- What is the typical consumer’s mindset?
- What mindset in business should you cultivate?
- How and why you should create an effective mindset in business
Q: What is the right mindset for business?
A: The right mindset in business allows you to seize opportunities and take calculated risks. This is the only way to grow your business, and it embraces positive change rather than remaining close-minded and conservative. The best entrepreneurs are always forging ahead with new ideas and innovative endeavors.
According to recent statistics from Gallup, 34% of all entrepreneurs report feeling worried about the future.
A further 45% of entrepreneurs feel high levels of stress – to an even greater extent than their own workers.
The data also shows that entrepreneurs are actually quite risk-averse, which is surprising considering the fact that they’re putting everything on the line.
A psychologist named Michael A. Freeman was recently quoted by Inc. Magazine as saying:
“People who are on the energetic, motivated, and creative side are both more likely to be entrepreneurial and more likely to have strong emotional states.”
These “strong emotional states” may include intense focus, high levels of optimism, and incredible self-confidence.
But there’s a clear trade-off, and these strong emotional states may also include depression, despair, hopelessness, worthlessness, loss of motivation, and even suicidal thinking.
Taking all of this into account, it should be very clear that mindset in business is incredibly important.
Establish the right mindset in business, and you can strive toward success in the most effective way possible.
It all starts with those firing neurons in your brain. Your thoughts are what propel you towards actions and behaviors that can make or break your company.
Establish the wrong mindset in business, and you could quickly begin a downward spiral that ends in bankruptcy, hopelessness, or worse.
Even if you’re the kind of person who dismisses psychology as pseudo-scientific nonsense, you owe it yourself to at least consider how your mindset in business might be affecting your entrepreneurial career.
So what makes an effective mindset? How do you improve your mindset, and how can these changes affect your bottom line?
You might be surprised at the answers…
- What is the typical consumer mindset?
- What mindset in business should you cultivate instead?
- How and why you should create an effective mindset in business
What is the typical consumer mindset?
Before we get into the best mindset in business, we should take a step back and make one thing very clear:
Most people do not have a business mindset.
Instead, they have something called a “consumer mindset” – also known as a “fixed mindset.” Understand the characteristics of this mindset, and you’ll immediately see why a business mindset is so different by contrast.
So what are some characteristics of a consumer mindset?
The Fixed Mindset of Typical Consumer
- Change Aversion: Perhaps the most important characteristic that sets consumers apart from entrepreneurs is their unwillingness or inability to take risks. This stems from their natural aversion to any kind of change – whether it’s a new job, a new place to live, or a new relationship. Most people simply want to uphold the status quo and continue living in the same way. Risk represents danger, and they’d rather play it safe with a bi-weekly paycheck rather than starting a business.
- Follow the Leader: Consumers are followers, not leaders. They accept new trends, purchasing whatever items entrepreneurs present them with. Sometimes, they have no idea they even wanted these products before they were put on the market. An obvious example would be Steve Jobs’ first iPhone. The tendency for consumers to follow rather than lead is why so many of them end up working for a wage rather than starting their own business. In contrast, entrepreneurs are willing to lead and hire employees.
- Consumption: Although it might sound obvious, consumers consume. They do not add anything new to the world, and they do not come up with new ideas that change our society. They simply consume products that other people have created. This lack of creativity prevents them from becoming entrepreneurs and adding value to the marketplace of ideas and products. Many people have creative personalities but never cultivate these traits for entrepreneurship. An entrepreneur is willing to draw upon their creative powers to start a new business.
- Accepts Failure: Consumers accept their failures without much of a second thought. If they fail once, they rarely try again. In fact, they view failure as a validation of their own limitations and inadequacies. This leads back to a comfortable, safe lifestyle as a wage-earner. In contrast, entrepreneurs show perseverance in the face of failure, learning from their past mistakes and viewing the experience as an opportunity for growth.
- Things Will Never Change: On that same note, consumers believe that nothing will ever change – that their current situation will continue for the foreseeable future. This includes their current skills and natural abilities. In contrast, an entrepreneur knows that they can develop their skills and abilities, transforming not only their natural talent, but also their intrinsic personality traits. Even an entrepreneur with serious self-confidence issues and a natural aversion to risk understands that these issues can be resolved in a relatively short period of time.
- No Real Goals: A consumer has no real goals for the future. They may only think about the next work week, how they’re going to spend their next paycheck, and what they’re going to do on the weekend. Again, there is no sense that this predictable schedule will change in the future. In contrast, an entrepreneur has complex, long-term goals. Entrepreneurs are also willing to set very high goals, pushing themselves towards heights that others would consider impossible.
- Unwilling to Delegate Tasks: A consumer may also be very reluctant to delegate tasks, preferring to do all their work themselves instead. This may stem from a lack of trust, an inability to collaborate effectively, social withdrawal, or ineffective communication skills. This severely limits consumers, as they can only achieve things that can be completed by one person. In contrast, an entrepreneur is much more willing to collaborate and delegate tasks, allowing them to focus on more important things.
