7 Essential Entrepreneurial Mindset Shifts
- First, know that this is happening
- The seven entrepreneurial mindset shifts
- The second entrepreneurial mindset shift is from cost to opportunity
- The third entrepreneurial mindset shift is from obligation to privilege
- The fourth entrepreneurial mindset shift is from perfection to action
- The fifth entrepreneurial mindset shift is from destination to journey
- The sixth entrepreneurial mindset shift is from transaction to transformation
- The seventh entrepreneurial mindset shift is from manipulation to inspiration.
- Cultivating an entrepreneurial mindset is a never-ending process
Cultivating an entrepreneurial mindset is essential because Business ownership goes against your natural fight-or-flight instincts.
When you define your objectives for yourself and create a business that encompasses a wholly new and different way of thinking, you will be standing on the precipice of the unknown.
It is like you are standing on a cliff; behind you is all you know, everything you have ever done, your knowledge, expertise, and understanding. In front of you is a primordial fog, with only a hint of what may be.
You must take the step off the cliff into the fog and trust that you won’t fall. You create the surface you are standing on as you walk forward. That is the experience of building something new: some people have it more or less. For some people, MSP ownership is their comfort zone. For others, it is a leap into a fog of the unknown.
The more unknown it is, the more the reptilian part of your brain goes twill. It will attempt to pull you back to what you knew. This fight-or-flight instinct protects you from the unknown and keeps you safe.
But the logical part of your brain knows that it is going to have to venture into the unknown, and therein lies the conflict.
First, know that this is happening
I like change. I have always been very comfortable with it. So, I like to tell myself that I am never afraid in situations like starting a new business.
I don’t feel afraid; I feel fine.
But here is where the comfort zone fear creeps in: I revert to my habits. I have seen this in the way I manage or the way I negotiate. I might catch myself thinking of a situation as a zero-sum game or striving for perfection instead of action.
Not doing these things the way I did before feels wrong, irresponsible, or like I am doing something the wrong way.
And that is where it happens. That is the reptilian brain stepping in and putting up a danger sign: don’t go there. Go back to what you know!
Some people – think Elon Musk or Jeff Bezos – have an entrepreneurial, build a business, comfort zone. For them, it is the day-to-day that would irk their reptilian brain.
(As an aside, there are also those who just don’t seem to know any better. Someone once said: if I’d understood the risks, I would never have taken them! For those of us with some experience, we know what we are getting ourselves into.)
Creating and growing a business is, though, inherently a step into the unknown. Therefore the mindset of the owner or leadership team is always the constraint when growing a business.
We’ve thought a lot about this and have worked with hundreds of managers and owners. That work has led us to identify seven fundamental mindset shifts that support owners as they step out of their comfort zones.
I go through those below.
The seven entrepreneurial mindset shifts
We refer to the shift as a shift from an employee mindset to an entrepreneurial mindset. However, we could also refer to it as a shift from a technical employee mindset to an ownership mindset. Even those who have never been employees start with an employee mindset.
We have to ask and answer how to move from this employee (or technical mindset) to an ownership mindset. What is that shift? What thinking patterns do we identify and change?
To answer that question, we’ve identified seven fundamental entrepreneurial mindset shifts.
The first shift is from scarcity to abundance.
The technical employee mindset is constantly competing for scarce resources. There are only so many projects, so much work, and there are only so many promotions.
There is a limit to what is out there, so my gain is your loss.
This “zero-sum game” approach is what we learn in school. The curriculum teaches us to compete, to stand up for ourselves, to be the best, and to scream that we are the best at the top of our lungs.
Joe talks about working at the Department of Defense and how the next guy in the hierarchy had ten years to retire, and the only way he could get promoted was if either something happened to him or he retired. That was it.
The scarcity mindset says I will stay here for ten years until that person retires to have that position and move into the next place.
In the entrepreneurial world, the scarcity mindset says I must do all the work myself. Because if I have somebody else do the work, or if I involve somebody, they’re going to take it from me, or it’s not going to get done right, or things aren’t going to work the right way.
The entrepreneur mindset shift is to an abundant mindset: the pie grows as we take a piece. Working together, we create significantly more.
I have had many conversations with “direct competitors.” We’ve shared models and helped each other solve problems. Through our Partnership with Digital Marketer, we work with 400 companies that do the same thing.
