Five Business Mistakes that KILL the American Dream

If you or someone you know owns or runs a small business (any business that earns under $38.5 million a year), chances are you are making massive business mistakes that are causing you to be unsuccessful.

However, did you know that in America alone, over 500,000 small businesses shut down EVERY YEAR? It’s a staggering amount, and what I’ve found through years of research is not only is it preventable, but they usually FAIL because of 1 of these 3 mistakes…

Even still what blows me away is that the MAJORITY of small business owners DON’T KNOW THEM or that they even EXIST! This is why EVERY single small business owner should know what they are and how to stop them, because if you don’t you are bound to make them, like I once did…

Know the Rules of The Game

Years ago, a partner and I used to run a factory business in Africa. It was a typical 50-50 relationship where I provided the sales, design and marketing. He would provide the employees, the factory but he also handled the money (a VERY important detail and I’ll explain why).

Our business would build prop swords for movies like Gladiator and Lord of the Rings and I was a world-class fencing champion who loved to play with swords…

Well, word somehow got out, and I was challenged to a duel by the local stick fighting champion! Never one to back down I accepted, and long story short I won and started to feel pretty good about myself, that is until my business partner came back upset…

He charged at me screaming, “ADAM DID YOU STICK FIGHT ONE OF THE WORKERS?!” I said, “Umm, yeah, I did, why?” He said, “DID YOU KNOW YOU WERE FIGHTING FOR OWNERSHIP OF THE COMPANY?!” I replied, “No, I did not…” He said, “Adam, you NEVER, EVER stick fight with Africans”


You see, I didn’t know the Rules of the Game, and it could’ve costed me big! It’s a mistake that most small business owners don’t even know they’re committing! Not every business plays by the same rules and whether your business is succeeding or failing, you may STILL not know the rules…

A lot of people think because they’re winning and having a lot of successes, they won’t bother learning the rules. And the people who are failing ask questions like, “What do I do? What do I do? What do I do?” And they never think, “What should I have done? What rules did I miss?!”

Even still, let’s say you’re having successes but you don’t know why you’re winning and you don’t know what’s at stake, when something goes wrong, and you don’t know the rules, how do you know how to fix it? So, if you want to do something seriously in life, whatever it is, whether it’s running a business or fighting for ownership of a factory…

What Mistakes Cause Businesses To Fail?

In America, there are over 31.7 million small businesses. If you’re a business owner, even in a different industry, you should know that you are competing for the same dollars as everybody else. So, of those 31.7 million small businesses, what percentage do you think are going to fail?

According to the US Bureau of Labor and Statistics, 66% of businesses will fail. Meaning 2 out of every 3 businesses you know will not make it. So, if you run a business and can name any two people you know who run a business of their own, can you predict which 2 of you are going to fail and are you aware of the rules?

Through research I’ve found the 3 major mistakes that contribute the most to small businesses failing, and I’ve stood in front of thousands of business owners who all make millions a year, and you’d be shocked by how many of them could not guess all three or even one! 

Business Plan Mistake #1 – No Market Need

Almost HALF of every single business in the world fails because they create products that have no real demand. According to CB Insights, 42% of companies try to sell things nobody wants! You should never build a business based on an idea of something that YOU want to sell…

Just because you want to sell it doesn’t mean that somebody else wants to buy it…

You may have a dream to create the newest theme park like Disney world, or maybe to create the best training program for athletes. You might have a dream to create the best cake decorating company in the world, or you may have no idea what you want to be doing at all, but unless you have an audience of potential customers to get it started, your business is going to fail… 

In fact, it’s almost always better off to start with a business that you can get going and sell something that people want. And then you can take the money that you’ve built and turn it into something that you actually want to be doing.

For example, the fastest way to build a theme park might be to run a Halloween experience for a local community as a regular event, or the fastest way to create a training program for athletes might be to help young athletes at a local middle school first, or the fastest way to creating the best cake decorating company in the world might be to run cake decorating parties for local communities and family members.

If you have absolutely no idea what you want to do, then you might be better off starting a business that is needed that nobody else wants to do, as they often make the most money. For example, a cleaning service at an apartment complex.