How Covid-19 Has Changed the Mindset of the Consumer
In many ways, the typical consumer mindset has gone unchanged throughout human history.
Even in the earliest human civilizations, there was always a clear distinction between business owners and the average consumer.
But with that said, major changes in our society can also affect the way a consumer thinks. For example, Covid-19 has caused consumers to shift their behavior in the following ways:
- Obsession with Safety: Consumers are now more obsessed with financial safety and security than ever before. Today, consumers are much more likely to save their money, exhibiting extreme caution and “hibernating” through these troubling times. This increases the divide between consumers and entrepreneurs, as the former is even more unlikely to take risks and explore lucrative opportunities. While consumers are saving and stockpiling for a rainy day amidst job losses and economic uncertainty, entrepreneurs are willing to take risks and start businesses.
- Criticism of Profit: Consumers today have become highly critical of virtually any business that profited during the pandemic. The most obvious example is “big pharma,” which raked in record profits while others were losing jobs and being forced into quarantine. Many consumers now believe that profit is inherently wrong, making them even more unlikely to start new businesses and escape the “9-to-5” daily grind.
- Unable to Start Businesses: Even if consumers are willing to start new businesses, many are completely unable to do so. This is because of economic uncertainty, supply chain issues, and high inflation. Many have lost their jobs, taking away the “safety net” that many entrepreneurs rely on while building their businesses from the ground up. Suddenly, consumers can’t afford to become entrepreneurs because they’re too preoccupied with finding their next paycheck, their next meal, or reliable housing.
That being said, consumers aren’t completely risk-averse. Many invest their money in assets that they see as “safe bets,” including real estate and stocks like the S&P 500. But when it comes to entrepreneurship, starting a business is a completely foreign prospect that seems far too risky.
What mindset in business should you cultivate instead?
But what is the mindset in business definition? What exactly does an effective business mindset look like? Here are a few traits to consider:
Characteristics of a Positive Mindset in Business
- Playing the Long Game: It seems like everyone is constantly searching for “get-rich-quick” schemes. Here’s a hint: They don’t exist. If you believe that a particular opportunity can quadruple your money within a few short months, it’s probably too good to be true. The best entrepreneurs set distant goals – often decades into the future. They don’t expect immmediate results, and they’re willing to work for years before seeing any returns. The goal is often to turn a small capital investment into a multi-million-dollar fortune within two or three decades.
- Self-Confidence: One of the most important aspects of a positive global mindset in business is confidence. The best entrepreneurs never lose hope, and they expect success rather than desperately hoping for it. They know that they are capable of reaching high goals, and they have faith in their own abilities. This allows them to take calculated risks without being overly cautious.
- Creativity: Entrepreneurs are some of the most creative people on the planet. While they might not be “artists,” they have incredible ideas that can transform our societies. Entrepreneurs are not afraid to cultivate their creativity, brainstorming ideas and trying out different strategies for success. Often, entrpreneuers try things that no one else has attempted in the past – leading to unparalleled levels of success.
- Accountability: Entrepreneurs aren’t afraid of making mistakes, but they also own their own failures. Instead of making excuses, these business owners learn from their mistakes and consider what went wrong. These lessons help them bounce back and try new, improved strategies with a higher chance of success. They know that the system is not rigged against them, and people can achieve anything if they try hard enough.
- Empathy: One of the most overlooked aspects of a positive mindset in business in empathy – or the ability to put yourself in other peoples’ shoes. This is often the key trait that allows entrepreneurs to come up with effective ideas for businesses. If you consider what the average consumer is thinking and feeling, it’s easier to solve their problems – creating effective products and services that people actually want and need.
- Resilience: Resilience is perhaps the most important trait for entrepreneurs. Entrepreneurs never give up, and they are always willing to bounce back after even the most catastrophic failures. Some of the world’s most successful entrepreneurs hit rock bottom at some point before throwing their hats back into the ring.
- Collaboration: Successful entrepreneurs are not afraid to ask for help, network with others, and collaborate. Even introverted business owners recognize the need for communication and teamwork. These entrepreneurs can delegate tasks effectively, receive advice from mentors, and lead others.
The Concept of Money in a Business Mindset
Business owners do not view money as a “safety net.” They do not hoard their cash, saving it up for a rainy day. Instead, they view money as “fuel” for future endeavors – capital that should be spent and put to work.
This is the complete opposite of a consumer mindset – especially in the post-pandemic world where people are saving cautiously and “hibernating” through troubling economic times.
This is one of the most difficult psychological shifts for new business owners, because it forces you to be more courageous while going against your instincts as a consumer.
One of the oldest mindset in business quotes was uttered by the ancient Roman playwright Titus Maccius Plautus, who said simply:
“You must spend money to make money.”
Investing in marketing, branding, networking, product development, talent acquisition, and many other areas can boost your profits considerably.
At the end of the day, this strategy can leave daring entrepreneurs with much more wealth than a business owner who cautiously saved their cash.