And we share.
We agree to use each other’s models and help each other out because we are trying to change the lives of tens of thousands of owners, and none of us can help them all.
The opportunity is endless; our perception of the opportunity, and our belief in scarcity, keep us constrained.
The second entrepreneurial mindset shift is from cost to opportunity
The next one is a move from cost to opportunity.
The employee is cost focused. The employee is concerned with holding on to what they have and avoids spending money.
I recently did some work with an accounting firm, and every concern was about what things cost: what it costs the firm to do, what cost their clients have to pay, never on the value or opportunity.
We talked about a newsletter that cost $500 to set up, $1,200 a year in software costs, and about $60,000 in writing costs. They thought it was too expensive; how could they spend so much money on the newsletter?
Well, in the first year, it generated $300,000 in revenue, and $100,000 of that was pure profit.
The cost is $60,000 a year.
The value is the revenue and the profit. The owner focuses on the value. This doesn’t mean spending money carelessly, but rather understanding the opportunity and investing in it. Be sure you get the return on your investment, don’t just minimize your costs.
Another way the cost focus reveals itself is in how we bill and charge for our efforts.
If you bill based on time, you focus your business on cost. You charge for effort and cost rather than benefit and value. Besides being uncomfortable and leading to endless negotiations with clients about what was done, it limits your opportunity to scale. The only way you can grow is by doing more work.
You end up training your staff not to do better work but rather to work harder and bill more hours.
An entrepreneurial mindset approach has you define the problem you solve and get spectacularly good at solving that problem.
Two things happen when you do this:
- You decouple your time from delivery: maybe it only takes 5 minutes to deliver something that used to take you hours. But the price stays the same.
- You get better at solving the problem, go deeper, get more specific, and do more, allowing you to charge more.
(See also the perils of a cost mindset.)
To round out the story of accountants: I have met many accountants who bill by the hour. And then I met accountants who don’t. The ones who bill by the hour are always hustling, tired, and frantic. The ones who don’t bill by the hour tend to be skiing, boating, hiking, or doing what they want to be doing. And they are much more relaxed.
Getting there is work, up-front work, “entrepreneur” work, but this shift from cost to opportunity is crucial to running a business.
The third entrepreneurial mindset shift is from obligation to privilege
The employee is obligated to work. The employee must work, whereas the entrepreneur has the privilege to do what they want.
Seth Godin tells a story of being in a hotel answering emails when a couple of women walk by. He overhears them talking about how sad it is that he has to work on his time off.
Seth’s response (articulated in his book, not toward the women) is that it is sad that so many people hate their work so much that they live only for the two-week vacation.
At Start Grow Manage, we believe that people need mental variety and that you should physically and mentally go to the beach. But Seth’s point is sound: it doesn’t feel like work when you are happy doing what you are doing. It feels like a privilege.
I, Jeff, love solving problems. It’s what I do. I’m happy if I can go hiking in the woods while pondering a meaty issue.
Or, think of it this way if I have to do a planning session on vacation, I’ll lose my mind. If, on the other hand, someone calls me to ask about how to fix a thorny marketing issue, I’ll immediately put down my trashy novel and start mulling over the problems.
The opportunity to focus on a problem and think it through is like candy to me. It’s a privilege.
In the book “Deep Work,” Cal Newport highlights some research that shows humans are happiest doing deep work. We think we are most satisfied watching Netflix and reading trashy novels on the beach, but research shows that finding something we can get involved with deeply is more rewarding.
Now, we are not knocking Netflix, trashy novels, or beach time. These are (can be) important, too, and there is a time and place for everything. The lesson is in the shift from obligation to privilege and in finding a way to make your work a privilege.
The fourth entrepreneurial mindset shift is from perfection to action
One reason that small businesses stay small is perfection. The problem isn’t that they aren’t perfect, but instead that they strive to be.
Building a business is a series of experiments. You try, you measure the result, and you try again. Each iteration enhances your results. You get better and better over time, which builds your intellectual property.
Small business owners tend to focus on small-scale perfection. It isn’t that the details don’t matter, but rather that the big picture is critical. I’ve seen ugly websites work brilliantly to bring in prospects, and beautiful websites fail miserably. Sure, a website should be attractive, but not at the expense of being useful.
Another manifestation of perfection over action is wanting to perfect each experiment before launching them.
