Oh, the lies that entrepreneurs tell themselves. Even when all signs point to the contrary, it can be very easy to make up excuses for why your business isn’t succeeding.
Here are some of the worst lies that entrepreneurs tell themselves, and the (sometimes) hard truths:
1. The money will come eventually. You think that if your idea is top notch, if the product/service you’re offering solves a real problem, or if you have true passion and drive, that your company will succeed and eventually start making some real money. This is a fallacy. It’s easy when you’re busy growing your company to buy into this lie, but incredibly dangerous. It may be true that there is a pot of gold further down the road, but you can’t just count on it being there. You must plan for it.
2. If I price low enough, I can attract more business. This may be true in some sense. You may bring in more business if your prices are lower than your competition’s. But if your pricing isn’t covering your costs and allowing for the kind of margin you need to make a profit to at least live on, you’re shooting yourself in the foot. You need to figure out your gross profit (how much you need to cover fixed costs — from salary to materials to marketing). Based on this figure, you can calculate your gross profit margin and figure out how much you need to make in sales.
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