The Concept of Time in a Business Mindset
Successful entrepreneurs can let go of their inhibitions and resist the urge to save their cash because of the way they view the concept of time.
In the eyes of a true entrepreneur, time is worth far more than money. After all, it is the one resource on this planet that is truly finite. Whether you’re rich or poor, you only have so much time on this Earth.
Entrepreneurs would rather have more time on their hands than a full bank account. They know that by taking risks and investing their money wisely today, they can experience a future of total freedom tomorrow.
Ironically, success through entrepreneurship is the only real safety net any of us can hope for, and most wage-earners will experience financial insecurity and a scarcity of free time throughout their entire lives.
This means that when people are overly cautious with their money instead of investing or starting businesses, they may experience less wealth and less time – exactly the opposite of what they hoped for.
How and why you should create an effective mindset in business
By now, you probably understand why it’s so important to cultivate an effective mindset in business. Success is a clear consequence of this psychological shift… But what about the potential negative consequences?
The Risks of a Negative Mindset Might Surprise You
- Suicide: Many entrepreneurs have taken their own lives after experiencing failure. If you don’t create an effective mindset early in your entrepreneurial career, you may suffer catastrophic mental health issues. Jody Sherman took his own life after the failure of the eCommerce website Ecomom. Ilya Zhitomirskiy was just 22 years old when he committed suicide when his social media platform Diaspora failed to gather momentum.
- A Lifetime of Regret: Failing to take risks might seem like the safe approach, but a lifetime of regret could prove to be a much worse consequence than you ever imagined. There’s nothing worse than constantly being haunted by opportunities that you never seized. Whether it’s that girl you never asked out or a business idea that never materialized, a sense of regret can be difficult to accept.
- Blaming Others: Without a positive mindset in business, you may start to blame others for your own failures – including those closest to you. This can cause rifts in families and end friendships. When you take accountability for your own actions and remain resilient, your optimism not only maintains important relationships, but it can also make you a more attractive person.
Actionable Tips for Building an Effective Mindset in Business
So how exactly do you create an effective mindset in business? What can you do right now to improve your psychological well-being and efficiency as an entrepreneur?
- Consider Meditation: Studies show that meditation can be very effective for entrepreneurs, boosting cognition, focus, energy, and a general sense of well-being.
- Split Tasks into Smaller Chunks: If you’re feeling overwhelmed by the future, take it one step at a time and split larger tasks into smaller chunks.
- Find a Mentor: If you’re struggling to adopt an effective mindset for business, you might want to find a mentor. Some people learn by watching and listening to others. A mentor can provide you with a real-life example of a positive mindset.
- Constantly Learn New Skills: Entrepreneurs never stop learning, and they constantly learn new skills. They’re also brave enough to challenge themselves and improve upon their weaknesses without simply focusing on their strengths.
- Invest in Marketing: If you’re feeling overly cautious about your money, try investing in marketing. This is a great way to put your capital to work, and you can start small with social media, paid ads, or blogs. You might also hire freelancers to create traffic-generating content. Make sure to engage in targeted marketing investment to maximize your ROI.
- Take Time for Yourself: Burnout is a very real threat for entrepreneurs, and you should try to take time for yourself. Do something you love at least once a week and recharge.
- Eliminate Distractions: The best entrepreneurs eliminate distractions and focus on their goals. Try putting your phone in another room while working on your computer. An effective mindset in business can even help you deal with sources of stress that are totally unrelated to your career.
- Write Down Your Goals: Don’t just keep your goals in your head. Write them down and state exactly when you want to meet these goals. Set both long-term and short-term goals, and don’t be afraid to plan for decades into the future. You might also want to write down your fears.
- Ask for Feedback: Be open to criticism. In fact, seek it out. Ask for feedback from just about anyone you come into contact with – whether it’s a co-worker, a friend, a customer, a mentor, or a family member.
Building towards success with your mindset in business
There’s nothing wrong with being risk-averse as an entrepreneur.
Being willing to accept change does not mean you need to go out and throw away all your cash in a desperate attempt to “get rich quick.”
Saving your money in a bank account is a smart choice – especially during times of economic uncertainty.
- 10 Traits of Highly Agile Companies
- Your Mindset Is The Secret To Successful Growth
- How to Stay Flexible Through Your Business Expansion
- How to have a ‘wealth mindset’ instead of a ‘poor mindset’ as an investor, from a financial psychologist
That being said, saving all of your money in an obsessively cautious manner will never result in true success.
Strike a balance between these two priorities, and you’ll find that success is much closer than you think.
If you’re ready to leave the consumer mindset behind and transform your psychology as an entrepreneur, Alliance Virtual Offices is here to help.
With our Virtual Office service, you can invest intelligently in a remote business structure, lowering your monthly costs with additional tax benefits and in a reputable location.
With options like AVO, you can save money cautiously and take advantage of new opportunities as you grow your business.
Check out Alliance Virtual Offices today to learn more.