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With preparing for the launch of our podcast People Who Know Their Shit and running our community The $100 MBA, Nicole and I speak with entrepreneurs pretty much every day. We talk about all kinds of things. We discuss successes and struggles. What works and what doesn’t. We spend time with all sorts, from complete newbies to business online and experts with ridiculous levels of success, and everything in between.

We love our job.

One topic that comes up in almost every discussion is mistakes made when just starting out in business.

It makes sense. The beginners love to know which mistakes they should avoid and the veterans love to talk about the things they wish they could tell their former selves, knowing what they know now.

I decided to put together a summary of the 5 most common and critical mistakes you should avoid that people have shared with us on People Who Know Their Shit, along with the mistakes we see being made with new entrepreneurs inside The $100 MBA.

Here are the Top 5 biggest mistakes made when starting a business:

1. Getting stuck on the idea phase and never doing

This is hands down the number one mistake. No questions about it. The idea phase is usually where everything stops for new entrepreneurs. Here, they are greeted by an old friend of the seasoned entrepreneur, Fear. Fear tells you that someone will steal your idea so never share it. Fear tells you that not enough people will buy it. Fear tells you that you can’t pull it off. Fear stops you from doing.

I say the following statement at least once 3 times a week: “Ideas are worthless without action. Without implementation you are just a dreamer and not an entrepreneur.”

You need to get out there and validate your ideas in the real world so you can see if they are viable businesses or not. Doing. You need to speak to potential customers and start crafting the best version of your idea. Doing. You need to start actually building your offering based on what you’ve learned. Doing.

Here is a little secret about business- everything is an experiment. Thomas Edison didn’t just sit and think about how to create the light bulb and then got it perfect the first time he took a crack at it. It’s been said that he used over 6,000 fibers to light his bulb. A reporter at that time asked Edison, “How many times are you going to fail at creating the light bulb?” Mr. Edison replied, “Son, I haven’t failed! I’ve simply discovered another way not to invent the light bulb!”

Bottom Line: Get to work. Validate and refine your idea (you can take our free course to show you how) and start hustling. As Edison once said “Genius is 1 percent inspiration and 99 percent perspiration.”

2. Choosing a topic you don’t care about

Building and running a business is hard. Most entrepreneurs we speak to say it’s the hardest thing they’ve ever done. We can definitely vouch for that. This is not to discourage you, but rather to drive home that you had better care, love, have passion for, be crazy about, the topic your business is based on, or you’re simply not going to make it. Pure and simple.

If you don’t enjoy your business day in and day out then you’re frustration will sooner or later overtake your desire for success, money or whatever you started the business for. Trust me. I’m speaking out of personal experience. It took me a few businesses to learn this and it hurt big time.

Also, if you don’t care about what you’re doing, it shows. Your audience and customer will notice and will take their time, money and attention elsewhere- somewhere that matches or exceeds their love for that same interest.

Bottom Line: Make sure you choose a business topic you would love to talk about and be involved in even if you didn’t need to make a dime. Seriously, think about it. Would you talk about that topic when you’re on vacation?

3. Being afraid to be different

Business is all about Why’s. Why should I pay attention? Why should I switch from where I shop now? Why should I subscribe to your blog?

If your answer to every Why is the same as everyone else’s, you’re in big trouble. Not being different is usually caused by the fear of not being respected in the marketplace. Nothing can be further from the truth. I told you Fear was a tricky fellow.

You need to offer something others don’t. That could be your style, your humor or even the fact you donate a healthy portion of your proceeds to an unrecognized cause. Just asks Warby Parker how well their business is doing because of their buy a pair, give a pair campaign.

Bottom Line: Be different. Be yourself. Stop trying to be like your competition. It’s bad form and bad business.

4. Not understanding what a business actually is

We need to get something clear right away. If you are not asking for monies in exchange for a product or service, you are not running a business. A blog is not a business. It’s a form of building relationships with your potential customers.

A business must have these 5 parts or it’s not a business. It’s a hobby, it’s a promotion tool, it’s something else- not a business.

Creating An Offer
Delivering An Offer
Sales
Marketing
Finance

If you are not creating and offering value you do not have a business.

If you are not ensuring that you are deliver your value in an exceptional way, you do not have a business.

If you are not selling, you do not have a business.

If you don’t market your business in any form, you do not have a business.

If you don’t make sure your finances are in check- your profits are larger than your expenses- you do not have a business. (Yes, some businesses lose money but if they are not working on reversing that, they don’t have a business.)

Bottom Line: Know what a business actually is and make sure you are building one. Blogs are great. Podcasts are great. But they support a business; they are not a business in itself. (Yes, there are RARE exceptions to this.)

5. Doing it alone

No one does it alone. No one. The lone wolf always dies at the end the movie. You need people to make it happen. Your customers are people, your suppliers are people, others in your industry are people.

Most importantly, you need help and support from other entrepreneurs who are at a similar stage as you are, as well as from those with more experience.

