mistakes sound too obvious to be even mentioned. And I guess that’s why many people make them. Because when it’s something too obvious we kind of start ignoring it and at one point it gets out of your focus and then you wished you were not so ignorant towards what it used to look “too obvious”. 

    But there is another thing: You as well as other entrepreneurs are putting a lot of efforts to help other entrepreneurs to avoid some of the most common mistakes startups  make and again many fresh entrepreneurs are making the same…And very often the world will hear about those same entrepreneurs who somehow found their way to make it big. So I am just wondering: Is it that sometimes you need to do it wrong in order to learn out of it and get to the top or is it that most of us are really ignorant towards “obvious” mistakes? 

    In any case thanks for posting this great piece. I found it very useful and practical. In fact I am a big fan of your articles and as always you make a great point delivering a straightforward message

  • http://blog.chillantro.com/appsperience/ Aleksandra

    Great  article.

    I agree, some mistakes sound too obvious to be even mentioned. And I guess that’s why many people make them. Because when it’s something too obvious we kind of start ignoring it and at one point it gets out of your focus and then you wished you were not so ignorant towards what it used to look “too obvious”. 

    But there is another thing: You as well as other entrepreneurs are putting a lot of efforts to help other entrepreneurs to avoid some of the most common mistakes startups  make and again many fresh entrepreneurs are making the same…And very often the world will hear about those same entrepreneurs who somehow found their way to make it big. So I am just wondering: Is it that sometimes you need to do it wrong in order to learn out of it and get to the top or is it that most of us are really ignorant towards “obvious” mistakes? 

    In any case thanks for posting this great piece. I found it very useful and practical. In fact I am a big fan of your articles and as always you make a great point delivering a straightforward message

  • http://mickisievwright.wordpress.com Micki Sievwright

    Thank you, I took notes! I’m growing my PR/writing/editing/social media consulting business and finding myself make these mistakes! I appreciate the easy statement as well and hope to quit “reinventing the wheel” over and over again, and streamline my processes. I also would add to the networking bit that finding a mentor, and in turn being a mentor, will pay dividends! Even when it’s sharing your learned advice like Neil here!

  • http://mickisievwright.wordpress.com Micki Sievwright

    Thank you, I took notes! I’m growing my PR/writing/editing/social media consulting business and finding myself make these mistakes! I appreciate the easy statement as well and hope to quit “reinventing the wheel” over and over again, and streamline my processes. I also would add to the networking bit that finding a mentor, and in turn being a mentor, will pay dividends! Even when it’s sharing your learned advice like Neil here!

  • http://twitter.com/MichealKennedy Mike Kennedy

    Wow, awesome advice. Thanks!

  • http://twitter.com/Wellness_Guiden Wellness Guiden

    Amazing advice

  • http://twitter.com/onlinemediadltd Online Media Direct

    great article I especially like the section going after the big boys. It isnt something I have ever considered and I will probably give it a go :-)

  • http://latevil.la LateVilla

    Really liked this article as it gives you all the things you kinda already know you should be doing but illustrates each one with a personal explanation. 

  • http://www.GenericDomainMarket.com Sameh

    I really enjoyed your post on SEOmoz last week and now they sent me back to this fascinating post.

  • Anonymous

    Nice list Neil, Thanks for Sharing.  My favourite is Focus – and by extension – Focus on what you love.  Forget the money, that will come by itself.  Just find out what you love to do, and act on it. (Finding out is the hard part)

  • Anonymous

    Good advice for a guy who has done it.   

  • http://www.woolovers.us Mikey

    Hmm. I’m on the 3rd read through of this and am now taking notes! Great stuff. Thank you.

  • http://www.slapdigital.fr SLAP digital

    Really insightful. Have duly noted a few I should follow more… Thanks

  • Dave

    The “Sell Something People Can Afford” blurb hit me funny, because I once read an amazing online discussion with someone who was very successful at selling high-end vacuums door-to-door. Hearing how he honestly and skillfully sold vacuums to people middle and lower income households (that would definitely have been grouped by most people in the “can’t afford this” category) was very enlightening.

