Why 99% of entrepreneurs stay broke

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If you learn nothing else from this newsletter, let it be this one critical lesson.

Welcome to another issue of Passionate Income.

Today, we’ll be discussing the #1 behavior responsible for keeping 99% of online entrepreneurs broke.

Let’s dive in.

When it comes to business, there are a million things that could block your success. From choosing the wrong niche, to government lockdowns, to a hurricane wiping out your store.

But in most cases, what blocks people from success is their own behavior.

Tony Robbins is famous for saying: “Success is 85% mental, and 15% skills.”

What he meant is that it’s people’s mindset that holds them back.

Not their lack of funding. Not their network. Their mindset. And in my experience, this is 100% true.

While there are many mindset blocks that “could” hold someone back from success, in my experience there’s one - just one - that is absolutely fatal for young entrepreneurs.

So what is this dream destroying belief?

The idea that the grass is greener on the other side.

Let me explain.

I was recently listening to an Alex Hormozi podcast episode where he discusses the 5 Phases of Niche Hopping. Here they are:

#1 - Uninformed Optimism
#2 - Informed Pessimism
#3 - Valley of Despair
#4 - Informed Optimism
#5 - Success & Fulfillment

Let’s break these down by one by one so you can identify which phase you’re in and stop yourself from making an income destroying mistake.

#1 - Uninformed Optimism 🤑

In the uninformed optimism phase, you’re blinded by opportunity. You see gurus in your niche driving lambos and renting villas and think:

“Yes, if I follow their plan I too can get a lambo.” Or retire your parents, or buy a pet kangaroo. Whatever you want to do. And in all honesty, you’re not wrong. You can. But only if you make it past the next few phases.

#2 - Informed Pessimism 😒

This is where the shit hits the fan. You’ve started taking action, are struggling to generate profit, and realize the lambos and pet kangaroos are a long ways off. This is normal, but because most people don’t anticipate the struggle, they’re surprised by it.

#3 - Valley of Despair 😔

In the Valley of Despair, you basically say: “F this ish. I’m done.”

By this point, you’re drowning in problems, stressed to the max, and still don’t have any cash coming in. Unfortunately, this is where 99% of entrepreneurs give up. Which is why 99% of them stay broke. But more on that later.

#4 - Informed Optimism 🙂

Assuming someone pushes through the nightmare of Phase #3, they arrive to Informed Optimism. They’re not longer wearing “rose colored” glasses. They know success in business requires struggle, pain, suffering and sacrifice. And because of that, they pay the price for success willingly.

#5 - Success & Fulfillment 💰

To use a farming analogy, this is where you harvest the fruits of your labor. You planted, you nurtured, you waited. And now you finally get to reap the benefits.

Assuming you put continual effort into improving your product or service, by this point, your reputation and word of mouth will compound to the point your business surpasses 99% of your so-called competitors.

On the surface, this is a pretty simple concept to understand. But in reality, 99% of online business owners completely screw this up. How?

Because when they get to the Valley of Despair, they give up.

And the reason they give up is because they believe the grass is greener on the other side.

In particular, they start to think they chose the wrong business model.

They start to think that if they start something new - in a new industry - their problems will disappear. Which, in turn, would allow them to make a bunch of cash without having to go through the Valley of Despair.

And that simple lie is the 99% of entrepreneurs will stay broke forever.

Make no mistake about it: There is no business model on the planet that is “easy.” If there was, everybody would be doing it.

Doesn’t matter if it’s dropshipping, becoming an influencer, starting an agency.

No matter what business you choose, it is guaranteed you will go through the five phases above.

First, you’ll start out bright eyed and bushy tailed. Next, you’ll realize things weren’t as easy as you thought. From there, as you continue facing problems, you will eventually reach a point of despair.

What you do at that moment will determine your future as an entrepreneur.

If you give up and start over, you will repeat the cycle.

Because you’re uninformed of the difficulties, you’ll jump to a new business model you’re excited about. But within a matter of weeks (if not days), your enthusiasm will be rapidly crushed as you realize the new business has its own challenges.

DO NOT MAKE THIS MISTAKE

You will never achieve success if you repeat this pattern. You must push through the shit. Success lies on the other side of all those problems.

Every time you jump niches - and switch business models - you’re resetting your progress. Going back to zero, at which point you guarantee your future self has to face the Valley of Despair (yet again).

Break this pattern. Find the ONE business model you’re committed to pushing forward through thick and thin. Be the man or woman who keeps going when everyone else gives up.

It won’t be easy. You will want to give up often. Potentially every day.

But on that other side of that struggle is everything you ever dreamed of. The car, the house, the lifestyle.

If you push through the Valley of Despair, all of this and more can be yours.

I'll leave you with this quote…

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