A fair warning before you invest 2 minutes of your precious time: this post has nothing to do with the taxes or compliance for e-residents. This is a short post on some of the business mistakes to avoid when you start your e-residency company. As it’s our fifth year anniversary, we think it’s a proper way to look back at the mistakes we’ve done and perhaps help our dear clients to avoid doing the same.
1. Investment vs expense
It’s a common misconception that many (starting) entrepreneurs do. If it’s going out of your pocket, then it has to be an expense, and we try to minimize all expenses as much as possible. However, there’s a huge difference between an investment and an expense. Investment is something that brings back greater value in the future. And it’s not always obvious how this greater value materializes, which makes it difficult to differentiate between them.
For example, think about advertising and marketing. You advertise in order to bring in clients, who in return will bring the greater value by paying you money. Yet, it’s not certain that your marketing works. Or what if your cost of client acquisition is more expensive than the money they pay you? Then, should it be seen as a cost or perhaps it’s a necessary investment to make your marketing work? The right answer may be that you need to either invest and work with savvy people that know what they are doing, or you have to first spend time on educating yourself in order to understand what not to do.
Same applies to your tax advisors, lawyers and accountants. While one may be more expensive at first, in the long-term, it may very well be a worthwhile investment.
It’s absolutely crucial to understand the difference between the cost and investment. Otherwise, you will cripple the growth of your company.
We would have definitely grown quicker with smart investments into people and software infrastructure in our early days.
2. Hiring and delegation.
This is a big one for many entrepreneurs. You wish to do everything by yourself as you either feel you do it better and faster and/or you just don’t trust other people to do a good work. This will usually end up in a situation where you will become a bottleneck for the whole company. Not only that, but you will find yourself in a situation where you are working for the business, not the other way around.
It’s quite simple: If you can’t hire and delegate, you won’t be able to build processes in the business, which in turn means you will never break through to a level where business works for you.
The earlier you’ll make an investment into people and start delegating, the more time you will have to focus on the right things. Though it will cut into the profitability of the business short-term, it’s a crucial step for long-term success.
And once you hire someone, train them properly. There’s nothing more important or scalable for you as an entrepreneur than proper training for new hires. Otherwise, it will start eating your valuable time like nothing else.
We were way too late with the delegation and building a proper and trained team.
3. Focusing on the right activities.
This is obviously a big one and applies to any business at any stage.
For example, many starting entrepreneurs are struggling with making sales. Yet, if I ask them to lay out their daily activities, it becomes clear that there aren’t many sales calls or offers sent out. The more activities you have per day that can end up in a sale, the more likely it is that you’ll make one. Focus on a) finding leads and b) convert these leads. Blogging alone isn’t sufficient. Selling is a lifeblood of any business, and I wish we focused on this more during the very first years.
Instead of focusing on activities that can end up in a sale, we were optimizing small things on the website, or small things on Google, or some conversion metrics – which are important, but only once you get the sales and marketing working on a bigger picture.
And once you get your focus on making the sales, make sure you sell to the right clients, and definitely do not accept clients that aren’t the right fit for you, however tempting it is.
There are many more mistakes we’ve done and we will do in the future. So will you. But remember – mistakes are only mistakes if you won’t learn from them.