I had a friend who moved into a complex with 200 apartments and he couldn’t find a good cleaning service. Every time he was in the elevator talking to other people in the elevator, they were all talking about the fact that they couldn’t find a good cleaner. So, my buddy went out and he found a guy trying to build a cleaning business on Craigslist and said to him, “listen, if you come and clean my apartment, the way that I want it done, I would enter into a business with you, where we can really scale what you’re doing.”

The guy agrees and my buddy teaches him how to clean his apartment in full. He teaches him everything he wants; white glove treatment, and it looks absolutely phenomenal. Now the guy says “Wow, I love this. Thank you so much for teaching me!” And he becomes his cleaner for a month cleaning once a week, every single week making his apartment look great.

At the end of it, my buddy goes to other people in the apartment complex and says, “I found a guy. He’s really good. Would you be interested in using him?”

Essentially selling this guy’s cleaning service to every single apartment inside the apartment complex generating enough money to pay his rent, to live in this apartment complex, and invest in other properties that he was buying based off this cleaner cleaning 200 apartments!

You see, a great business model, the smart way to build a business, is to use market research to identify the greatest need your largest audience has, and then use that to develop a product that people want. Even if your largest audience is just the apartment complex you live in, use that to develop a product that people actually want. This is how I’ve built multiple seven figure companies myself and the system we teach inside our Smart Blueprint. 

Business Plan Mistake #2 – Cash Flow Issues

Cash flow issues kill 29% of small businesses in America, but they’re actually simple to fix. In order to understand it, think about these two different scenarios, Family business Fred and Smart Blueprint Sam…

Family business Fred has a company selling lawn care for $200 a home and Smart Blueprint Sam has the same service in a different town. Imagine these two towns are very, very similar and their Homeowners Associations have a requirement that people must maintain their lawns.

They both charge $200 a month per house for lawn care, and they both have 30 customers, which works out to one lawn per day. If you do this every single day, 30 days a month, they’d both make $6,000 a month. Family business Fred relies purely on word of mouth and Smart Blueprint Sam follows the S.M.A.R.T Blueprint.

It takes two hours to mow a lawn. Family business Fred works for 15 hours a week, approximately 30 lawns a month and Smart Blueprint Sam does exactly the same. 

Family business Fred does what every family business owner does, keep all the money. Smart Blueprint Sam uses the S.M.A.R.T Blueprint!

Rather than keeping all the money half of the money is put aside for ads, sales and marketing…

50% of that money, 1/6 of that money is put aside for staffing, another 1/6 is put aside for costs and another 1/6 is put aside for profit.

That means that out of the $6,000 a month, rather than keeping it all Smart Blueprint Sam spends 3000 on ad sales and marketing, which is enough to hire a local advertising agency and pay for advertising. Has a thousand dollars for costs like accountants, payroll and equipment repair. And Sam’s got a thousand dollars to pay himself as an owner.

After the first 30 days and 30 customers, Family business Fred has $6,000 and Smart Blueprint Sam has $2,000 because he gives himself a $1000 for being a staff member, and another $1000 as the owner, but he gains 10 new clients because of the $3,000 ad budget!

As we move into month two, Family business Fred is still waiting for referrals, but Smart Blueprint Sam got those 10 new customers.

That means that Family Business Fred makes $6,000, but this time Smart Blueprint Sam makes $2,667 and now has 12 new clients because the ad budget is even larger!

As we get into month three, Family business Fred still makes $6,000, but Smart Blueprint Sam now makes $3,467 as a combination of the only staff member and a business owner, plus he’s gained 18 new clients, thanks to an even bigger ad budget.

In month four, Family business Fred makes $6,000 again, but Sam now gets $4,667 and 20 new clients. 

Now as we enter month five, Smart Blueprint Sam now makes $6,000 a month purely as a staff member and business owner. Five months from the start, Smart Blueprint Sam now makes as much as Family business Fred except Smart Blueprint Sam is now structured to be a much bigger and better company.

