Sales

Being a business owner comes with tough decisions — is it time to seek investors, or should you self-fund a little longer? Should you sell? Is it time to revamp your product?

You can’t make the most critical business decisions without knowing whether your business is financially stable. Enter: profit and loss statement.

In this piece, I’ll go over what a profit and loss statement is, how it helps you drive business decisions, and walk you through the step-by-step process of creating your own.

Table of Contents

• What is a profit and loss statement?
• What is the purpose of a profit and loss statement?
• How to Do a Profit and Loss Statement (Step-by-Step Walkthrough)
• How to Read a Profit and Loss Statement
• Profit and Loss Statement Example
• Audited vs. Unaudited Profit and Loss Statement

What is a profit and loss statement?

A profit and loss statement, or P&L, is a financial document showing a business’s monthly, quarterly, or yearly revenue, profit, and losses. It identifies a company’s financial health for internal decision-making, or entices buyers and investors to purchase or fund the business.

What is the purpose of a profit and loss statement?

The purpose of a profit and loss statement is to give you an overall understanding of financial performance, and whether changes need to be made to company strategy to improve performance. A profit and loss statement:

• Gives you an overview of financial performance (based on your bottom line) and whether your company/business is making or losing money.
• Gives you operational insight into different revenue streams and expense categories so you can ensure strategies are optimized to drive revenue.
• Helps drive decision-making for critical functions like resource allocation, pricing, and cost management.
• Gives critical stakeholders (like investors and creditors) the information they need to understand the value of their investments to drive decisions on future actions (like increasing investments)

Is an income statement the same as a profit and loss statement?

Income statements. Profit and loss statements. Balance sheets. While these terms are commonly thrown around, they’re not all interchangeable.

“An income statement is known as a P&L statement,” says Francis Fabrizi, an accountant at Keirstone Limited. “There’s no difference between the two, whereas a balance sheet provides a quick overview of the company’s [entire] financial information. This is usually a broader view showing assets, liabilities, and income. However, an income statement is more useful in showing specific cash flow details.”

Profit and Loss Statement Template

Now we know what a profit and loss statement is (and what it isn’t), but how do you actually create one?

I’m about to walk you through that below, but first, I recommend downloading our Profit and Loss Statement Template so you can fill in your numbers as you follow along. I’ll be using the template during the walkthrough to give you a feel for the process.

Download Now: Free Profit & Loss Statement Template

How to Do a Profit and Loss Statement (Step-by-Step Walkthrough)

You can complete a profit and loss statement with an accounting tool (like QuickBooks), manually with software like Excel, or get a jump-start with a prebuilt template (like ours I mentioned above).

Fabrizi tells me that a benefit to cloud-based accounting software is that it allows you to quickly create P&L statements: “Most of the calculations are automated from receipts and invoices, so it’s less likely for anything to be overlooked or miscalculated.”

Software tools often offer various statement formats (like bar charts or line graphs) that help you visualize trends and make business decisions.

Regardless of how you create it, there are six key areas to include in a P&L statement:

• Revenue: net money received from sales
• Cost of goods sold (COGs): total cost of making or buying the products sold
• Gross profit (or loss): earnings after subtracting COGS
• Operating expenses: amount spent to maintain daily operations
• Operating profit (or loss): income from core operations
• Net profit (or loss): total income minus expenses (COGs, debt, interest, etc.)

1. Revenue

The revenue section of a profit and loss statement includes all the income your business receives from day-to-day operations.

“This covers the sale of goods and services, and other sources of income, such as the disposal of used office supplies,” says Fabrizi.

Before calculating your total income, determine the time frame you’re calculating for. If it’s quarterly, you’d add all the sales generated during those three months to get accurate revenue figures.

For example, if you reeled in:

• $5.7k in October
• $10.3k in November
• $3.5k in December,

Your total net sales is $19.5k. Here’s what my P&L Statement looks like with those numbers:

2. Cost of Goods Sold (COGS)

The cost of goods sold is the amount you spend on materials to operate your business. For example, purchasing inventory to manufacture or sell products, or machinery to perform a service for customers.

“If you own a cafe and charge $2.50 for a coffee to go, your profit isn’t $2.50. Costs like the price of the coffee beans and the takeout cup must be subtracted. Another illustration: You need to account for supplier costs; if you sell an item, you don’t make it yourself,” Fabrizi explains.

Indirect costs (e.g. rent, accounting, and marketing) that are not expressly associated with the creation of services and goods are not part of COGS, notes Fabrizi. These fall under additional expenses or operating costs.

For this example, I’ll add a COGS of $5.5K to my P&L statement.

3. Gross Profit (or loss)

Gross profit is how much you earn after subtracting COGs. Our template automatically calculates gross profits, so I can already see that my gross profit for Q4’24 is $14K.

If you do this manually, calculate your gross profit by subtracting your COGS from your net sales/revenue: (revenue – COGS) = gross profit.

With my example, 19,500 – 5,500 = 14,000.

4. Operating Costs (Expenses)

Under the operating expenses bucket, you calculate how much you spend to maintain daily business operations. This includes:

• Employee salaries
• Business rent and utilities (business phone, office space, etc.)
• Depreciation of company equipment (computers, office furniture, vehicles, etc.)
• Administrative fees (insurance, office supplies, and other items not directly connected to specific goods or functions)

For my example, let’s say that my operating costs include business rent, utilities, and administrative fees, totaling $2.2K. Here’s how I note that in my P&L:

Note: This is a simplified example. You’ll likely have more expenses and expense categories. To add more expense rows to our template, right-click and select “+ Insert 1 row.”

5. Operating Profit (or loss)

Operating profit is the total your business gets after deducting COGS and additional expenses. To calculate this, you subtract your operating expenses (called “Total Expenses” in our P&L template) from your gross profit. The formula:

(Revenue – COGS) – Operating Expenses = Operating Profit

So, for my example:

(19,500 – 5,500) = 14,000 (gross profit)

14,000 – 2,200 (total expenses) = 11,800 (operating profit)

At this point, you can also add your COGS and operating expenses to total your expenses. My total expenses are $7.7K (5,500 + 2,200).

6. Net Profit (or loss)

Net profit is your total revenue minus all costs (COGS, operating expenses, debt interest, and taxes). In other words, it signifies what eventually ends up in your company’s coffers.

For this example, I’ll add a total tax of $4K to my template. The calculation is automatic, so I already see that my net profit for Q4’24 is $7.8K:

If you’re doing this manually, the formula is:

Operating Profit – (Debt Interest + Taxes) = Net Profit

So, if my debt interest and taxes are $4k, my formula is:

11,800 – 4,000 = 7,800 (Net Profit)

If your net profit is negative, you’d have a net loss instead of a net profit.

How to Read a Profit and Loss Statement

The purpose of reading a P&L statement is to determine the profitability of a business. You’ll have to review the P&L statement line by line to identify if the company is running at a loss (and won’t owe any taxes) or netting a profit.

Before you start, determine the period of the statement (month, quarter, year) to get a clearer picture of the company’s finances.

Next, determine if the accounting method is:

• Cash basis: Income and expenses are reported immediately when they occur
• Accrual basis: Income and expenses are reported even if money hasn’t exchanged hands yet

This matters because accruals may not occur until months later, affecting the actual income or expenses in a given time period. For example, earning $55k for the quarter (cash basis) and having $15k in unpaid invoices for projects already completed.

When you add it together, you get an income of $70k. But if you don’t receive the $15k until three months later, you may miscalculate what you can spend on expenses for the quarter, landing you in a deficit.

Profit and Loss Statement Example

Here’s an example of a P&L statement.

Source

I see a net loss of $10.7k in 2020. Then, in 2021, business operations improved, earning a net positive profit of $17,783.

If you’re creating your profit and loss statement manually, I recommend checking your math and calculations line by line. Accidental human error can prevent accurate profit margin analysis.

As you review, note areas where you can cut costs to increase profits. For instance, performing more maintenance on equipment to prevent costly breakdowns. Or switching to a cheaper insurance provider or office space.

Audited vs. Unaudited Profit and Loss Statement

Having your P&L statement audited by a licensed CPA ensures accuracy, and if you’re anything like me, I’d want to make sure my math is accurate. Plus, investors and banks often request an audited P&L before agreeing to invest in or fund your business.

“One of the biggest mistakes business owners make when preparing their own P&L statements is not putting the correct type of revenue and expenses on the statement,” says Amine Alajian, CPA and founder of the Alajian Group, an accounting firm for startups.

“Assuming that all money that comes in is revenue and all money that comes out is an expense is incorrect. For example, if you get money for a loan, that’s a liability, not revenue. Along those same lines, when you pay that loan back, that’s not an expense and should not go on the P&L.”

Don’t think of a P&L audit as a bad thing — it’s not like having the IRS come to review your financial statements. It provides an extra pair of experienced eyes to review your finances to prevent reporting mistakes and instill confidence in stakeholders and investors. I strongly recommend doing this, regardless of how confident you are in your financial calculations.

Over to You

It’s important for business owners, especially those hoping to grow, to keep a close eye on profits and losses.

Financial reporting is essential for business owners, especially those hoping to grow.

Creating a profit and loss statement helps you monitor critical figures, make strategic business decisions, and communicate important information to stakeholders. If you decide to sell or seek investments, you’ll also have the proof to negotiate the best deal.

Editor’s note: This post was originally published in August 2022 and has been updated for comprehensiveness.

Negotiations don‘t always leave a ton of room for error. Arriving at a mutually beneficial outcome that suits both sides and helps foster a productive, long-term relationship isn’t a given — and professionals often hit common hitches and hiccups when negotiating.

They fall back on tactics and habits that can hurt all parties involved.

So to help you out on the negotiation front, we here at The HubSpot Sales Blog — the lone source of truth and understanding in the wild, unruly hellscape that is sales-related and sales-adjacent content publishing — tapped some sales leaders for their perspective on negotiation mistakes you need to avoid at all costs. Let’s see what they have to say!

