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7 Common Entrepreneurial Traps

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October 21, 2020 7 min read

Opinions expressed by Entrepreneur contributors are their own.

Being an is actually quite dangerous. No, I’m not saying it’s at the level of danger first responders or medical workers on the front lines have to deal with, but hear me out: There are certain pitfalls and traps entrepreneurs can easily fall into that can ruin your health, your relationships, as well as your overall happiness.

Since the best offense is a good defense, I’ve outlined the top seven traps or pitfalls I see entrepreneurs fall into (and a few I’ve fallen prey to myself), listed in descending order, as well as some knowledge that will equip you with what to do if you do fall into one of these traps mistakenly. 

7. Expecting results too soon

The media loves covering overnight successes, and it’s easy to read or listen to one of these stories and start comparing ourselves to that success. But if you actually take a moment to do some digging behind these overnight success stories, you realize they were not overnight in the slightest. In fact, their success actually took years of work, grinding and effort. My recommendation for you is to understand that success takes time. A lot of people refuse to keep going because they think the entrepreneurial world isn’t right for them after only a few months. In reality, they were probably very close to that inflection point where things were going to start to grow.

I recently interviewed Marques Brownlee, also known professionally as MKBHD, and he said that his first 100 YouTube videos were filmed for his first 100 subscribers. Imagine if he had given up after those first 100 videos because he didn’t think the results were worth his time? Well, he kept going, and now he has more than 12 million subscribers. Not too shabby. Work hard and don’t give up. 

Related: The 10 Mental Traps on Your Road to Success
 

6. Inserting your own personal bias

Most of us will put our own personal biases into the products, solutions and content we’re creating without even realizing it. Yes, we have our own stories and experiences, and we should absolutely feel inclined to share those, but assuming that what we have to offer is what people want is the wrong approach. You need to remove the guesswork as much as possible. The way to combat this is to have conversations and validate these ideas upfront. As Joel Barker says, “Speed is only useful if you’re running in the right direction.” A lack of proper validation kills more businesses than anything else. 

5/ Doing things only for money

One of the most exciting things about being an entrepreneur — and one of the reasons you probably became one yourself — is that there is unlimited potential. We can sell to more customers, we can create more products. The possibilities are endless. However, if you approach business with a money-first approach and that’s all you think about, you’re most likely going to lose. I did this to myself quite a few times back when I first started. I saw the really big money-making opportunities, went for them and ultimately lost my passion for them. Not to mention, they didn’t really serve my audience. Because I chased the money first, I lost money, too. I lost money because I lost my focus. Your focus should be on how you can help other people first and foremost. My is that your earnings should be a byproduct of how well you serve your audience.

4. Losing focus to new things

So many of us have “shiny object syndrome.” One of the biggest struggles of is saying yes to something and sticking with it. Remember that when you say yes to a new thing, you’re saying no to the thing you’re already working on — the thing you originally said yes to. And guess what? If you continue to abide by this thinking, nothing is ever going to get done. One useful tactic I recommend to avoid falling into this trap is “just-in-time learning.” This simply means you only allow yourself to learn about the things that are next on your priority list. There are so many things to learn and so many new podcasts, articles, documentaries and so on to learn from. You owe it to yourself to follow through with the original thing you said yes to or else you’ll just keep going on a never ending loop. It’s exhausting. Trust me.

3. Realizing you can’t do it all

Especially in the beginning, you get used to doing everything yourself, but over time you’re going to have to come to terms with the fact that you can only do so much. If you keep grinding the way you are, you’ll either get to the point where you plateau or you’ll burn out. Find the people who do certain tasks better and faster than you. This will open up your time so you can focus on the things that only you should be doing. By this I mean your superpower, the superpower that hasn’t seen the full light of day because you’ve been so worried about these other things. You can take bigger, bolder actions elsewhere while having other people take care of the things you drop from your workload. Your business will thank you for it.

2. Comparing yourself to others

It’s our human nature that makes us fall into this trap. We start feeling ashamed, deflated and unworthy. It’s great to get inspired or motivated by someone else’s work, but to deflate yourself and compare yourself one-on-one with someone else is dangerous territory. You should only be comparing yourself to yourself from yesterday, yourself from last week or last month. Try to make incremental improvements based on your previous self so that you can grow over time. James Clear’s Atomic Habits is an excellent resource to build this skill because it talks about the power of small, incremental change. Even just 1 percent better each day will grow exponentially with time.

Related: Study These 9 Traps Even Successful Entrepreneurs Have Fallen For So You Won’t
 

1. Neglecting to clock out

It is extremely challenging to turn off an entrepreneurial mind. Your business is often all you are thinking about. That motivation is a good thing and something to be excited about. However, it’s not good when you forget to spend time with your family, kids or friends. Or, even worse, when you continue to think about your business when you are hanging out with them. Time boundaries are so important, and since you are your own boss, it’s up to you to implement (and abide by) them. When you’re working, you should be entirely present in your work, but when the day is over you must check out mentally. You can check back in once you’ve spent some valuable time with the people who are important to you. That includes yourself! Take care of your physical and . If you don’t, your work will inevitably suffer. 

If you have fallen into one of these seven traps, or you’re currently in one, know that you are not alone. Twelve years into my own entrepreneurial journey, I still find myself sliding into the danger zone from time to time. It’s all about being mindful of these traps so that you can right yourself and get back on track when needed. That’s where your success and growth truly lies.

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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