  • http://www.godofstyle.com Vince Lin

    nice list

  • http://www.mentalpad.com Chris Li

    Great article!  I totally understand when you mention about focus and good help.  I’m one of those developer/designer/marketer/etc type which tend to spread my skills too thin.  When I started my own web development company, I had the do everything mindset and didn’t want to hire other’s as that would cut into my profits.  Long story short, growing the business was extremely difficult, and I learned a hard lesson.  My financial accounts were totally out of whack and I eventually had to find an accountant to get things sorted, which costed me a lot.  

    Throughout the time with running the company, there was one point where I partnered with somebody that had complementary skills as me.  She was a designer and I focused on development.  During that time, I did my best work, and was happiest in my accomplishments.  

    Reflecting back, finding good help and staying focused helped me mentally and helped me stay positive, allowed me to focus on the things I liked to do, and gave me room to expand my skills.  When your enjoying what you do, and your given room to show your passion, employees, partners and clients see it.

  • Dino Gomez

     Awesome advice. “Emotions Rule” and are certainly crucial for selling. This is something we we will be working to convey on our website, http://www.dinomiteseo.com/ (The emotion that our service will bring to our clients. Currently we don’t do the best job of this.)

    “Going after the big guys” and remembering to always learn from anybody and everybody are two tips I am taking home with me.

    Exceptional blog post and thank you very much for sharing!

  • http://twitter.com/parthabha Partha Bhattacharya

    Neil, very good advice, thanks! There is always so much to learn which I believe is the gist of this article..

  • http://www.mundoweekend.com Mundoweekend

    Good article, thank you!

  • http://www.banken-auskunft.de Dimi Bankenvergleich

    Thanks for sharing! I am starting with http://www.banken-auskunft.de this month into new cycle of my life. Its very exciting, but it feels soooo right!!! 

  • Tatva88

    Thanks for posting such nice article. It will help anyone who wish to start his own business. 

  • http://digitalfireflymarketing.com John

    The biggest thing I learned in all my years doing start ups is watch your money. It’s ok to spend a little bit to try something out, but if there was no ROI then you should either understand why there wasn’t before making the same decision or don’t make the same mistake twice.

  • http://www.PocketSquareZ.com NeckTyze

    Very thought provoking.  Thanks

  • Dan Tucker

    What a great article bringing great clarity and motivation. Thank you!

  • Web design London

    Awesome advice. “Emotions Rule” and are certainly crucial for selling. This is something we we will be working to convey on our website.

  • Web design London

    Awesome advice. “Emotions Rule” and are certainly crucial for selling. This is something we we will be working to convey on our website.

  • Ksaffexpert

    Good points! Thanks

  • http://twitter.com/seocadiz Seo Cádiz

    All your advices are really great. I learned a lot with the emotions rules. Its like i wake up for that..

  • http://twitter.com/sifu33 Paul Ricketts

    i really liked these tips, and they are built on experience, great job

  • Anonymous

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  • Anonymous

    Read Michael Gerber’s “The E Myth” about entrepreneurship. It’s the bible for startups. http://www.amazon.com/Myth-Revisited-Small-Businesses-About/dp/0887307280

  • Detkhobut

    A long time ago I was a vaccum cleaner salesman.I like what you said about the price.Good tips.

  • http://twitter.com/mycolleges MyCollegesandCareers

    This is top notch advice! I’m on my third business now, one that really resonates with my values and passions and it has made a huge difference to my profitability and success. -Sarah

  • Chris Bellacose

    Passion is paramount.  You need to enjoy what you do.

  • http://www.vaporizerreviewsource.com vaporizer reviews

    not a bad guide.  Great to print out and read when things get tough.

  • http://www.vaporizerreviewsource.com/wispr-vaporizer-review wispr vaporizer

    listening to friends and family are so critical.  dont ever forget that 

  • http://nonfatadvertising.com/ Duane Christensen

    Thanks for the tips, Neil. Haven’t started my company yet. Still just thinking about it. I’ve been told by people that think I’m talented…to just do it. That’s tough. I’m making good money in Sales right now. It’s hard to think about “jumping” when I’ve got a family and a mortgage. Ya know? Anyway, your tips are great. Thank you!