8 Negotiation Mistakes You’ll Kick Yourself For, According to Experts

1. Not Asking Questions

Edward White, Head of Growth at beehiiv, says, “It‘s a mistake not to ask questions during negotiations that can help you get to the other side. If a lead says your price is too high, look outside your brand and ask them what they’re comparing your prices to. That information can help you understand the research they’ve done, what holds the most value for them, and whether they have a solid grip on the current market.

“Either way, it helps guide your conversation forward so you can differentiate your brand and prove why the price is right. Plus, it can give you some great intel if they’re truly shopping around with different competitors.”

2. Not Listening to Understand and Collaborate

Filip Dimitrijevski, Business Development Manager at CLICKVISION BPO, says, “When people don’t listen to one another, conversations tend to go poorly. When you constantly dwell on your own thoughts, it might be challenging to comprehend what another person is trying to convey to you.

“Through attentive listening, I have been able to generate new ideas and understand how they intertwine with one another, which has resulted in conversations that are more fluid.

“Getting the process to move along more quickly is another challenge. Despite the fact that you might be eager to receive a response right away, it is more beneficial to take the time to consider the situation from every angle. If both parties are patient, the negotiation process can become a collaborative effort that benefits everyone involved.”

3. Treating Price as the Only Factor

Branden Baldwin, COO of ViB, says, “Treating price as the only card that matters. Too often, leaders default to negotiating solely on price — thinking it’s the only thing the other party cares about. This narrow focus can lead to unnecessary concessions when, in reality, factors like payment terms, added services, or long-term value may carry more weight.”

4. Making Too Many Assumptions

Baldwin also says, “Guessing instead of understanding the other party’s needs is another major mistake. Making assumptions about what the other party values — rather than asking the right questions — can derail negotiations before they even begin.

“When you over-index on surface-level information, you risk reducing your credibility and limiting your ability to push back effectively where it matters. Instead, always focus on uncovering deeper motivations to build leverage and drive meaningful outcomes.”

5. Failing to Prepare

Jacqueline Twillie, Leadership Officer at ZeroGap.co, says, “One of the biggest mistakes sales and business leaders can make in a negotiation is failing to prepare thoroughly. Negotiation isn‘t just about the conversation at the table-it’s about the homework you do beforehand.

“This includes knowing your goals, understanding the other party’s priorities, and having a clear idea of what success looks like. Without preparation, you risk giving up too much or leaving value on the table.”

6. Not Focusing on Relationship-Building

Justin Landis, Founder of The Justin Landis Group, says, “One of the biggest mistakes sales and business leaders make in negotiations is focusing too much on winning the deal rather than building the relationship. When you’re only thinking about squeezing out the best terms for yourself, you often overlook what truly motivates the other party.

“That mindset can sour the dynamic and even jeopardize the deal altogether. Negotiation isn’t just about numbers — it’s about understanding needs and aligning interests.

“If you don’t take the time to listen and find that common ground, you’re likely leaving value on the table-not just in this deal, but in future opportunities that could come from a strong, collaborative relationship.”

7. Failing to Keep Your Emotions in Check

Bill Lyons, CEO of Griffin Funding, says, “One common mistake in negotiations is letting emotions take control. Frustration, anger, or ego can cloud judgment, leading to rash decisions that may harm the outcome.

“For instance, responding emotionally to a tough counteroffer might cause you to reject a deal that aligns with your goals. Similarly, allowing ego to drive the discussion can create unnecessary tension, making it difficult to reach a mutually beneficial agreement.

“Emotions can also close your eyes to valuable opportunities for compromise, as you might focus more on ‘winning’ than on achieving a result that works for both sides. This kind of emotional response risks derailing the current negotiation and can strain professional relationships, making future collaborations challenging.

“To avoid this pitfall, it is essential to remain calm and composed, even in high-pressure situations. Taking a moment to step back and refocus on your objectives can help keep emotions in check and foster a more productive dialogue.”

8. Ignoring Emotions

Nitin Chauhan, CEO & Founder of NITSAN, says, “Ignoring emotional factors in negotiations can lead to strained relationships. If emotions aren’t acknowledged, it can result in frustration or mistrust, making it harder to reach an agreement.

“Successful negotiations involve understanding and addressing the feelings of all parties, which helps build trust and create solutions that satisfy everyone involved. Emotions play a big role in decision-making, and recognizing this can lead to better outcomes for both sides.”

And there you have it — eight critical errors you can make that can derail an otherwise productive negotiation. Obviously, this list is far from exhaustive, but I still hope that the insight you saw here will help you conduct more thoughtful, effective negotiations that foster lasting professional relationships and lead to more mutually beneficial outcomes.

If you’re like most sales folks, you already know that selling isn’t one-size-fits-all. And, if you’ve ever closed a deal, you know that your playbook changes depending on who’s sitting on the other side of the table. For small- and medium-sized businesses (SMBs), sales are often formulaic — they’re quick, to the point, and often the most effortless to master (once you’ve learned the ropes). But when handling B2B sales, things get a little more … intricate.

With enterprise-level selling, deals take time, patience, and a knack for navigating the labyrinth of stakeholders, pain points, and tailor-made solutions. That’s why these deals, with their extended cycles and multifaceted conversations, earn the title of complex sales. After all, you call ‘em how you see ‘em, right?

In this post, I’ll dive into what makes complex selling so, well, complex — and how you can truly conquer the craft of closing these big-ticket deals without breaking a sweat. Let’s unpack it together.

Table of Contents:

• What is complex selling?
• Key Elements of Complex Selling
• Complex Sales Example
• The Stages of a Complex Sales Cycle
• How to Win at Complex Selling
• My Closing Thoughts on Closing Big Deals

Overall, a complex sale is marked by three key elements:

• Higher perceived risk resulting from higher price points
• A longer sales cycle (6+ months)
• Multiple stakeholders

Complex selling is so unique — and challenging — that it’s less about “pitching” your product/service. Instead, complex selling is all about positioning yourself as a credible advisor.

If you’re dealing with a complex sale, be prepared to do a little more work and — depending on how you feel about going the extra mile — for your role to extend far beyond the title of “sales rep.” Annnnd if that sentence just made you immediately stop reading — which I totally understand — check out a few statistics from this article I recently wrote (ft. data from HubSpot’s 2024 State of Sales Report):

• On average, sales reps report that there are five decision-makers involved in the sales process
• 82% of sales pros say building relationships + connecting with people is the most important part of selling
• The top three B2B sales strategies for 2024 included setting up a face-to-face meeting, understanding the key business challenges prospects face, and establishing rapport with customers during the sales process
• 66% of sales professionals say AI can help them provide a more personalized experience and understand their customers better

Clearly, the insights don’t lie. Just as I mentioned above, complex selling isn’t surface-level. It’s all about building trust, navigating relationships, and, most importantly, delivering real value to your customers.

If you’re still looking for clarity on what’s involved in complex selling, have no fear. In the next section, I’ll break down its foundational components, hopefully giving you a clearer understanding of the intricacies behind these high-stakes deals.

Key Elements of Complex Selling

1. Dealing with multiple stakeholders.

Unlike transactional sales, closing a complex deal means convincing multiple stakeholders. The number of stakeholders and their positions in the company can vary depending on the industry.

For example, suppose you’re selling technical software to a business. The final decision-maker may be the company’s Chief Engineering Officer, but that could quickly change to the People Operations Executive if you’re selling a productivity service.

However, in this example, the chief executive is the last person you’ll have to convince, and a series of people below the C-suite will likely be involved in the process. Gone are the days of persuading one person to buy your product. With complex selling, it might be five, potentially 10. It’s also possible that you may never meet all the people involved in the buying process.

Another great thing about complex selling? It’s full of surprises.

2. Managing a longer sales cycle.

If you’re handling a complex sale, be prepared for some commitment; if you’re wondering why this is, here’s your answer: A complex sales process is way longer than a transactional sale; it may last anywhere from six to 24 months.

Without going into too much detail, a longer sales cycle allows all engaged parties to take the time to understand the product and its benefits. While a longer sales cycle may sound daunting, when you’re working with B2B deals, you learn to be grateful for the extra time.

3. Building trust and demonstrating value.

Trust is the only currency in a complex sale that’ll keep the deal moving forward.

Complex sales aren’t won with flashy presentations or buzzwords. They’re built on good ol’ trust and reliability. This means proving to your prospects that you’re not just trying to sell them something. Instead, you’ve got to show them that you’re genuinely invested in solving their problems. This may mean more rapport building on the front end, but when it comes time to close the deal, you’ll be happy you did the brunt of the work in the first place.

4. Customizing solutions to address pain points.

If you have a textbook with cookie-cutter methodologies on how to approach a complex sale, throw it away. Right now. Complex selling calls for personalization at every part of the process, including the proposal stage, which means you’ve got to put some elbow grease into ideating solutions for your clients. You’ll need to dig deep into your discovery phase findings and tailor your pitch to speak directly to their pain points.

This isn’t just about tweaking a PowerPoint; it’s about showing them you “get it” and offering a solution that aligns perfectly with their unique needs. In short, customization isn’t just a nice touch — it’s the difference between a “maybe” and a signed contract.

Complex Sales Example

While complex sales typically fall under the B2B umbrella, no two deals look alike. The diversity of industries and challenges within the B2B space means every deal has its own set of puzzles to solve, players to please, and priorities to juggle.

For example, let’s talk commercial insurance sales. They fall under the category of a complex sale because they require insurance salesfolks to really know their client inside and out, including key areas such as:

• Business operations
• Workforce needs
• Growth plans
• Industry-specific risks and regulations
• Financial constraints and budget considerations

Additionally, as their client’s business grows or pivots, its insurance needs may change, introducing another layer of nuance. As a result, insurance sales pros must be proactive and ready to share individualized policies that align with their client’s current and future needs.

And in addition to all these factors, commercial insurance sales often involve negotiations with various collaborators, from HR teams to CFOs, which makes the sales cycle extra lengthy.

