What is the biggest mistake aspiring entrepreneurs make? originally appeared on Quora - the place to gain and share knowledge, empowering people to learn from others and better understand the world.

Answer by Charles Tips, Retired entrepreneur, on Quora:

Venture entrepreneurs are buffered against mistakes by the need to raise money from savvy investors, attract a savvy management team and pull together a savvy board of directors. Still, mistakes are made, most often of the "where did that train come from?" variety. All ventures resemble combat in that you must act on critical decisions made with partial information. Sometimes you zig right when you would've been better off zagging left, and you fall hors d'combat.

Small business entrepreneurs, especially first-timers, fall victim to the same deadly trap time after time after time...

They start a job for themselves rather than a business.

A business is straightforward. You leverage circumstances. You leverage the talent of others. You leverage money to make increasing income with the prospect of decreasing time commitment. You end up with an asset you can sell in order to realize the bigger upside.

For example, I knew a woman who had a garden business. She put custom flower gardens into downtown urban apartment patios, or, rather, her business did. She was a socialite who knew all the right people. She leveraged that to build up a customer base. She could simply phone horticulturalists in the area and not only have them deliver all the flowers but plant them, another leverage. She had a staff of three to go onsite and supervise and put the finishing touches on the work.

Venture entrepreneurs are buffered against mistakes by the need to raise money from savvy investors, attract a savvy management team and pull together a savvy board of directors. Still, mistakes are made, most often of the "where did that train come from?" variety. All ventures resemble combat in that you must act on critical decisions made wth partial information. Sometimes you zig right when you would've been better off zagging left, and you fall hors d'combat.

Small business entrepreneurs, especially first-timers, fall victim to the same deadly trap time after time after time...

They start a job for themselves rather than a business.

A business is straightforward. You leverage circumstances. You leverage the talent of others. You leverage money to make increasing income with the prospect of decreasing time commitment. You end up with an asset you can sell in order to realize the bigger upside.

For example, I knew a woman who had a garden business. She put custom flower gardens into downtown urban apartment patios, or, rather, her business did. She was a socialite who knew all the right people. She leveraged that to build up a customer base. She could simply phone horticulturalists in the area and not only have them deliver all the flowers but plant them, another leverage. She had a staff of three to go onsite and supervise and put the finishing touches on the work.

With a less than forty-hour-a-week effort and with much of summer and all of winter off, she quickly built the business up to $2 M a year, where she quit seeking new business except to replace the rare departed customer. She had a tidy stream of income that consumed maybe 800 hours of her time a year and that she was able to sell at a premium when she wanted. And the investments she'd made leveraged her income stream and provided another source of continuing income.

That's a business. And she spent her time working on the business, almost never in it. That is, she focused only on things that made the business more profitable, more streamlined, more of a package to sell. She promoted her image and put herself in the position to gain by being able to tell would-be celebrity clients, "I am so sorry, I simply cannot take on any new business now." And her prices climbed right through the roof with not a whimper of complaint. She was leveraging her image as the gardener to the city's elite. She essentially only lost customers when they died or moved to Europe.

What's the big mistake others make then? Not doing that. They conceive a business as little more than doing their job on their own. They not only see themselves working in the business, they are the business. There's no one to leverage but themselves.

Should they get a bit of money ahead, they hire a staff person or two to free themselves up from doing all the marketing, the accounting, the scheduling, the troubleshooting. But staff people are cost centers. You can't leverage cost centers; they leverage you. Next thing you know, the principal is being pulled in all directions all the time. Such business owners run themselves ragged and burn out.

Worse, they have nothing to sell. Who would buy a messy business entirely dependent on the unique talents of one or a few key individuals?

Worst of all, they don't learn from their failure. They type a resume and go back to the corporate grind when they should have, instead, learned enough to make a go of a second attempt.

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Published on: Jun 25, 2018