Family business Fred is only working 15 hours a week and Smart Blueprint Sam has 45-hour workweek servicing 90 clients, which actually is just a full-time job.

You could argue, “Fred’s got it better. Fred doesn’t have to work as much.” Well, at this point, Smart Blueprint Sam does something really smart.

Smart Blueprint Sam now shifts their financials and instead of spending half on ad sales and marketing, they’ve decided to scale it back. 1/4 is now for ad sales and marketing. 1/4 is for staff, which now goes to the new Employee Eric, 1/4 goes to costs and 1/4 is profit, which all goes to Smart Blueprints Sam.

At 90 clients at $200 a month without having to change any of the pricing, we have $18,000 in gross revenue a month. That means, 25% is $4,500 in ads and marketing, still 50% larger than the initial budget that brought 10 new clients a month.

We can assume there’ll be 15 new clients a month, give or take, meaning every three months Sam will see his business growing by a significant 50%. $4,500 that goes to staff, which is Employee Eric to mow lawns 45 hours a week, almost as much as Family business Fred except Employee Eric has guaranteed income and maybe even health benefits!

$4,500 goes towards costs, which is accounting taxes, lawyers, paperwork, equipment.

Lastly that leaves $4,500 for Smart Blueprint Sam who is now pretty much retired. And as the company continues to grow, Smart Blueprint Sam may need to hire new staff members like, Employee Eric to help scale, and every time he adds a new employee, he just makes more money time and time again. 

Now this is just one way to handle cash flow, but let’s look at the real issue.

What if Family Business Fred suffers an injury which completely kills their ability to work or generate cash flow for a while? 

That will completely impact their ability to make money. And of course, if they don’t do lawn care to the houses, the people in those houses are probably going to switch to Smart Blueprint Sam, because it’s a much more reliable service, as Smart Blueprint Sam can always call another employee to cover. If one of his employees are sick, Smart Blueprint Sam has a stronger cash flow model and has built a business that is designed to last! To put it bluntly, Sam works a system, but Fred’s system works him!

Mistake #3 – Not Hiring The Right Talent

CB Insights discovered that 23% of businesses fail because they don’t attract the right talent. And since Smart Blueprint Sam isn’t an advertising expert or an accountant, he’d be in deep trouble if Employee Eric does a bad job because Smart Blueprint Sam will have to do all the work…

Attracting the right talent actually comes down to just four things, Pay, a Hiring and Firing System, a Culture Match and Killer Referrals, and if you do this right, you’ll find your P.A.C.K.

Lesson #1: Pay

 When it comes to pay, you have to be competitive. Too many people try to build a business by getting the cheapest employee they can. If you get the cheapest employee, you’ll end up with the cheapest amount of work, and the cheapest amount of service which is not good!

You’ve got to be competitive enough on the pay that people would risk leaving their job to come to you. It’s how you get the good talent, because it’s the good employees that will leave and go for better pay. 

Next, I would strongly recommend an annual pay rise of about 5% a year as standard. It’s regarded as the Golden Standard and it’s not “If they do a good job, they get 5%.” Their performance was either bad enough that you fired them, or good enough that they warrant a 5% raise. If they can rely on 5% improvement every single year, that’s the kind of thing that will make them stay on, meaning less training time for you, more loyal customers, and ultimately everyone’s great.

Next is a generous Holiday System, which is best illustrated by the story of the Woodsman.

The Lumberjack Story

This guy is the #1 lumberjack in town, with his axe he can cut down more trees than anybody else. One day this foreman of this lumber yard goes to him and says, “I want you to work for my company. The average guy cuts down 10 trees a week. How many can you do?” The lumberjack says, “I can do 12 a day!”

The foreman says, “Great! We’ll hire you.” Sure enough, day one, this guy is destroying everyone cutting down 12 trees while everyone else is doing 10! However, by week 2, he’s only cutting 10 trees, same as everybody else. And the foreman becomes concerned wondering, “Is this guy slacking off not working as hard anymore?”