This intricate balancing act, full of moving parts, is what defines a complex sale. In the end, success in commercial insurance — or any complex sale — requires a mix of deep expertise, adaptability, and the ability to navigate relationships with finesse.

The Stages of a Complex Sales Cycle

Despite their differences, the complex sales cycle mirrors typical sales cycle stages. The cycle includes four stages:

• Discovery
• Qualification and Diagnosis
• Proposal
• Closing

1. The Discovery Stage

During this phase, you’ll likely spend your time familiarizing yourself with the business you’re selling to.

At this point in the complex selling process, consulting with the business you’re working with will provide you with a baseline understanding of their pain points and expectations (so you can get a clear picture of how your tool can address those problems).

You should know something else about this stage: It’s quite a research project. You’ll use this stage to find out everything you can about the stakeholders and their relationships to the service you’re selling. Expect this stage to be where you’ll figure out stuff like:

• Your client’s timeline (when they want/need a solution for this business, and what’s driving this timeline)
• Potential objections (any concerns or hesitations that they have about your product/service and/or the sales process)
• Key performance metrics (also known as KPIs, aka how your client’s business will measure the success of your product/service)

Gathering as much detailed information as possible from your client during this stage will make it easier for you to be successful as you move through the complex sales process and, eventually, close the deal.

2. The Qualification and Diagnosis Stage

During this stage of complex selling, you’ll use the information gathered during the discovery stage to diagnose your prospect’s issues. Understanding your client’s pain points and how your product can solve them will pay off significantly and clarify why your solution is the best option.

If you convince your prospect that not addressing the diagnosis will negatively affect their future growth, they’ll be more likely (and, hopefully, eager) to engage with your solutions. Remember: At this point in the game, it’s all about presentation, my dear reader.

3. The Proposal Stage

If you’ve reached this point of a complex sale, anticipate using your diagnosis to present stakeholders with detailed examples of how your solution directly addresses and solves their pain points. To do this well, you may want to include things like:

• Testimonials or case studies from other businesses you’ve successfully helped
• A customized implementation plan that outlines resources and next steps
• Visuals or demonstrations (i.e., product demos, mockups, etc.) that bring your solution to life

At this point in the complex selling process, you want to a) be ultra-confident in your solutions and b) ensure that any involved stakeholders are assured of your understanding of their situation.

Since these deals include multiple layered solutions, providing them with a detailed plan accompanied by tons of other materials will give them a well-rounded view of your offer.

4. The Closing Stage

After you’ve done the work to convince all stakeholders of the benefits of your service, you’ll do what you’ve been waiting for: Closing the deal.

The final contract, which addresses significantly more solutions, differentiates a complex sales closing stage from transactional sales. A regular contract may outline one or two solutions, but your complex deal may address ten.

Maintaining contact with the client and presenting yourself as a resource after the deal is finalized shows them you’re eager to help them should any issues arise. If this deal is part of a contract, maintaining a relationship can ensure the contract is renewed.

How to Win at Complex Selling

While the sales cycle for complex selling may be pretty straightforward, there’s still much to uncover about what it takes to excel at it. I recently sat down with Trav Simat, a leading Enterprise Business Development Representative (BDR) at HubSpot, to discuss:

• Understanding the complex sales process
• How he’s navigated its roadblocks
• Strategies he’s used to manage/mitigate risk, misalignment, and all the little things that come with the territory of a complex sale

Here’s what he had to share regarding how to improve your complex selling skills (and ditch any outdated sales tactics that simply aren’t working anymore):

1. Want to win a complex sale? Become a product expert first.

When I asked Trav about any specific strategies he swore by when navigating a tricky enterprise-level deal, he told me something I wasn’t quite expecting to hear. I think you’ll be surprised, too.

“With complex sales, you have to be a product expert in order to provide the correct guidance,” Trav told me. He then continued, “There’s no doubt about it. You’ve also got to have a deep understanding of what the customer’s current challenges are, could be, and how your tailored solution is going to be able to drive results or make their business more efficient.”

Evidently, Trav’s advice is a reminder that in complex selling, knowledge is your greatest asset. Whether it be about the product you’re selling, the person you’re talking to, or the business you’re working with, the more you know, the more likely you are to go farther in your deal.

2. Understand your Ideal Customer Profile (ICP).

When it comes to finding the right fit for a complex sales deal, Trav goes back to the basics: identifying his target market, also known as an ICP.

“You need to understand your ICP and what businesses can actually benefit from your solution before any discovery even takes place,” Trav admitted. “From there, you have to slowly build relationships and try and go as wide as you can to have as many meaningful conversations with as many prospects as possible that have decision-making power at the company you’re trying to work with.”

Like Trav emphasized, complex sales aren’t just about finding any deal — they’re about finding the right deal. By honing in on your ideal customer profile and focusing on meaningful, relationship-driven conversations with key decision-makers, you’re not just selling a solution — you’re building partnerships that last.

Pro Tip: You can use HubSpot’s Sales Plan Template to outline your target market, amongst other things (like your prospecting strategy and overall sales goals), to make B2B selling effortless and stress-free.

3. Like the Kenny Rogers song says: Know when to hold ‘em, know when to fold ‘em, and know when to walk away.

When it comes to securing a complex sale success, Trav says that you’ve got to occasionally abandon ship, especially when the prospect doesn’t seem worth your time.

“I’ve also noticed over the years that the best salespeople can qualify and disqualify their products as quickly as possible in order not to waste anyone’s time,” Trav explained. “A lot of people make forced deals that aren’t there when they really should do a better job at disqualifying the deal and moving onto better opportunities that actually have a chance at closing. That’s what truly separates the champions from the rest.”

Knowing when to walk away is just as important as knowing when to push forward. The best salespeople don’t chase every lead. Instead, they prioritize their time and energy on opportunities that have real potential.

My Closing Thoughts on Closing Big Deals

Alright. We’ve reached the end of the road. If you walk away from this post having learned anything from this post, I hope it’s the following:

• Success in complex sales comes down to mastering the basics (ex: building trust, addressing pain points with custom solutions) and implementing your spin on them
• Complex sales require attention to detail at every step of the buyer’s journey
• Devote your energy and time to worthwhile prospects; don’t be afraid to ditch the ones that don’t

Complex sales aren’t about landing the deal but delivering real, measurable value. When you approach each stage with care and intention, you set yourself up to close confidently.

So, take a deep breath, double-check your pitch, and dive in. You’ve got this, my dear reader. After all, big deals don’t just build themselves, and you’re the person who knows exactly how to make them happen.

Editor’s note: This post was originally published in September 2020 and has been updated for comprehensiveness.

If you’re like most sales folks, you already know that selling isn’t one-size-fits-all. And, if you’ve ever closed a deal, you know that your playbook changes depending on who’s sitting on the other side of the table. For small- and medium-sized businesses (SMBs), sales are often formulaic — they’re quick, to the point, and often the most effortless to master (once you’ve learned the ropes). But when handling B2B sales, things get a little more … intricate.

With enterprise-level selling, deals take time, patience, and a knack for navigating the labyrinth of stakeholders, pain points, and tailor-made solutions. That’s why these deals, with their extended cycles and multifaceted conversations, earn the title of complex sales. After all, you call ‘em how you see ‘em, right?

In this post, I’ll dive into what makes complex selling so, well, complex — and how you can truly conquer the craft of closing these big-ticket deals without breaking a sweat. Let’s unpack it together.

Table of Contents:

• What is complex selling?
• Key Elements of Complex Selling
• Complex Sales Example
• The Stages of a Complex Sales Cycle
• How to Win at Complex Selling
• My Closing Thoughts on Closing Big Deals

Overall, a complex sale is marked by three key elements:

• Higher perceived risk resulting from higher price points
• A longer sales cycle (6+ months)
• Multiple stakeholders

Complex selling is so unique — and challenging — that it’s less about “pitching” your product/service. Instead, complex selling is all about positioning yourself as a credible advisor.

If you’re dealing with a complex sale, be prepared to do a little more work and — depending on how you feel about going the extra mile — for your role to extend far beyond the title of “sales rep.” Annnnd if that sentence just made you immediately stop reading — which I totally understand — check out a few statistics from this article I recently wrote (ft. data from HubSpot’s 2024 State of Sales Report):

• On average, sales reps report that there are five decision-makers involved in the sales process
• 82% of sales pros say building relationships + connecting with people is the most important part of selling
• The top three B2B sales strategies for 2024 included setting up a face-to-face meeting, understanding the key business challenges prospects face, and establishing rapport with customers during the sales process
• 66% of sales professionals say AI can help them provide a more personalized experience and understand their customers better

Clearly, the insights don’t lie. Just as I mentioned above, complex selling isn’t surface-level. It’s all about building trust, navigating relationships, and, most importantly, delivering real value to your customers.

If you’re still looking for clarity on what’s involved in complex selling, have no fear. In the next section, I’ll break down its foundational components, hopefully giving you a clearer understanding of the intricacies behind these high-stakes deals.

Key Elements of Complex Selling

1. Dealing with multiple stakeholders.

Unlike transactional sales, closing a complex deal means convincing multiple stakeholders. The number of stakeholders and their positions in the company can vary depending on the industry.

For example, suppose you’re selling technical software to a business. The final decision-maker may be the company’s Chief Engineering Officer, but that could quickly change to the People Operations Executive if you’re selling a productivity service.

However, in this example, the chief executive is the last person you’ll have to convince, and a series of people below the C-suite will likely be involved in the process. Gone are the days of persuading one person to buy your product. With complex selling, it might be five, potentially 10. It’s also possible that you may never meet all the people involved in the buying process.

Another great thing about complex selling? It’s full of surprises.

2. Managing a longer sales cycle.

If you’re handling a complex sale, be prepared for some commitment; if you’re wondering why this is, here’s your answer: A complex sales process is way longer than a transactional sale; it may last anywhere from six to 24 months.