Recently, Nicole and I ran a short survey with our $100 MBA members to find out what they find most valuable about the community. The overwhelming majority mentioned that the support of the community forum was one of the most useful aspects of their experience. They found being able to get feedback and simply be friends with like-minded people was incredibly valuable and useful in their progress as entrepreneurs.

The more connected you become with other entrepreneurs, the more normal your feel about being one. You’ll no longer feel crazy or alone, and you’ll realize that we all face the same challenges, just in different forms.

Bottom Line: We all need others to grow and to succeed. Make sure you are a part of a regular mastermind group, meet-up, online community or whatever. Consider getting a committed business partner if you feel you need it to make it happen. I did, and never regretted it for a second.

Final Words

Take these mistakes made at the start seriously. If I had read this post when I started out 12 years ago, I would have probably saved a few years of learning the hard way and approximately $60,000. Seriously guys.

These are the top 5 mistakes made at the start, not all the mistakes that are commonly made as a newbie. But instead of writing you a 10,000-word post, I decided to focus on only the top 5 mistakes. If you found this post to be useful, share it via social media below and we’ll know we should write a part 2.

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So if you’ve been watching the hit series on Netflix, House of Cards, then the title of this post gives you a clear indication of the caliber of a negotiator I’m taking about. If you’re not familiar with the series, Frank Underwood, played by Kevin Spacey, is the main character of the drama and is a walking manifestation of the best selling book 48 Laws of Power by Robert Greene.

Now let me clearly state I AM NOT advising you or endorsing any type of evil acts of trickery in becoming a successful negotiator. But there are some simple principles of negotiation that need to be understood if you are going to be a successful negotiator in business, or in life in general.

Frank Underwood always remains calm in a negotiation. Not because he’s a laid back guy but because he goes into every negotiation, big or small, with a plan. Frank understands that negotiation is an art and a science. It’s not all psychology; your charm and character play a major role as well.

So what does this have to do with business?

It doesn’t matter what business you are in; online, offline, retail, wholesale, eBooks or cattle for that matter, you will have to negotiate at some point. How do you do it effectively while remaining refined and in control? This post is going to be your practical guide to negotiating in business like a pro. Get what you want, be in complete control while keeping everyone happy. First, let’s define what exactly we mean by a negotiation, and then how to do so like a seasoned veteran like Frank.

What is a Negotiation?

By definition, a negotiation is a dialogue between two or more people or parties, intended to reach an understanding. In business, the stakes are often high. You’re not haggling at a flea market here. You are trying to reach an agreement that is perceived as fair to both parties. After all, you’ll be negotiating with people vital to the success of your business- your clients. Notice I said “perceived as fair.” Negotiation in business is all about perception. Perceptions are formed in the negotiation process. In essence a negotiation is a form of sales. The party you are negotiating with forms their perception of what they are receiving in the exchange solely based on what you tell them. So making sure you fully convey your value is vital. More about that later.

How To Act When Negotiating

When negotiating in business, you need to remember that the client has come to you because they want something that you offer. Automatically, that gives you the upper hand. You are the one in demand. Yes, you need clients and their money but how much you need them is a complete mystery to them. Master salesperson and good friend, Chris Johnson, taught me a critical rule: If the other party gets a whiff of any scent of desperation on you, you have lost before you have even begun. This is not to mean you treat your customers with arrogance and haughty aloofness. Always remain humble yet confident. Never cocky. You have to believe that what you are offering is worth far more than what the client will be paying. Even if you are selling a product that has a market price, the experience of buying it from you is more valuable than getting it elsewhere. Price is just one factor in the negotiation process. And for many, it’s not the most important. Remember that even before you enter the negotiation process with your clients.

Your Guide to Negotiating in Business Like Frank Underwood

Rule #1: Focus on the first 5 minutes

According to a study by The Journal of Applied Sciences, the first 5 minutes of a negotiation can predict the outcome. In this first 5 minutes people decide what direction they will take in the negotiation. More audibles are called here than in a New York Jets game. How you greet them, in person with a handshake, or on an email with your opening line, sets the tone. Make sure you smile and are likeable. If you’re doing business online, make sure your communication is positive and friendly. It’s a lot harder to say no to someone you like. Get right into why you think working together is a good idea and how their work/ business/ idea is a good one. Yes, people like praise but they love it when they feel someone understands them. A feeling of connection makes your value skyrocket. Frank is always on his ‘A Game’ the first 5 minutes of a negotiation. He only resorts to other options if he hasn’t won them over and is in complete control by the first 5 minutes.

