3 Deadly Misconceptions About Entrepreneurship New Founders Must Avoid

Can you relate?

Forging your path as an entrepreneur feels like navigating a maze

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Last week I caught up with an engineer who had worked in corporate all their life.

They said that entrepreneurship had always “intrigued” them, but they were scared of making the jump to working for themselves.

They felt that they had a number of “misconceptions” about entrepreneurship that they needed to fix if they wanted to succeed. 

I can deeply relate to this statement.

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My entrepreneurship journey the last year and a half was me fixing all the mistaken mindsets I harbored.

Each of these beliefs caused me to miss opportunities and go down wrong paths, costing me months of delays each time.

But every time I fixed one of these misconceptions, I unlocked a new level of growth in my business. 

In today’s issue, I want to share the top 3 mistaken beliefs I had about entrepreneurship:

• Building SaaS is the best and only path for entrepreneurs

• Small deals aren’t worth doing

• I am too good for Upwork and Fiverr

Avoiding these 3 mindset mistakes will help you avoid a year’s worth of mistakes that I made.

Misconception #1: SaaS is the best way for an engineer to pursue entrepreneurship

My first misconception went like this:

I’m an engineer, and I know how to code.

Therefore the best path for me as an entrepreneur is to build a SaaS product like the ones I’ve built at big companies.

Looking back, this line of thinking is flawed for a number of reasons.

First off, there are many different approaches to entrepreneurship, of which building software is only one of them.

I didn’t realize at the beginning that:

• affiliates

• coaching

• consulting

• freelancing

• newsletters

• sponsorships

• video courses

• cohort classes

• content creation

are all legitimate paths to entrepreneurship. 

Not only that, these paths are easier to start and faster to launch than building software.

Second, the strategy a large company pursues is fundamentally different than the game a startup is playing going from 0 to 1.

In a large company, any little change they make will be seen by millions of people instantly.

So scale is a concern for every project, hence the importance of coding and automating things from the very beginning.

But new founders are mostly dealing with issues of product-market fit and distribution.

And solving these problems doesn't necessarily require that much coding to begin with.

Lastly, building SaaS is an advanced entrepreneurship tactic. In an article by Nathan Barry, he mentions the ladders of wealth creation below.

Image link here

Notice how in the chart above, entrepreneurs have to start out with a service business and a productized service before they can begin offering a SaaS product.

It’s a progression of automation from a fully manual business to a fully automated one that is how many SaaS products develop.

After all, SaaS stands for “software as a SERVICE.” So you might as well start with the service business first and build the software later.

Note how the CEO of Microacquire also recommends starting a services business with an agency first.

Takeaway: Don’t jump straight into building a SaaS product. Consider alternate entrepreneurship options that don’t involve coding as well.

Misconception #2: Small Deals Aren’t Worth Doing

Here’s another misconception that cost me months of time, and it goes like this:

Winning a $100k deal is the equivalent of winning 10, $10k deals.

Therefore I should just go for winning the $100k deal every single time and avoid the $10k deals because it’s 10x the work.

What I Realize Now

Aiming for huge payoffs from the very beginning is also a mistake because it causes you to miss out on the small wins that help you build the momentum needed to win the larger deals later.

From my experience, it’s very unlikely for a person to win a $100k deal straight out of the gate without having completed any smaller deals prior.

The only deals that people are willing to trust a newcomer are likely the smallest deals, so it’s important to win those and show you can successfully deliver before aiming for the larger deals.

In fact, to even deliver on a $100k deal requires a lot of prerequisite skills first. You have to know how to:

• hire people

• manage a team

• form partnerships 

• deliver on the project

• and manage client expectations

I certainly didn’t have these skills when I first started, so it’s better to gain some experience managing these for smaller clients before moving onto larger projects.

Lastly, entrepreneurship is a game of keeping morale high. The small wins might not be much, but it’s at least progress you can point to later.

Every deal you complete is, at minimum, a testimonial, a case study, and something to post about on social media. 

After completing a few of these, you will have a number of engagements to write about, which will help you look much more legitimate and win larger deals later.

Key Takeaway: No deal is too small in the beginning. A steady drumbeat of small wins could be all you need to grow.

Misconceptions #3: I’m too good for Fiverr and Upwork

This last misconception caused me to undervalue marketplaces like Fiverr and Upwork. My thinking went like this:

I was making X amount of money at Netflix and Amazon. Fiverr and Upwork are for the clients with the most limited budgets.

Therefore, if I was going to go on Fiverr and Upwork, I might as well stay in corporate.

This is so wrong.

In fact, if there was one thing I redid as an entrepreneur, I would start off on Upwork and Fiverr on day 1.

First, despite the name “Fiverr”, these platforms have evolved beyond just offering $5 gigs to people selling projects in the thousands and tens of thousands of dollars.

Second, there were a lot of hidden benefits to working on Fiverr and Upwork that made me a stronger entrepreneur.

For example, it was on Upwork and Fiverr that I learned the importance of responsiveness in client-facing projects.

On Upwork, you have to be one of the first people to respond to a bid if you expect to win it.

On Fiverr, part of your success rate is judged by your responsiveness to clients, so it’s critical to keep your response rates under 24 hours and ideally under 2 hours to keep clients interested.

Clients can see your response times on Fiverr so it’s important to keep this timing low.

When I realized my success on these platforms were judged by responsiveness, it changed my communication strategy with clients through other channels completely. 

When someone contacts me on LinkedIn or on my website, I now get back to them ASAP. Even if I am just telling them I saw the message and I’ll get back to them later, clients at least feel like they aren’t left in the dark.

It sets the tone that I will be this communicative for the rest of the engagement.

Second, these platforms taught me how to position my offering. For example, on Fiverr, I noticed how specific other freelancers were when they described their service. 

A gig like “I will be your editor” is unlikely to succeed. But the best gigs I’ve seen were much more specific, like “I will edit your resume” or “I will edit your college essay”.

This helped me become more specific with my positioning statements and change from “Engineering Consulting” to “I will build your ChatGPT app in 1 month.” 

Notice how specific the gig descriptions are on Fiverr. It’s not just “I will edit your video”.

So the last takeaway is if you’re struggling to gain momentum as an entrepreneur, try building on Upwork and Fiverr first.

I promise you’ll become a stronger entrepreneur for it :)

Final Thoughts

Can you relate to these mindset mistakes in your own entrepreneurship journey?

Have you also:

• overlooked Fiverr and Upwork as growth channels?

• said no to small deals by only aiming for moonshots at the beginning?

• thought that SaaS was the only path to entrepreneurship? 

Let me know in the comments below.

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