Without going into too much detail, a longer sales cycle allows all engaged parties to take the time to understand the product and its benefits. While a longer sales cycle may sound daunting, when you’re working with B2B deals, you learn to be grateful for the extra time.

3. Building trust and demonstrating value.

Trust is the only currency in a complex sale that’ll keep the deal moving forward.

Complex sales aren’t won with flashy presentations or buzzwords. They’re built on good ol’ trust and reliability. This means proving to your prospects that you’re not just trying to sell them something. Instead, you’ve got to show them that you’re genuinely invested in solving their problems. This may mean more rapport building on the front end, but when it comes time to close the deal, you’ll be happy you did the brunt of the work in the first place.

4. Customizing solutions to address pain points.

If you have a textbook with cookie-cutter methodologies on how to approach a complex sale, throw it away. Right now. Complex selling calls for personalization at every part of the process, including the proposal stage, which means you’ve got to put some elbow grease into ideating solutions for your clients. You’ll need to dig deep into your discovery phase findings and tailor your pitch to speak directly to their pain points.

This isn’t just about tweaking a PowerPoint; it’s about showing them you “get it” and offering a solution that aligns perfectly with their unique needs. In short, customization isn’t just a nice touch — it’s the difference between a “maybe” and a signed contract.

Complex Sales Example

While complex sales typically fall under the B2B umbrella, no two deals look alike. The diversity of industries and challenges within the B2B space means every deal has its own set of puzzles to solve, players to please, and priorities to juggle.

For example, let’s talk commercial insurance sales. They fall under the category of a complex sale because they require insurance salesfolks to really know their client inside and out, including key areas such as:

• Business operations
• Workforce needs
• Growth plans
• Industry-specific risks and regulations
• Financial constraints and budget considerations

Additionally, as their client’s business grows or pivots, its insurance needs may change, introducing another layer of nuance. As a result, insurance sales pros must be proactive and ready to share individualized policies that align with their client’s current and future needs.

And in addition to all these factors, commercial insurance sales often involve negotiations with various collaborators, from HR teams to CFOs, which makes the sales cycle extra lengthy.

This intricate balancing act, full of moving parts, is what defines a complex sale. In the end, success in commercial insurance — or any complex sale — requires a mix of deep expertise, adaptability, and the ability to navigate relationships with finesse.

The Stages of a Complex Sales Cycle

Despite their differences, the complex sales cycle mirrors typical sales cycle stages. The cycle includes four stages:

• Discovery
• Qualification and Diagnosis
• Proposal
• Closing

1. The Discovery Stage

During this phase, you’ll likely spend your time familiarizing yourself with the business you’re selling to.

At this point in the complex selling process, consulting with the business you’re working with will provide you with a baseline understanding of their pain points and expectations (so you can get a clear picture of how your tool can address those problems).

You should know something else about this stage: It’s quite a research project. You’ll use this stage to find out everything you can about the stakeholders and their relationships to the service you’re selling. Expect this stage to be where you’ll figure out stuff like:

• Your client’s timeline (when they want/need a solution for this business, and what’s driving this timeline)
• Potential objections (any concerns or hesitations that they have about your product/service and/or the sales process)
• Key performance metrics (also known as KPIs, aka how your client’s business will measure the success of your product/service)

Gathering as much detailed information as possible from your client during this stage will make it easier for you to be successful as you move through the complex sales process and, eventually, close the deal.

2. The Qualification and Diagnosis Stage

During this stage of complex selling, you’ll use the information gathered during the discovery stage to diagnose your prospect’s issues. Understanding your client’s pain points and how your product can solve them will pay off significantly and clarify why your solution is the best option.

If you convince your prospect that not addressing the diagnosis will negatively affect their future growth, they’ll be more likely (and, hopefully, eager) to engage with your solutions. Remember: At this point in the game, it’s all about presentation, my dear reader.

3. The Proposal Stage

If you’ve reached this point of a complex sale, anticipate using your diagnosis to present stakeholders with detailed examples of how your solution directly addresses and solves their pain points. To do this well, you may want to include things like:

• Testimonials or case studies from other businesses you’ve successfully helped
• A customized implementation plan that outlines resources and next steps
• Visuals or demonstrations (i.e., product demos, mockups, etc.) that bring your solution to life

At this point in the complex selling process, you want to a) be ultra-confident in your solutions and b) ensure that any involved stakeholders are assured of your understanding of their situation.

Since these deals include multiple layered solutions, providing them with a detailed plan accompanied by tons of other materials will give them a well-rounded view of your offer.

4. The Closing Stage

After you’ve done the work to convince all stakeholders of the benefits of your service, you’ll do what you’ve been waiting for: Closing the deal.

The final contract, which addresses significantly more solutions, differentiates a complex sales closing stage from transactional sales. A regular contract may outline one or two solutions, but your complex deal may address ten.

Maintaining contact with the client and presenting yourself as a resource after the deal is finalized shows them you’re eager to help them should any issues arise. If this deal is part of a contract, maintaining a relationship can ensure the contract is renewed.

How to Win at Complex Selling

While the sales cycle for complex selling may be pretty straightforward, there’s still much to uncover about what it takes to excel at it. I recently sat down with Trav Simat, a leading Enterprise Business Development Representative (BDR) at HubSpot, to discuss:

• Understanding the complex sales process
• How he’s navigated its roadblocks
• Strategies he’s used to manage/mitigate risk, misalignment, and all the little things that come with the territory of a complex sale

Here’s what he had to share regarding how to improve your complex selling skills (and ditch any outdated sales tactics that simply aren’t working anymore):

1. Want to win a complex sale? Become a product expert first.

When I asked Trav about any specific strategies he swore by when navigating a tricky enterprise-level deal, he told me something I wasn’t quite expecting to hear. I think you’ll be surprised, too.

“With complex sales, you have to be a product expert in order to provide the correct guidance,” Trav told me. He then continued, “There’s no doubt about it. You’ve also got to have a deep understanding of what the customer’s current challenges are, could be, and how your tailored solution is going to be able to drive results or make their business more efficient.”

Evidently, Trav’s advice is a reminder that in complex selling, knowledge is your greatest asset. Whether it be about the product you’re selling, the person you’re talking to, or the business you’re working with, the more you know, the more likely you are to go farther in your deal.

2. Understand your Ideal Customer Profile (ICP).

When it comes to finding the right fit for a complex sales deal, Trav goes back to the basics: identifying his target market, also known as an ICP.

“You need to understand your ICP and what businesses can actually benefit from your solution before any discovery even takes place,” Trav admitted. “From there, you have to slowly build relationships and try and go as wide as you can to have as many meaningful conversations with as many prospects as possible that have decision-making power at the company you’re trying to work with.”

Like Trav emphasized, complex sales aren’t just about finding any deal — they’re about finding the right deal. By honing in on your ideal customer profile and focusing on meaningful, relationship-driven conversations with key decision-makers, you’re not just selling a solution — you’re building partnerships that last.

Pro Tip: You can use HubSpot’s Sales Plan Template to outline your target market, amongst other things (like your prospecting strategy and overall sales goals), to make B2B selling effortless and stress-free.

3. Like the Kenny Rogers song says: Know when to hold ‘em, know when to fold ‘em, and know when to walk away.

When it comes to securing a complex sale success, Trav says that you’ve got to occasionally abandon ship, especially when the prospect doesn’t seem worth your time.

“I’ve also noticed over the years that the best salespeople can qualify and disqualify their products as quickly as possible in order not to waste anyone’s time,” Trav explained. “A lot of people make forced deals that aren’t there when they really should do a better job at disqualifying the deal and moving onto better opportunities that actually have a chance at closing. That’s what truly separates the champions from the rest.”

Knowing when to walk away is just as important as knowing when to push forward. The best salespeople don’t chase every lead. Instead, they prioritize their time and energy on opportunities that have real potential.

My Closing Thoughts on Closing Big Deals

Alright. We’ve reached the end of the road. If you walk away from this post having learned anything from this post, I hope it’s the following:

• Success in complex sales comes down to mastering the basics (ex: building trust, addressing pain points with custom solutions) and implementing your spin on them
• Complex sales require attention to detail at every step of the buyer’s journey
• Devote your energy and time to worthwhile prospects; don’t be afraid to ditch the ones that don’t

Complex sales aren’t about landing the deal but delivering real, measurable value. When you approach each stage with care and intention, you set yourself up to close confidently.

So, take a deep breath, double-check your pitch, and dive in. You’ve got this, my dear reader. After all, big deals don’t just build themselves, and you’re the person who knows exactly how to make them happen.

Editor’s note: This post was originally published in September 2020 and has been updated for comprehensiveness.

Take everything that you think you know about real estate entrepreneurs and throw it out the window. I know that sounds crazy, but just trust me on this one.

Au contraire to the public knowledge you’ve likely acquired about real estate entrepreneurs and what they do, they aren’t just people who flip houses or invest in rental properties for a quick buck. At their core, all preconceived notions aside, real estate entrepreneurs are pretty good salespeople, and there’s a ton to learn from them, from making profit to closing deals, even client relationship management stuff.

In this article, I’ll break down some bottom-line essentials you should know about real estate entrepreneurship (especially if you’re thinking about exploring it as your next career move). Plus, I’ll share insight into what it takes to become a real estate entrepreneur and the skills, certifications, and resources you should have that’ll set you apart from your competitors.

Table of Contents:

• What is a real estate entrepreneur?
• How to Become a Real Estate Entrepreneur
• Real Estate Entrepreneur Skills
• Real Estate Entrepreneur Responsibilities
• So, Does Real Estate Entrepreneurship Really Rock?