So, he goes to see him and the guy’s puffing, out of breath and the foreman asks him “what’s going on?” The lumberjack says, “I don’t know, I’m working as hard as ever boss. I just, I’m just, I don’t, I’m cutting down less trees.”

The foreman responds, “okay, well, just keep going. I’m sure you got it a week later. Everyone’s doing 10…”

Week 3, everybody’s doing 10 trees a day, EXCEPT the new guy who’s gone from 12 to 8! So, the foreman pulls him aside and said, “what’s going on!?” And the new guy goes, “I don’t know, Boss…” The foreman says, “let me have a look at your axe.” And when he looks, it’s blunt and beaten up. And he goes, “dude, do you ever sharpen your axe?”

He replied, “well, no, I’m too busy cutting down trees. I have no time sharpen my axe” the foreman says, “listen, take some time, a couple of hours…Sharpen your axe and you’re going to see that it’s a little bit easier.” So sure enough, the guy sharpens the acts and he’s back to chopping 12 trees a day….

Sometimes, you want to outperform everyone, but sometimes outperforming everyone is making sure you take the time to rest. You have to take time to rest or you’re going to burn yourself out and become less efficient.

For some people, rest can be meditating once a day, for others it’s a gym, and for some people, it’s just getting a good night’s sleep. Whatever you do to get your rest, you MUST sharpen your axe, and your employees need to sharpen their axes too.

When you give employees generous holidays, they will come back to work rested. How likely is someone going to steal your best employee when you are offering a great amount of vacation a year?

The last thing is medical. You got to make sure that your people have medical, especially in America, because a lot of people, if they have good medical insurance, they won’t leave the company because they want that medical insurance.

From this point, you’re now a very, very competitive company, but just because you’re paying them well, if there isn’t a culture fit, or if you don’t have a good hiring and firing system, then it all collapses.

In order to hire the best employees, you need to make sure you’re not just advertising on job sites, but you’re actually paying for the ads, because the more eyes on your advert, the more people will apply allowing you filter out and get the good ones. If you’re looking for a great employee, don’t cut corners. 

Also, you’ll want to build filters to weed out the people that don’t pay attention. For example, one of ours might say, make the headline a different colored font, so if someone’s just copying and pasting CVS or resumes, they’re going to fail with us because we have these tweaks they have to make. But if they’ve got good attention to detail, they’ll get through that first initial round.

The more details we require from them, ultimately the better the applicants that we get. Another filter is to give people a minor assignment just to prove they care about the job, however, make it very clear that you’re not trying to get free work out of them. Give them a minor assignment that takes less than 10 minutes to see if somebody is willing to go that extra mile to get the job, and if they are, they’re going to stand out.

Hire Slow and Fire Fast

Lastly, one of the best rules you’ll ever learned about staff is to Hire Slow and Fire Fast. Really take the time to weed people out, go through the interview process, talk to people, give them tests and go through that very, very slowly and be very, very particular about who you hire.

The minute somebody, does something worthy of a warning, you’ll probably want to start looking to replace them. You may not have to, but you must be quick on that trigger finger in our company.

Give a verbal warning, then a written warning, and then the next infraction they must be fired if they all come within six months.

Hire Slow and Fire Fast, because if you know you offer a competitive environment, have things like full medical, five-week vacations, guaranteed pay rises every year and Christmas bonuses, you know you’re offering something good. And if somebody’s just here to mess around, you should want them out.

Culture Match

Next, you’ll want to make sure you hire the right talent that will be a culture match. The easiest way to get a culture match is to know the qualities that make you excellent as a person and that you display daily. So rather than thinking, “what kind of culture do I want to create in my company?”

Think, “what kind of culture do I have” and build a company around that. If you have some toxic traits, you need to get rid of them before you start building a company, because building a company off the back of toxic traits, isn’t good.

During the hiring process, make sure that you tell your staff what the culture of the company is, like which traits you follow and only hire employees that are willing to fulfill those traits. It’s very important that those traits are not only things the employee agrees with, but they’re things that employees would want to have themselves. 

Six Qualities of the Culture in my Company

I want to share with you the six qualities and cultures that we live by in our company. It’s something every single one of my employees agrees with, helped create live by, daily.