I once worked with a VOIP company, and they wanted to use a free fax as a lead magnet. I thought that was a great idea.
So they created a development plan to automate the process; it would take them two months and cost more than ten thousand dollars worth of time. They wanted to make this investment because automated is better, and there was a possibility that hundreds of people would take them up on the offer; how could they possibly deliver it?
The demand flood was exceedingly unlikely (read impossible), but they wanted the experience to be perfect and ready for the flood.
But the development was a waste of money. We didn’t even know if the free fax would work. So rather than spend thousands of dollars and weeks of time, we put a form on the website that sent an email to one of the employees; they would take the information and send the fax.
The first iteration was a failure. It took a few tries to get it right, and we were able to iterate many times through experimentation rather than making it perfect.
It is spending time and money before proving the concept that wastes small businesses’ resources and keeps them small.
Rather than focus on perfection, develop an entrepreneurial mindset bias toward imperfect action. Try it, see if it works, then try it again. Use imperfect action to perfect something meaningful rather than hide in a development cycle that ensures you never get anywhere.
The fifth entrepreneurial mindset shift is from destination to journey
An employee mindset focuses on getting there, wherever “there” is. It can be 5 o’clock, the ride home, the end of a project, or getting a promotion. Whatever the goal is, the thinking is destination-focused.
Successful MSP owners turn their focus toward the journey.
To scale a business, the leadership must have a clear future vision much further than next week or month. Your North Star Vision should be unattainable in the near future. So your work is about the journey.
Practically, this means celebrating wins, taking imperfect action, and moving beyond failures. No one event defines the journey, and since it is an abundant journey of opportunity, each step has its own rewards.
One challenge business owners face is that their employees are destination focused. It often feels like they aren’t as committed to the business as we are.
To be fair, nobody will ever be as committed to your business as you are. But you can enhance their commitment by creating destinations for them while encouraging them to see, appreciate and enjoy the journey.
And, even if they don’t see the journey, it is essential to recognize that it is still a journey. It is a journey of experimentation, imperfect action, abundance, and opportunity. Over-managing the destination without recognizing the journey leads quickly to toxic, Gotcha Management.
The sixth entrepreneurial mindset shift is from transaction to transformation
The employee is all about the transaction.
Employees must transact to keep the boss happy and endure the machine working.
Think of a Mcdonald’s. Building the burger to serve a customer is a transaction. Collecting money is a transaction.
But designing the process of a Mcdonald’s is transformative.
Before McDonald’s, a hamburger required a cook with some expertise. McDonald’s transformed that. In fact, McDonald’s transformed restaurants, practically inventing fast-food chains and even redefining the concept of a franchise.
The entrepreneurial mindset drives transformation and thinks of a different, better process to build a burger.
The employee takes the process as given and transacts according to instructions.
The seventh entrepreneurial mindset shift is from manipulation to inspiration.
Employees manipulate the system. They try to maximize their benefit without thinking of the consequence. Someone, I think it was Jack Welch, talked about changing systems every 3-4 years because people learn to game them, so they lose their effectiveness.
For the employee, the system, conditions, and environment are given. They are playing a scarcity game, and they get more through manipulation.
Another way to think of manipulation is convincing: if I have to convince you to do something that touches on a form of manipulation. I have something I want you to do, and I structure the conversation so that you do what I want.
Convincing is generally manipulative.
You will see a lot of manipulation in marketing. Especially new MSP owners will try to convince, cajole and encourage people to buy.
Manipulative management is Gotcha Management: micromanaging, finding mistakes, pointing them out, criticizing, and belittling.
An entrepreneurial mindset focuses on inspiration.
If you deliver a valuable transformation, you can inspire people to take action: you show them the value of what you do.
Instead of criticizing and micromanaging, you can inspire your team to act. You give them the tools, the power, and the inspiration to do the right work
Inspiration is many times more potent than manipulation.
Cultivating an entrepreneurial mindset is a never-ending process
You are the wildcard in your business, and your mindset will always be a factor in the success of your business. As the business grows, challenges and opportunities will repeatedly push you out of your comfort zone and challenge your mindset.
The good news is: like anything else, practice improves performance, and every challenge gives you access to new levels of thinking.
So enjoy the challenges, enjoy the journey and build your entrepreneurial mindset.