Before I get into the specifics of the real estate entrepreneur landscape and what’s needed to get yourself in the door, I think it’s important to lay the foundation with some need-to-know statistics highlighting real estate professionals’ current state in their industry (from the National Association of Realtors). Take a look below:

• The average amount of experience that all realtors have is about 10 years
• The average realtor worked 35 hours per week in 2023
• While 65% of licensed realtors are female, only 35% of them are male
• 34% of realtors have a Bachelor’s degree, only 13% have a graduate degree and above
• The average realtor is white, a woman, and already a homeowner
• 77% of licensed NAR realtors use Facebook for professional purposes, and 55% use LinkedIn for professional purposes
• 19% of all members get 1-5% of their business from social media, and 10% get 6-10%
• The median gross income of licensed realtors — income earned from real estate activities — was $55,800 in 2023
• 82% of NAR members have their own listings on their website, 70% have information about buying and selling, and 65% have a link to their firm’s website

Also, outside of what’s mentioned above, I put together a tiny FAQ list (with answers) you should consider before marrying to a life of real estate entrepreneurship:

1. Do real estate entrepreneurs make money?

This answer is totally subjective … because it’s based on a lot of things, not one sole variable. Your clientele, the type of real estate properties you specialize in selling (i.e., commercial, land, residential, luxury, vacation, mixed-use), what state you practice in, and a bunch of other factors.

However, I’ll say this: The more properties you invest in and the more clientele you have, the more money you’ll make, so don’t find it surprising if it takes time to find what properties bring in the most dollars. For example, you might find that multi-family home investments generate the most money because you’ll have more than one source of income (aka more than one client).

Some early real estate entrepreneurs even recommend getting in the game by investing in wholesale real estate, like this creator below:

Still, all of this depends on your goals, business plan (more on how to build that out later), and the resources you have at your disposal. Just know that regardless of what real estate lane you choose to niche in, careful planning and strategic decision-making are non-negotiables.

2. Are real estate agents and realtors the same thing?

Short answer: No. They’re similar but different. Here’s why:

• Realtors are always certified members of the National Association of REALTORS® (NAR), whereas real estate agents aren’t required to be (unless it’s a part of their state’s regulations)
• Both realtors and real estate agents complete the same education and training requirements (national and state licensing exams). However, a realtor has to re-certify their NAR Code of Ethics Training every 3 years
• Real estate agents must remain licensed in their state/with their state’s real estate commission; realtors do not (as long as they complete their NAR Code of Ethics Training)
• Only realtors — through their NAR membership — have access to the Multiple Listing Service (MLS), which is where property listings can be found; real estate agents oftentimes find their listings through sites like Propstream.

3. What qualifications are required to become a real estate agent?

To become a real estate agent, you’ll have to:

• Complete high school/acquire a high school equivalent diploma (i.e., GED)
• Complete state-required pre-licensing education (different states require different amounts of hours)
• Pass your state-required real estate licensing exam
• Pass a background check
• Affiliate yourself with a licensed real estate brokerage (some common ones are Re/Max, Keller Williams, and Century 21)

While a career in real estate doesn’t sound too shabby, it does take a certain finesse to be successful in this lane; believe me or not, it starts with securing the basics. In the next section, I’ll review the steps you’ll need to take to formally begin your journey to real estate entrepreneurship.

How to Become a Real Estate Entrepreneur

Unfortunately, you can’t just “become a real estate entrepreneur” (I know, cue the crowd booing). However, if you follow the steps outlined below, I can guarantee that you’ll be well on your way to building out a clear path to getting there.

Here’s what to expect if you’re interested in exploring the path to real estate entrepreneurship:

1. You’ll have to educate yourself, then get licensed (expeditiously).

Step one to becoming a real estate entrepreneur begins with immersing yourself in the fundamentals of real estate investing. You can do this in various ways, but I recommend getting your daily dose of knowledge through online courses, a few podcast episodes, some YouTube videos, any TikTok content creators you trust, and, of course, lots of research through Google.

Here are a few vetted resources (yes, I scoured the internet far and wide just for you, dear reader) you can visit to get started:

• Coursera’s Principals of Real Estate Course (free enrollment)
• Real Estate Skills’ Webinar Event for Wholesale Real Estate (updated regularly, comes with a free Wealth Through Real Estate Investing PDF)
• The BiggerPockets Real Estate Podcast (specifically this episode)

2. Put together a solid business plan.

You can’t be any kind of entrepreneur without a business plan in place. When it comes to outlining your success as a real estate entrepreneur, your business plan should overview the following:

• A risk management plan (I’d argue that this is one of the most important elements of your business plan)
• Financial projections (these can be quarterly or yearly, whichever floats your boat the most, just make sure you’re accounting for the financial viability of your business)
• Goals and objectives (make sure they are SMART goals that carve out a clear roadmap for your growth)
• A market analysis (this is how you’ll get a closer look at your local real estate landscape, which will ultimately inform your strategies for identifying business opportunities)
• Marketing and sales strategy (how you’ll attract and retain clients, how you’ll differentiate yourself from competitors, what your branding will be and look like)

3. Get out there, build a network, meet people!

As a real estate entrepreneur, putting yourself out there is one of the best ways to build clientele, meet colleagues, and attach credibility to your name. To get a head start, I suggest:

• Joining real estate associations (like NAR, Appraisal Institute, Institute of Real Estate Management)
• Attending local conferences/events (fun fact: Most states have their own annual Real Estate Investors Expo)
• Starting an Instagram, then filming short-form content of the properties you’re selling (trust me, with a consistent posting schedule, it’ll make it to someone’s FYP eventually)

4. Find and purchase your first property.

When you’ve done the work to educate yourself on all things real estate, craft a killer business plan that covers everything you can think of, and meet groups of folks across the real estate space, you’re officially ready to put the ‘entrepreneur’ in real estate entrepreneurship — you’ll do so by landing your first investment property.

Now, you can approach this from several different angles. Some people choose to:

• Get a hard money lender (you can read more about hard money lenders here)
• Follow the BRRR method (Buy, Renovate, Rent, Reinvest)
• Buy real estate investment trusts (REITS)

If you’re wondering how the BRRR method/hard money lenders work, check out this TikTok video I found featuring Jessica Weaver, a Charlotte, NC-based real estate agent and content creator, who did both of these things and was able to successfully begin her career in real estate investment (I also highly recommend sifting through her YouTube Shorts or TikTok account to find other advice she’s shared):

Real Estate Entrepreneur Skills

Clearly, the process of becoming a real estate entrepreneur is lengthy AF, but if you’ve got the skills, good news: You’re already halfway there.

If you don’t, that’s also fine, but you should start cultivating them ASAP. Here are some foundational skills I recommend having if you’re curious about what it takes:

1. Networking Skills

As I mentioned above, if you’re going to pursue real estate entrepreneurship, you’ve got to get comfortable with putting yourself out there. Utilize social media, real estate associations, and local event opportunities to build relationships with other like-minded entrepreneurs.

2. Financial Literacy

Having a solid understanding of financial principles, like budgeting, investment analysis, and market economics, is crucial for sustaining profitability as a real estate entrepreneur. This skill equips you to appropriately plan out spending on incidental purchases, comprehend loan applications, and assist clients with every aspect of their home-buying journey.

3. Adaptability

The real estate market is tricky to navigate. It’s inherently dynamic, influenced by consumer preferences and the fluctuating economy, and factors such as government policies. Adaptability enables you to pivot when necessary and, above all, meet the diverse needs of your clients.

4. Time Management

I won’t spend too long on this one, but you and I both know that time management is a simple skill that goes a long way. Real estate entrepreneurship demands juggling multiple responsibilities — from property showings to managing clients — and, at the end of the day, you’ve got to develop a method that works for you.

Whatever your version of time management may be, ensure that your day-to-day structure allows you to prioritize tasks, maintain productivity, and achieve a healthy work-life balance.

Real Estate Entrepreneur Responsibilities

As a real estate entrepreneur, you should be prepared to handle anything that comes your way (and trust, there will be lots that will). That said, here’s what you can anticipate if you think real estate entrepreneurship is the right profession for you:

1. Customer Relationship Management (CRM)

While the real estate entrepreneur’s life is full of rewards, it’s no lie that you’ve got to do the work to reap them. One of those rewards? Happy clients. How to achieve this? By prioritizing your CRM strategy as a core responsibility in your business.

Building and maintaining strong relationships with clients isn’t just about closing deals — it’s about creating a lasting impression that earns trust, loyalty, and referrals. A robust CRM strategy allows you to:

• Track client interactions
• Anticipate your client’s needs
• Deliver personalized experiences that set you apart from your competition

Pro Tip: HubSpot’s Real Estate CRM software allows you to do all of the above, including directly responding to client inquiries.

2. Identifying Investment Opportunities

A cornerstone of real estate entrepreneurship is the ability to identify and evaluate investment opportunities. This involves conducting thorough market research to understand trends — such as population growth, employment rates, and local infrastructure developments — that can impact property values.

Additionally, spotting undervalued properties or areas with untapped growth potential requires a keen eye and forward-thinking mindset. Whether it’s identifying a distressed property for a flip, a commercial space in a developing neighborhood, or land primed for residential development, the ability to recognize opportunities before other real estate entrepreneurs in your area is the key to staying ahead in the market.

3. Property Development, Maintenance, and Management

Once you’ve secured an investment property, the real work begins with property development, maintenance, and management. You must coordinate with contractors, architects, and inspectors to bring their vision to life while adhering to local regulations and budget constraints.

Additionally, if you’re dealing with rental properties, ongoing management will be your biggest duty. This includes collecting rent, addressing maintenance requests, and ensuring tenant satisfaction. A well-maintained property not only attracts high-quality tenants but also preserves or increases its value over time, making it a sustainable investment.

4. Strategic Planning

Lastly, strategic planning is the backbone of any successful real estate business. This involves setting clear short-term and long-term goals, such as:

• Expanding your property portfolio
• Entering new markets
• Increasing passive income streams

If you excel in this area of entrepreneurship, you’ll be able to keep your business scalable and aligned with their overall vision for growth.

So, Does Real Estate Entrepreneurship Really Rock?