  • http://nonfatadvertising.com/ Duane Christensen

    Thanks for the tips, Neil. Haven’t started my company yet. Still just thinking about it. I’ve been told by people that think I’m talented…to just do it. That’s tough. I’m making good money in Sales right now. It’s hard to think about “jumping” when I’ve got a family and a mortgage. Ya know? Anyway, your tips are great. Thank you!

  • Paul Uhlir

    Basic stuff but 100% right on. Great post.

  • Anonymous

    Thank you Neil. It’s never too soon, nor too late to follow you passion! Great support for budding entrepreneurs. Cheers! Shann

  • Sameer

     Niel that was really awesome, perhaps it  was more like a self introspection for me entire summary of what i have learned in past 01 Year of My Start Up… Thank you so much

  • http://thisbluecouch.com Chad Tabary

    Bookmarked to come back later.  Good stuff!

  • http://thisbluecouch.com Chad Tabary

    Bookmarked to come back later.  Good stuff!

  • http://thisbluecouch.com Chad Tabary

    Bookmarked to come back later.  Good stuff!

  • http://seohowto.ca Dan

    Thanks, Neil, this is excellent business advice. I would add that you should find your first customer as soon as possible. Don’t wait for your product to be finished or your service to be ready. Get out there and talk to prospective customers. Learn what the world looks like from their perspective and how you can help them the best. A common mistake, especially in web tech, is for people to wait until development is done before telling anyone about it. This “stealth” phase will make you lose the opportunity to test your assumptions with real customers and find out if you have the product-market fit that you need to succeed before sinking all your time & money into building your product.

  • http://www.apartmentninjas.com Rickdiculous

    Neil, these are the exact 17 things I wish I knew when launching my apartments search business two years ago. Traffic and general online presence/buzz has sky-rocketed in the last year, but were not seeing what we should be seeing in terms of the bottom line. My competitors (until they read this comment) think I’m making a ton of money and coming up way too fast…little do they know I can barely pay myself sometimes.

  • http://businesstips.ph Vic @ Business Tips Blog

    Great tips and advice from a successful entrepreneur who really have gotten from trials to success. I read your blog and now I’m glad to read another great article from you here.

    • Pep Cearnal

      Agreed. Low prices attract people who do not understand or appreciate quality. 

  • John Lynch

    very worthwhile article.

  • http://www.medicalcodingtraininghq.com Medical Coding Training

    Really great post for new business starters. This can really change our thinking. 

  • http://pilotincanada.com Private pilot license

    I like the point about finding your passion. Work that doesn’t feel like work is critical to your success to go above and beyond. 

  • http://pilotincanada.com Private pilot license

    I like the point about finding your passion. Work that doesn’t feel like work is critical to your success to go above and beyond. 

  • Anonymous

    Nice summary of a lot of hard work and experience.  Working on my third start-up, which is going somewhat better than the first two.  I would emphasize that it is imperative that you learn how to do your own marketing.  I have wasted more money by trusting someone from the advertising/marketing world who is sure their product will help me sell mine but doesn’t really have any skin in the game after they cash my check.  Most recently, I bought some bus stop print advertising for my website.  I had never used this channel before, so I wanted to just do a simple ROI test for traffic to compare it to online PPC.  The salesguy tried to talk me into spending 5X as much (offered a deal on multiple placements if I just paid about $1K for printing) even though I learned later that he knew the ROI would be extremely low and he just failed to mention that during our discussion of the campaign.  I can safely say that almost every single SEO/PPC marketing, NewMedia consultant is going to rip you off.  Some of them are earnest and don’t know they’re selling you hot air, but most of them know and don’t care.  So, like Neil says, learn how to do it yourself before you pay someone to do it.

    E. Coyle, http://panyrgy.com

  • Anisha Vinjamuri

    Neil , these are some amazing tips . I have faced each one of them in my start up and bounced back . These are lessons every entrepreneur will have to experience to come out successful . The lessons they learn out of these experiences are priceless . Great article.  

  • http://www.seo-suresh.blogspot.com/ Seo Expert

    Great advice from the successful person…

  • Horizonscs

    Great insight.

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  • Jennifer Pasalakis

    What an amazing article! I used this article and recommended it in a training I just did!

  • Tinkerbell

    Good advice! Thank you for taking your time to help others out in starting their own business. This information will be very helpful to my husband and I.

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