There were misconceptions I had when I started my business over 16 years ago.  They shaped the first years of my business, and are examples of why most businesses never make it past 5 years.

If you can learn from these misconceptions that so many new entrepreneurs have, you might make it.  You don't even have to be good at what you do in your field, you just have to know how to hire, manage, and retain the people who do.  Some of the best entrepreneurs I've seen in the Silicon Valley were so great because they knew how to build and keep together teams of the people who really knew their jobs.  Get those people, give them what they need without micromanaging them, set the direction, and get out of the way.

We should do anything for anyone
No, don't take the direction of your business from whatever potential customer you're talking to today.  This one I think is universal.  It seems obvious, but it's very tempting to believe, especially in the beginning when you have intense pressure on you financially.  Also, there are so many ways to fall into this trap, like just changing what you offer to customers based on one or two invoices for specific things, even if they are within your field. 

If you've ever been a salesperson, this is where "qualifying a customer" comes in.  You shouldn't be doing much more than talking to a company if you haven't qualified them as having one or more qualities of your ideal customer. The only exception is if you literally have no business, and even then, reaching out to companies you don't know is more productive than talking to someone you've disqualified or can't qualify.

I worked in a sales-oriented company (or companies, depending on how you look at acquisitions and mergers) for years before I started my business, and heard salespeople asking each other all the time, "Did you qualify them?  Did you ask all the questions on the sheet?"  It still didn't sink into me until I was actually out there selling myself and my business.

This can be the biggest waste of your limited time in the beginning, but it is a waste even later when you're established.  Investing in a relationship with an unqualified customer for months or years is a huge waste of time, and time is money.  Think about your ideal customer and what they have that makes them ideal, then use that to formulate solid questions to qualify any potential customer.

And a customer who was once qualified may become unqualified.  Some qualification questions can only be answered after some time.  Don't be afraid to part ways with an unqualified or disqualified customer when it becomes obvious.  And if they are the ones who present you with the opportunity to get out, take the time to recognize it and take it. 

This is where my prior experience in an electronics company failed me in running my services business.  If you're not a qualified customer we want to do business with, but you just want to buy another part, it's fine because it's a one-and-done transaction.  But, if you want us to come back to help with IT issues that are caused by your internal problems that disqualify you as a customer, forget it.

An offshoot or variation of this is believing, well, it may not be worth doing business with this customer now, but it might be later.  That brings us to:

Your customers will grow
No, they won't, not as a given.  This is sunny, positive thinking at it's worst.  If you qualify a customer based on the idea they'll grow in the future while today they don't qualify as a customer, you're making a mistake.  You must qualify the ones that are worthy of your time today, so you can avoid the others.  It seemed obvious to me that people would be in business to grow over time.  It never occurred to me that many businesses just want to do exactly what they're doing today, with no desire to grow or improve in the future.  And then there are others who simply can't grow no matter how hard they try.  If the last company they paid to do what you do won't answer their phone calls, take the hint and run.

Even if these "titans of business" and their employees are in immense pain every day just doing things the way they've always done them, they typically just want help putting out fires when they come up, nothing more.  And they'll as easily blame you as they will their own employees in the process.  Many pay for your recommendations and never do anything with them because of severe indecisiveness.  They may argue on and on with you about minute details of your work while you're doing it. 

I watched one customer pay us thousands and thousands of dollars to keep decades-old software working instead of just upgrading it for less money.  I told him so.  He didn't take the recommendation, and in the end, there was no reason.  Another customer made every major decision based on pennies of difference in cost, then never admitted he made mistakes in those decisions after they didn't work out.  That closed circuit security system was a bargain, if only it worked when you used it.  And then he kept trying to get me to figure out why it didn't work when it's a completely custom-coded system that only one guy could make work again, the guy who sold it to him.  But, what a bargain. 

Then another customer wanted a cloud solution meeting exact specifications.  There was one solution I recommended that cost $100 exactly, no recurring costs.  We talked about it twice a year for hours in great detail.  Then he'd always go away to think about it.  Rinse and repeat ... for over four years.  All his employees loved testing the solution I recommended.  He just never paid for it.  After those four years he ran out and got a subscription to another solution that accomplished the same thing, but cost $75 a month.  Don't ask me why he spent so many hours with me explaining the solution that exactly met his requirements, multiple times a year, every time like we never talked about it before, then he decided to get a solution that didn't meet his original requirements.  That is an example of a customer who was qualified early in our company history, then it became obvious later after we had grown that they were no longer.  They had become unworthy of our time.

This brings me to another realization I had after years in business:  there are vast numbers of poorly-managed companies out there that will never go anywhere except out of business (eventually).  I knew one that took over 20 years to skid out of business, and the final hole that took them out was the pandemic.  I never realized how lucky I had been to land in a well run company in the early days of my career until I started a business to help other companies.  In my daily work in my business, I had so many opportunities to see so many small businesses (less than 50 employees).

Your customers will utilize your team's talents
Well, the ones worth your time will, but most won't.  Badly run small companies are typically run by people with a very narrow skill set who don't know how to find talented people to make up for it.  They may hire you or your company, but don't really understand how to utilize you or your team.  If they did, they wouldn't be so badly run.

It's not like they don't try, but companies like these don't understand exactly how to piece together different people and organizations like the puzzle pieces they need to get what they need done in the best way possible.  There is a reason they are badly run in the first place.  No amount of talent can really substitute unless your service is actually performing exactly that function for them.  And, of course, will a badly run company actually let you perform that function without interfering?  Probably not.  You can't make them do what you know will work, and often you can't even lure them into doing it even when you tell them exactly why.

So, the point is to disqualify a customer you've confirmed doesn't meet one or more qualifications you've set for a customer that is worth your time.  Or at least to leave them unqualified until you confirm them one way or the other.  What I've learned over the years is to deal with these customers by prioritizing them to your lowest, end-of-the-queue service level, with the disqualified getting service last.

Bottom tier customers just need to wait behind qualified customers.  The customers who always need you to put out fires, don't actually take recommendations seriously, and who like to argue on and on about semantic details will naturally get less and less opportunity to waste your time.  Eventually, they'll go away or in rare cases actually change so they may become qualified and move up your service ladder.  That's why you never stop talking to the unqualified or disqualified, you just don't allow them to take up more of your team's time than the top tier qualified customers.  If you let them, your bottom tier customers will take more and more of your time while they don't actually take your recommendations, resulting in them having more problems, and taking more of your time.  Get out early when you see this.

The beauty of prioritizing this way is that if you just started your business, even disqualified customers have nobody to wait behind and you need their business.  In the beginning you need to survive first. You'll grow, but it'll be painful.  Later, as you acquire more and better qualified customers, those unqualified or disqualified customers just naturally go away as you have less time for them.  Either they go out of business, or they look for another sucker to take your place.  Until they inevitably go out of business.

In the end, avoiding the worst potential customers can be even more important than outmaneuvering your competitors.  Think of it as running next to a guy while an angry bear is chasing both of you.  All you have to do is run faster.  Let your competitors have the worst customers.