As you’ve probably realized by now, real estate entrepreneurship isn’t for the faint of heart, but for those willing to put in the work, it can be an incredibly liberating and financially lucrative experience. It requires a whole lot of hustle, but if you’re up for the challenge, the payoff won’t just be tangible through dollar signs and zeros — you’ll also get the satisfaction of creating something impactful for others.

So, does real estate entrepreneurship really rock? Absolutely, but only if you’re ready to roll with the punches, think creatively, and embrace the grind. After all, the real estate entrepreneurship game rewards those who play it boldly.

Take everything that you think you know about real estate entrepreneurs and throw it out the window. I know that sounds crazy, but just trust me on this one.

Au contraire to the public knowledge you’ve likely acquired about real estate entrepreneurs and what they do, they aren’t just people who flip houses or invest in rental properties for a quick buck. At their core, all preconceived notions aside, real estate entrepreneurs are pretty good salespeople, and there’s a ton to learn from them, from making profit to closing deals, even client relationship management stuff.

In this article, I’ll break down some bottom-line essentials you should know about real estate entrepreneurship (especially if you’re thinking about exploring it as your next career move). Plus, I’ll share insight into what it takes to become a real estate entrepreneur and the skills, certifications, and resources you should have that’ll set you apart from your competitors.

Table of Contents:

• What is a real estate entrepreneur?
• How to Become a Real Estate Entrepreneur
• Real Estate Entrepreneur Skills
• Real Estate Entrepreneur Responsibilities
• So, Does Real Estate Entrepreneurship Really Rock?

Before I get into the specifics of the real estate entrepreneur landscape and what’s needed to get yourself in the door, I think it’s important to lay the foundation with some need-to-know statistics highlighting real estate professionals’ current state in their industry (from the National Association of Realtors). Take a look below:

• The average amount of experience that all realtors have is about 10 years
• The average realtor worked 35 hours per week in 2023
• While 65% of licensed realtors are female, only 35% of them are male
• 34% of realtors have a Bachelor’s degree, only 13% have a graduate degree and above
• The average realtor is white, a woman, and already a homeowner
• 77% of licensed NAR realtors use Facebook for professional purposes, and 55% use LinkedIn for professional purposes
• 19% of all members get 1-5% of their business from social media, and 10% get 6-10%
• The median gross income of licensed realtors — income earned from real estate activities — was $55,800 in 2023
• 82% of NAR members have their own listings on their website, 70% have information about buying and selling, and 65% have a link to their firm’s website

Also, outside of what’s mentioned above, I put together a tiny FAQ list (with answers) you should consider before marrying to a life of real estate entrepreneurship:

1. Do real estate entrepreneurs make money?

This answer is totally subjective … because it’s based on a lot of things, not one sole variable. Your clientele, the type of real estate properties you specialize in selling (i.e., commercial, land, residential, luxury, vacation, mixed-use), what state you practice in, and a bunch of other factors.

However, I’ll say this: The more properties you invest in and the more clientele you have, the more money you’ll make, so don’t find it surprising if it takes time to find what properties bring in the most dollars. For example, you might find that multi-family home investments generate the most money because you’ll have more than one source of income (aka more than one client).

Some early real estate entrepreneurs even recommend getting in the game by investing in wholesale real estate, like this creator below:

Still, all of this depends on your goals, business plan (more on how to build that out later), and the resources you have at your disposal. Just know that regardless of what real estate lane you choose to niche in, careful planning and strategic decision-making are non-negotiables.

2. Are real estate agents and realtors the same thing?

Short answer: No. They’re similar but different. Here’s why:

• Realtors are always certified members of the National Association of REALTORS® (NAR), whereas real estate agents aren’t required to be (unless it’s a part of their state’s regulations)
• Both realtors and real estate agents complete the same education and training requirements (national and state licensing exams). However, a realtor has to re-certify their NAR Code of Ethics Training every 3 years
• Real estate agents must remain licensed in their state/with their state’s real estate commission; realtors do not (as long as they complete their NAR Code of Ethics Training)
• Only realtors — through their NAR membership — have access to the Multiple Listing Service (MLS), which is where property listings can be found; real estate agents oftentimes find their listings through sites like Propstream.

3. What qualifications are required to become a real estate agent?

To become a real estate agent, you’ll have to:

• Complete high school/acquire a high school equivalent diploma (i.e., GED)
• Complete state-required pre-licensing education (different states require different amounts of hours)
• Pass your state-required real estate licensing exam
• Pass a background check
• Affiliate yourself with a licensed real estate brokerage (some common ones are Re/Max, Keller Williams, and Century 21)

While a career in real estate doesn’t sound too shabby, it does take a certain finesse to be successful in this lane; believe me or not, it starts with securing the basics. In the next section, I’ll review the steps you’ll need to take to formally begin your journey to real estate entrepreneurship.

How to Become a Real Estate Entrepreneur

Unfortunately, you can’t just “become a real estate entrepreneur” (I know, cue the crowd booing). However, if you follow the steps outlined below, I can guarantee that you’ll be well on your way to building out a clear path to getting there.

Here’s what to expect if you’re interested in exploring the path to real estate entrepreneurship:

1. You’ll have to educate yourself, then get licensed (expeditiously).

Step one to becoming a real estate entrepreneur begins with immersing yourself in the fundamentals of real estate investing. You can do this in various ways, but I recommend getting your daily dose of knowledge through online courses, a few podcast episodes, some YouTube videos, any TikTok content creators you trust, and, of course, lots of research through Google.

Here are a few vetted resources (yes, I scoured the internet far and wide just for you, dear reader) you can visit to get started:

• Coursera’s Principals of Real Estate Course (free enrollment)
• Real Estate Skills’ Webinar Event for Wholesale Real Estate (updated regularly, comes with a free Wealth Through Real Estate Investing PDF)
• The BiggerPockets Real Estate Podcast (specifically this episode)

2. Put together a solid business plan.

You can’t be any kind of entrepreneur without a business plan in place. When it comes to outlining your success as a real estate entrepreneur, your business plan should overview the following:

• A risk management plan (I’d argue that this is one of the most important elements of your business plan)
• Financial projections (these can be quarterly or yearly, whichever floats your boat the most, just make sure you’re accounting for the financial viability of your business)
• Goals and objectives (make sure they are SMART goals that carve out a clear roadmap for your growth)
• A market analysis (this is how you’ll get a closer look at your local real estate landscape, which will ultimately inform your strategies for identifying business opportunities)
• Marketing and sales strategy (how you’ll attract and retain clients, how you’ll differentiate yourself from competitors, what your branding will be and look like)

3. Get out there, build a network, meet people!

As a real estate entrepreneur, putting yourself out there is one of the best ways to build clientele, meet colleagues, and attach credibility to your name. To get a head start, I suggest:

• Joining real estate associations (like NAR, Appraisal Institute, Institute of Real Estate Management)
• Attending local conferences/events (fun fact: Most states have their own annual Real Estate Investors Expo)
• Starting an Instagram, then filming short-form content of the properties you’re selling (trust me, with a consistent posting schedule, it’ll make it to someone’s FYP eventually)

4. Find and purchase your first property.

When you’ve done the work to educate yourself on all things real estate, craft a killer business plan that covers everything you can think of, and meet groups of folks across the real estate space, you’re officially ready to put the ‘entrepreneur’ in real estate entrepreneurship — you’ll do so by landing your first investment property.

Now, you can approach this from several different angles. Some people choose to:

• Get a hard money lender (you can read more about hard money lenders here)
• Follow the BRRR method (Buy, Renovate, Rent, Reinvest)
• Buy real estate investment trusts (REITS)

If you’re wondering how the BRRR method/hard money lenders work, check out this TikTok video I found featuring Jessica Weaver, a Charlotte, NC-based real estate agent and content creator, who did both of these things and was able to successfully begin her career in real estate investment (I also highly recommend sifting through her YouTube Shorts or TikTok account to find other advice she’s shared):

Real Estate Entrepreneur Skills

Clearly, the process of becoming a real estate entrepreneur is lengthy AF, but if you’ve got the skills, good news: You’re already halfway there.

If you don’t, that’s also fine, but you should start cultivating them ASAP. Here are some foundational skills I recommend having if you’re curious about what it takes:

1. Networking Skills

As I mentioned above, if you’re going to pursue real estate entrepreneurship, you’ve got to get comfortable with putting yourself out there. Utilize social media, real estate associations, and local event opportunities to build relationships with other like-minded entrepreneurs.

2. Financial Literacy

Having a solid understanding of financial principles, like budgeting, investment analysis, and market economics, is crucial for sustaining profitability as a real estate entrepreneur. This skill equips you to appropriately plan out spending on incidental purchases, comprehend loan applications, and assist clients with every aspect of their home-buying journey.

3. Adaptability

The real estate market is tricky to navigate. It’s inherently dynamic, influenced by consumer preferences and the fluctuating economy, and factors such as government policies. Adaptability enables you to pivot when necessary and, above all, meet the diverse needs of your clients.

4. Time Management

I won’t spend too long on this one, but you and I both know that time management is a simple skill that goes a long way. Real estate entrepreneurship demands juggling multiple responsibilities — from property showings to managing clients — and, at the end of the day, you’ve got to develop a method that works for you.

Whatever your version of time management may be, ensure that your day-to-day structure allows you to prioritize tasks, maintain productivity, and achieve a healthy work-life balance.

Real Estate Entrepreneur Responsibilities

As a real estate entrepreneur, you should be prepared to handle anything that comes your way (and trust, there will be lots that will). That said, here’s what you can anticipate if you think real estate entrepreneurship is the right profession for you:

1. Customer Relationship Management (CRM)

While the real estate entrepreneur’s life is full of rewards, it’s no lie that you’ve got to do the work to reap them. One of those rewards? Happy clients. How to achieve this? By prioritizing your CRM strategy as a core responsibility in your business.