Rule #2: Appearances still matter

Yes we are in an age of 20 year-old CEO’s, with their definition of dressing for a meeting being a hooded sweatshirts and track pants. But that’s a huge minority. If you’re negotiating in person make sure you look like you’re worth more than what you are negotiating over. Your get up for a baseball game with friends isn’t appropriate. Clean, ironed clothing that you would wear on a night out with your better half is however. This is a job interview of sorts. Looking sharp gives you an advantage from the get go. If business is being done online or over email, make sure your avatar is respectful and respectable. If you are not a kitten wearing Ray Bans then you may want to consider putting a photo that is more becoming. Yes, Frank works in the most professionally dressed profession on the planet but he’s always looking sharp when he enters a negotiation. Sleeves never rolled up, shoes always shined, not a crease in sight.

Rule #3: State what they are ACTUALLY getting

The value you offer is not immediately obvious. You know your business very well so you think what you offer and what value you give is obvious. Know that it is not. It’s your job to make sure that your customer knows even well before you discuss money, what they will actually be getting when working with you. It is not only the product or service you will be delivering but the manner in which they will receive it. Your business may be more conveniently located, you may offer outstanding service, you may have a better return policy, or simply genuinely care more about your customer. Whatever it is, the value you offer needs be completely clear so that when price is mentioned, your price is not only justified, it’s a steal. Frank, never undersells what he is offering- just the opposite. He paints the picture of the other party’s new reality after they agree on the deal. How they will appear amongst their peers and how it will make them look. He makes sure he focuses on benefits rather than features.

Rule #4: State your price. Don’t ask for permission.

Now that you have conveyed the value you are offering, you must state what you are worth. When quoting your price be cautious of how you deliver it. This is applicable in person or over email.

How NOT to do it:

We would have to charge $10,000 for a website like yours. This is because we want to do the very best job on your project. How does that sound? So why is this unfavorable? Firstly, “we would have to” sounds like you are doing something that is painful for them when in fact you are giving them a value-laden bargain. Secondly, associating your fee with the quality of work, “best work” in this case, implies that your work has a quality to price scale. It implies you can do the job for less but it just won’t be as polished. Lastly, ending with “how does that sound?” puts you in a position of weakness. Why would you need to ask for the client’s permission to give them amazing value at an incredible price?

How to do it:

Given all the details we discussed, our fee is $10,000. We are excited to begin work on your project. Once a deposit is paid we can schedule to begin work this week. Frank does nothing weak. His tone of voice is firm yet friendly. Yes, he has the advantage of having a South Carolina accent but you can smile just as widely as he does.

Rule #5: Know when to stop talking

After you state your price, STOP TALKING. Don’t begin a ramble of justifications and reminders as this makes you look needy and unsure of yourself. Allow your client to think and ask questions. This keeps you in a powerful position. If there is a gap of silence, don’t feel the need to fill it with any kind of chatter. The ball is in their court so if anyone is obliged to speak, it’s them. Keep calm, positive and wait. Frank always uses awkward moments of silence to his advantage; forcing the other party to break it with agreeing on the deal. He never feels forced to talk. Everything is accounted for.

Rule #6: Create Urgency

If there is no pressure to close the deal, there is no reason for the client to take action soon. Make sure you are honest with them and let them know, as shown in the example of stating your price, the deal is time-sensitive and it may not be available if they don’t act quickly. That’s why every retail store’s sale has a deadline. You may want to do the same. Jay Abraham teaches this point brilliantly in his book Getting Everything You Can Out of All You’ve Got. I highly recommend it. Frank always makes the other party feel like his offer is a once-in-a-life time opportunity and if not acted upon quickly, their moment of glory will be gone. Missed opportunities are painful; Frank knows this and uses it to his advantage when negotiating.

Rule #7: Create Scarcity

Make sure your clients know you get booked up quickly or your products get sold out very fast without looking like a shyster. Again, just be honest: “I know as of today I’m available the last 2 weeks of February to work on this project. But this may change tomorrow.” Frank always makes sure the other party understands that not everyone has the opportunity to work with him and those who do never regret it. Even his enemies know it.

Rule #8: Allow room to make them feel like they got a deal.

Some people just don’t feel like they got a deal unless they get some sort of discount. They want to go home feeling they got a bargain. This is why it’s wise to leave a 5-10% buffer in your price. You don’t want to give it to them as soon as you see some resistance. If they don’t immediately accept your offer, you may want to just ask them what their budget is. Their ‘budget’ will be the price they want with the ‘bargain discount’. This will be a bit lower than your pre-buffered price but meeting somewhere at your buffered price will be the sweet spot. Frank always makes the other party feel like they are in control and that the decision they make is theirs. The reality is he is the one that sets the options; so no mater what the other party chooses, he wins.

Final Advice

Remember, just because it’s business and big stakes may be involved, it doesn’t need to be stressful. Knowing that you have a plan puts you way ahead of the pack. You can now go into your next negotiation with a new set of skills and the confidence of a seasoned veteran like Frank Underwood.

Follow up Reading

Your negotiation training doesn’t end here. Here are a few books you should pay serious attention to.

Books:

Getting a Yes by Roger Fisher
Book Yourself Solid by Michael Port
How to Win Friends & Influence People by Dale Carnegie

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