  1. Do what you say you will and have integrity.

I made a point of telling you what I was going to teach you and I’m making sure I deliver on it. I’m giving you actual actionable steps to help you get a business started, grow your business or fix a business by avoiding the 3 biggest mistakes. I believe I’ve fulfilled that promise because that’s one of my core qualities. I have integrity. And if I say I’m going to do something, I’m going to hold myself to it. I don’t need anybody else to hold myself to it. I’m going to hold myself to it because I follow that value.

  1. Lead with empathy

What that means is try when you initiate conversations with somebody to understand their emotions, understanding where they’re come from and really try to help them. Now, it may not stay that way, for example, if you reach out with empathy to help someone and they’re really rude, I’m going to react to that. But, in essence, I’m going to give them the benefit of the doubt because I want to reach a resolution, so I will work a resolution with you and I’ll help you in whatever problem you have because I believe it’s important for us to be kind and caring towards others.

  1. No entitlement

We don’t believe, regardless of who you are in the company, that you’re more important than anyone else, and that goes the same for me. A good example of this is, in our company we have a rule called stay in your lane. It means if I disagree with something one of my employees has done, but it’s in their department, I’ll give them the suggestion, but they don’t have to change it. It is just a suggestion. What I am doing is trusting that that person I’ve put in that place knows their department well enough to hear my suggestion and then make a good choice. If their choice doesn’t work then we might have to change a standard operating procedure in the company to fix that in the future.

  1. No cynicism. Highlight the solutions, not the problems

Don’t just bring up a problem with somebody and talk to them about the problem. If you bring up a problem, propose what the solution could be. Within our company we come up with three different solutions, so you’re presenting someone, “Hey, here’s the problem. These are the three solutions I’ve found. What do you think about any of these? Is there something I’ve missed?” That way you never bring somebody an open-ended problem. You’re always bringing them a couple of solutions as well.

  1. Grow or Die

You have to always be improving, leveling ourself up, and changing the processes. Business is constantly changing and you want to change with the times. The S.M.A.R.T Blueprint is now in its 3rd version because what we’re sharing has to be the latest most up to date, cutting edge content, and we will constantly improve and add new value to it.

  1. Take immediate action

It’s one of my biggest strong points. And it’s something that permeate throughout our company

That’s our culture but you don’t want to steal our six. Instead, what you want to do is sit down and think, “who are you? What cultural elements do you embody? What phrases do you live by?” Write those down on a piece of paper and that becomes the culture of your company because ultimately the culture of your company is you.

Lesson #3: Killer Referrals

You should really only hire teams and employees from referrals, the people and other companies that we know. The only exception to that is if we are running an ad for a position and we don’t know somebody who can refer somebody to us.

This is one of the reasons I make a point to regularly join trainings and masterminds with other people at similar levels to me in business, because the students, coaches of the programs, and other business owners are often the ones that help me with referrals.

You should only hire teams and employees from referrals, the people, and other companies that we know. The only exception to that is if we are running an ad for a position and we don’t know somebody who can refer somebody to us. This is one of the reasons I make a point to regularly join training and masterminds with other people at similar levels to me in business, because the students, coaches of the programs, and other business owners are often the ones that help me with referrals. 

When you’re both going through a program together you both want to see each other succeed, sharing tips like, “oh, I used this resource. It was really good.” Or “I tried this resource. It didn’t help me.” And these referrals are worth their weight in gold. This is why I recommend joining groups like the S.M.A.R.T Blueprint because you can, A: level yourself up, and B: You can network with other business owners and share referrals and share resources.

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About Adam Lyons

Beyond his own portfolio of growing companies, Lyons is an advisor for over 500 brands across the US and Canada. Lyons has been featured on the Today Show, The Steve Harvey Show, Forbes, Bloomberg Business and the NY Post. He has been awarded 3 different ‘Wicked Smaht’ Awards due to his innovative business strategies and multiple 2 comma club awards. Companies he has worked with include PepsiCo, Nike, Nescafé, Discovery Digital Networks and many smaller brands.

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