Building and maintaining strong relationships with clients isn’t just about closing deals — it’s about creating a lasting impression that earns trust, loyalty, and referrals. A robust CRM strategy allows you to:

• Track client interactions
• Anticipate your client’s needs
• Deliver personalized experiences that set you apart from your competition

Pro Tip: HubSpot’s Real Estate CRM software allows you to do all of the above, including directly responding to client inquiries.

2. Identifying Investment Opportunities

A cornerstone of real estate entrepreneurship is the ability to identify and evaluate investment opportunities. This involves conducting thorough market research to understand trends — such as population growth, employment rates, and local infrastructure developments — that can impact property values.

Additionally, spotting undervalued properties or areas with untapped growth potential requires a keen eye and forward-thinking mindset. Whether it’s identifying a distressed property for a flip, a commercial space in a developing neighborhood, or land primed for residential development, the ability to recognize opportunities before other real estate entrepreneurs in your area is the key to staying ahead in the market.

3. Property Development, Maintenance, and Management

Once you’ve secured an investment property, the real work begins with property development, maintenance, and management. You must coordinate with contractors, architects, and inspectors to bring their vision to life while adhering to local regulations and budget constraints.

Additionally, if you’re dealing with rental properties, ongoing management will be your biggest duty. This includes collecting rent, addressing maintenance requests, and ensuring tenant satisfaction. A well-maintained property not only attracts high-quality tenants but also preserves or increases its value over time, making it a sustainable investment.

4. Strategic Planning

Lastly, strategic planning is the backbone of any successful real estate business. This involves setting clear short-term and long-term goals, such as:

• Expanding your property portfolio
• Entering new markets
• Increasing passive income streams

If you excel in this area of entrepreneurship, you’ll be able to keep your business scalable and aligned with their overall vision for growth.

So, Does Real Estate Entrepreneurship Really Rock?

As you’ve probably realized by now, real estate entrepreneurship isn’t for the faint of heart, but for those willing to put in the work, it can be an incredibly liberating and financially lucrative experience. It requires a whole lot of hustle, but if you’re up for the challenge, the payoff won’t just be tangible through dollar signs and zeros — you’ll also get the satisfaction of creating something impactful for others.

So, does real estate entrepreneurship really rock? Absolutely, but only if you’re ready to roll with the punches, think creatively, and embrace the grind. After all, the real estate entrepreneurship game rewards those who play it boldly.

When I first came across the term debt-to-equity ratio, I’ll admit — it sounded more intimidating than it actually is. But as I dug deeper, I realized just how essential this financial metric is, especially for anyone looking to understand a company’s financial health or make informed investment decisions.

In simple terms, the debt-to-equity ratio is like a snapshot of how much a business relies on borrowed money versus its own resources. If you’re an investor sizing up a company’s stability or a business owner managing your finances, understanding this ratio can help in gauging financial health.

Even if you’re someone just curious about financial numbers, this article is for you. Let’s break it down together and make sense of what this number really tells us — and why it matters so much.

Table of Contents

• Debt-to-Equity Ratio
• Why is debt-to-equity ratio important?
• Debt-to-Equity Ratio Formula
• Long-Term Debt-to-Equity Ratio
• What is a good debt-to-equity ratio?
• What is a negative debt-to-equity ratio?
• How much leverage or risk should a business take?
• Using Debt and Equity to Scale Your Business

To further clarify the ratio, let’s define debt and equity next.

What is debt?

Debt is money borrowed from a bank or private lender, with an agreement to repay the amount plus interest, typically in regular intervals. Businesses use debt to fund operating needs.

To secure a loan, a company generally requires hard assets — receivables for delivered products or services recorded on its balance sheet — to demonstrate repayment capability. New businesses or those lacking hard assets often face greater difficulty in borrowing.

What is equity?

Equity is stock or security representing an ownership interest in a company. Put simply, it’s your ownership of an asset — such as a company, property, or car — after your debt on that asset is paid.

In equity financing, a business raises capital by selling shares to investors. To learn more about funding options, I suggest reading this guide to entrepreneurship.

Debt-to-Equity Ratio Formula

Now that I have defined the debt-to-equity ratio, I’ll show you how to use it. Below is the formula to calculate the debt-to-equity ratio:

Here are the two elements that make up the formula:

• Total liabilities. Total liabilities represent all of a company’s debt, including short-term and long-term debt, and other liabilities (e.g., bond sinking funds and deferred tax liabilities).
• Shareholders’ equity. Shareholders’ equity is calculated by subtracting total liabilities from total assets. Total liabilities and total assets are found on a company’s balance sheet.

Long-Term Debt-to-Equity Ratio

The long-term debt-to-equity ratio measures how much of a company’s assets are financed through long-term financial obligations, such as loans.

As I covered above, shareholders’ equity is total assets minus total liabilities. However, this is not the same value as total assets minus total debt because the payment terms of the debt should also be taken into account when assessing the overall financial health of a company.

To calculate the long-term debt-to-equity ratio, divide long-term debt by shareholders’ equity. Short-term debt refers to liabilities due within a year, while long-term debt takes more than a year to mature.

For example, consider two companies:

• Company A — $2 million in short-term debt, $1 million in long-term debt.
• Company B — $1 million in short-term debt, $2 million in long-term debt.

Both companies have $3 million in total debt and $3.1 million in shareholder equity, resulting in an identical debt-to-equity ratio of 0.97.

Short-term debt is riskier than long-term debt due to frequent renewals and fluctuating interest rates. Therefore, Company B, with more stable long-term debt, is considered less risky.

Here’s a quick reference for the long-term debt-to-equity ratio formula.

Examples of long-term debt include mortgages, bonds, and bank debt. Just like the standard debt-to-equity ratio, investing in a business is riskier if it has a high ratio.

Other Debt-to-Equity Ratio Formulas to Consider

Depending on what metrics you’d like to evaluate, you may need to use a different formula. To compare a company’s short-term liquidity, use the cash ratio:

The cash ratio is used to evaluate the ability of an organization to pay its short-term obligations with cash. If the ratio comes out higher than 1, it means the organization has enough cash to cover its debts. If less than 1, the organization has more short-term debts than cash.

Additionally, you can opt to use the current ratio:

The current ratio also evaluates an organization’s short-term liquidity and compares its current assets to its current liabilities. It evaluates an organization’s ability to pay its debts and obligations within a year.

Short-term debt can include wages, payments to suppliers, or short-term notes payable. Short-term liabilities are considered less risky because they are typically paid within a year.

Debt-to-Equity Ratio Example

Let’s say a software company is applying for funding and needs to calculate its debt-to-equity ratio. Its total liabilities are $300,000 and shareholders’ equity is $250,000.

Here’s what the debt-to-equity ratio would look like for the company:

Debt-to-equity ratio = 300,000 / 250,000

Debt-to-equity ratio = 1.2

With a debt-to-equity ratio of 1.2, investing is less risky for the lenders because the business is not highly leveraged — meaning it isn’t primarily financed with debt (I talk more about leverage below).

As an entrepreneur or small business owner, this ratio is used when applying for a loan or business line of credit. For investors, the debt-to-equity ratio is used to indicate how risky it is to invest in a company. The higher the debt-to-equity ratio, the riskier the investment.

How can you tell what your debt-to-equity ratio should be? I’ll go over that next.

What is a good debt-to-equity ratio?

A good debt-to-equity ratio is typically between 1 and 1.5, though it varies by industry (some industries use more debt financing than others). Capital-intensive sectors like finance and manufacturing often have ratios above 2.

A high ratio indicates heavy reliance on debt for growth, which can pose risks for lenders and investors if the business struggles to repay its obligations. Conversely, a low ratio suggests limited borrowing, which may signal missed opportunities for expansion and profit, potentially discouraging investors.

What should businesses with good debt-to-equity ratios do next?

Businesses with good debt-to-equity ratios — those within the standard range for their industries — likely experience balanced growth supported by both debt and equity financing.

However, a good ratio is just one snapshot of financial health. To ensure stability, focus on the long-term debt-to-equity ratio. I suggest using long-term debt, rather than short-term financing, to fund growth plans and stabilize your pecuniary picture.

What is a negative debt-to-equity ratio?

A negative debt-to-equity ratio occurs when a company’s debt generates interest costs exceeding its return on investment or when the company has a negative net worth. This signals financial instability and is often viewed as risky by analysts, lenders, and investors.

Here, I identify the common causes of a negative debt-to-equity ratio:

• Taking on additional debt to cover losses instead of issuing shareholder equity.
• Expensing intangible assets, such as trademarks, that exceed existing shareholder equity.
• Paying large dividends that surpass shareholder equity.
• Suffering financial losses after significant dividend payments.

Such scenarios can indicate financial distress to shareholders, investors, and creditors.

What would I recommend if you’re dealing with a negative debt-to-equity ratio?

A negative debt-to-equity ratio can make securing future financing difficult due to your business’s heavy reliance on debt. Avoid rushing into equity financing, as adding new shareholders could shift your company’s direction based on their terms.

Instead, focus on reducing your debt before pursuing further growth. To gauge your standing, I recommend comparing your debt-to-equity ratio with industry standards using resources like CSIMarket.

How much leverage or risk should a business take?

I’ll start by defining leverage:

Leverage refers to a business’s use of debt to finance activities and asset purchases. A company is considered highly leveraged if debt is its primary financing source, resulting in a higher debt-to-equity ratio.

I think that the amount of leverage or risk a business should take depends largely on the industry it operates in. debt-to-equity ratios vary across industries because different sectors require varying levels of debt and capital to scale.

Investors may also focus on the long-term debt-to-equity ratio to assess more significant risks. High ratios often signal higher risk for lenders and investors, so if your business relies on future loans, it’s important to analyze your debt-to-equity ratio carefully.

For example, an apparel company with significant physical assets like textiles, labor, and brick-and-mortar stores will typically have a higher debt-to-equity ratio compared to a tech company with fewer physical assets and an online sales model.

Take the U.S. business debt-to-equity ratio, which reached 82.4% in Q3 2023. This figure highlights a trend where businesses are balancing debt and equity to drive growth and also taking the right risks in an ever-evolving market.

I’m of the view that striking the right balance is essential — too much debt can cause financial strain during downturns, while relying too heavily on equity can dilute ownership and reduce shareholder returns. Companies that manage this balance effectively demonstrate strong financial planning and so are in a better position to take risks.

Using Debt and Equity to Scale Your Business

Debt often carries a negative connotation for small and growing businesses. It can actually demonstrate to investors and lenders that your business is effectively using available resources to generate a positive return on investment — provided it’s leveraged correctly.

There are various ways to raise capital, each with distinct impacts on your company’s growth and financial structure. The two most common methods are equity and debt.

I think the debt-to-equity ratio is a critical tool for entrepreneurs and investors, as it illustrates how much a business relies on debt relative to equity for financing operations and purchases. Since this ratio can vary by industry, I recommend you understand the benchmarks for your sector when financing major projects or growth strategies.

Editor’s note: This post was originally published in October 2018 and has been updated for comprehensiveness.

When I first came across the term debt-to-equity ratio, I’ll admit — it sounded more intimidating than it actually is. But as I dug deeper, I realized just how essential this financial metric is, especially for anyone looking to understand a company’s financial health or make informed investment decisions.

In simple terms, the debt-to-equity ratio is like a snapshot of how much a business relies on borrowed money versus its own resources. If you’re an investor sizing up a company’s stability or a business owner managing your finances, understanding this ratio can help in gauging financial health.

Even if you’re someone just curious about financial numbers, this article is for you. Let’s break it down together and make sense of what this number really tells us — and why it matters so much.

Table of Contents

• Debt-to-Equity Ratio
• Why is debt-to-equity ratio important?
• Debt-to-Equity Ratio Formula
• Long-Term Debt-to-Equity Ratio
• What is a good debt-to-equity ratio?
• What is a negative debt-to-equity ratio?
• How much leverage or risk should a business take?
• Using Debt and Equity to Scale Your Business

To further clarify the ratio, let’s define debt and equity next.

What is debt?

Debt is money borrowed from a bank or private lender, with an agreement to repay the amount plus interest, typically in regular intervals. Businesses use debt to fund operating needs.

To secure a loan, a company generally requires hard assets — receivables for delivered products or services recorded on its balance sheet — to demonstrate repayment capability. New businesses or those lacking hard assets often face greater difficulty in borrowing.

What is equity?

Equity is stock or security representing an ownership interest in a company. Put simply, it’s your ownership of an asset — such as a company, property, or car — after your debt on that asset is paid.

In equity financing, a business raises capital by selling shares to investors. To learn more about funding options, I suggest reading this guide to entrepreneurship.

Debt-to-Equity Ratio Formula

Now that I have defined the debt-to-equity ratio, I’ll show you how to use it. Below is the formula to calculate the debt-to-equity ratio:

Here are the two elements that make up the formula:

• Total liabilities. Total liabilities represent all of a company’s debt, including short-term and long-term debt, and other liabilities (e.g., bond sinking funds and deferred tax liabilities).
• Shareholders’ equity. Shareholders’ equity is calculated by subtracting total liabilities from total assets. Total liabilities and total assets are found on a company’s balance sheet.

Long-Term Debt-to-Equity Ratio

The long-term debt-to-equity ratio measures how much of a company’s assets are financed through long-term financial obligations, such as loans.

As I covered above, shareholders’ equity is total assets minus total liabilities. However, this is not the same value as total assets minus total debt because the payment terms of the debt should also be taken into account when assessing the overall financial health of a company.

To calculate the long-term debt-to-equity ratio, divide long-term debt by shareholders’ equity. Short-term debt refers to liabilities due within a year, while long-term debt takes more than a year to mature.

For example, consider two companies:

• Company A — $2 million in short-term debt, $1 million in long-term debt.
• Company B — $1 million in short-term debt, $2 million in long-term debt.

Both companies have $3 million in total debt and $3.1 million in shareholder equity, resulting in an identical debt-to-equity ratio of 0.97.

Short-term debt is riskier than long-term debt due to frequent renewals and fluctuating interest rates. Therefore, Company B, with more stable long-term debt, is considered less risky.

Here’s a quick reference for the long-term debt-to-equity ratio formula.

Examples of long-term debt include mortgages, bonds, and bank debt. Just like the standard debt-to-equity ratio, investing in a business is riskier if it has a high ratio.

Other Debt-to-Equity Ratio Formulas to Consider

Depending on what metrics you’d like to evaluate, you may need to use a different formula. To compare a company’s short-term liquidity, use the cash ratio:

The cash ratio is used to evaluate the ability of an organization to pay its short-term obligations with cash. If the ratio comes out higher than 1, it means the organization has enough cash to cover its debts. If less than 1, the organization has more short-term debts than cash.

Additionally, you can opt to use the current ratio:

The current ratio also evaluates an organization’s short-term liquidity and compares its current assets to its current liabilities. It evaluates an organization’s ability to pay its debts and obligations within a year.

Short-term debt can include wages, payments to suppliers, or short-term notes payable. Short-term liabilities are considered less risky because they are typically paid within a year.

Debt-to-Equity Ratio Example

Let’s say a software company is applying for funding and needs to calculate its debt-to-equity ratio. Its total liabilities are $300,000 and shareholders’ equity is $250,000.

Here’s what the debt-to-equity ratio would look like for the company:

Debt-to-equity ratio = 300,000 / 250,000

Debt-to-equity ratio = 1.2

With a debt-to-equity ratio of 1.2, investing is less risky for the lenders because the business is not highly leveraged — meaning it isn’t primarily financed with debt (I talk more about leverage below).

As an entrepreneur or small business owner, this ratio is used when applying for a loan or business line of credit. For investors, the debt-to-equity ratio is used to indicate how risky it is to invest in a company. The higher the debt-to-equity ratio, the riskier the investment.

How can you tell what your debt-to-equity ratio should be? I’ll go over that next.

What is a good debt-to-equity ratio?

A good debt-to-equity ratio is typically between 1 and 1.5, though it varies by industry (some industries use more debt financing than others). Capital-intensive sectors like finance and manufacturing often have ratios above 2.

A high ratio indicates heavy reliance on debt for growth, which can pose risks for lenders and investors if the business struggles to repay its obligations. Conversely, a low ratio suggests limited borrowing, which may signal missed opportunities for expansion and profit, potentially discouraging investors.

What should businesses with good debt-to-equity ratios do next?

Businesses with good debt-to-equity ratios — those within the standard range for their industries — likely experience balanced growth supported by both debt and equity financing.

However, a good ratio is just one snapshot of financial health. To ensure stability, focus on the long-term debt-to-equity ratio. I suggest using long-term debt, rather than short-term financing, to fund growth plans and stabilize your pecuniary picture.

What is a negative debt-to-equity ratio?

A negative debt-to-equity ratio occurs when a company’s debt generates interest costs exceeding its return on investment or when the company has a negative net worth. This signals financial instability and is often viewed as risky by analysts, lenders, and investors.

Here, I identify the common causes of a negative debt-to-equity ratio:

• Taking on additional debt to cover losses instead of issuing shareholder equity.
• Expensing intangible assets, such as trademarks, that exceed existing shareholder equity.
• Paying large dividends that surpass shareholder equity.
• Suffering financial losses after significant dividend payments.

Such scenarios can indicate financial distress to shareholders, investors, and creditors.

What would I recommend if you’re dealing with a negative debt-to-equity ratio?

A negative debt-to-equity ratio can make securing future financing difficult due to your business’s heavy reliance on debt. Avoid rushing into equity financing, as adding new shareholders could shift your company’s direction based on their terms.

Instead, focus on reducing your debt before pursuing further growth. To gauge your standing, I recommend comparing your debt-to-equity ratio with industry standards using resources like CSIMarket.

How much leverage or risk should a business take?

I’ll start by defining leverage:

Leverage refers to a business’s use of debt to finance activities and asset purchases. A company is considered highly leveraged if debt is its primary financing source, resulting in a higher debt-to-equity ratio.

I think that the amount of leverage or risk a business should take depends largely on the industry it operates in. debt-to-equity ratios vary across industries because different sectors require varying levels of debt and capital to scale.

Investors may also focus on the long-term debt-to-equity ratio to assess more significant risks. High ratios often signal higher risk for lenders and investors, so if your business relies on future loans, it’s important to analyze your debt-to-equity ratio carefully.

For example, an apparel company with significant physical assets like textiles, labor, and brick-and-mortar stores will typically have a higher debt-to-equity ratio compared to a tech company with fewer physical assets and an online sales model.

Take the U.S. business debt-to-equity ratio, which reached 82.4% in Q3 2023. This figure highlights a trend where businesses are balancing debt and equity to drive growth and also taking the right risks in an ever-evolving market.

I’m of the view that striking the right balance is essential — too much debt can cause financial strain during downturns, while relying too heavily on equity can dilute ownership and reduce shareholder returns. Companies that manage this balance effectively demonstrate strong financial planning and so are in a better position to take risks.

Using Debt and Equity to Scale Your Business

Debt often carries a negative connotation for small and growing businesses. It can actually demonstrate to investors and lenders that your business is effectively using available resources to generate a positive return on investment — provided it’s leveraged correctly.

There are various ways to raise capital, each with distinct impacts on your company’s growth and financial structure. The two most common methods are equity and debt.

I think the debt-to-equity ratio is a critical tool for entrepreneurs and investors, as it illustrates how much a business relies on debt relative to equity for financing operations and purchases. Since this ratio can vary by industry, I recommend you understand the benchmarks for your sector when financing major projects or growth strategies.

Editor’s note: This post was originally published in October 2018 and has been updated for comprehensiveness.

Starting up a business — piece of cake. Keeping it going past the first year … not so much. If you‘re like me, you’re an entrepreneurial spirit who wishes to have her cake (business) and eat it too (turn a healthy profit).

Unfortunately, it’s not always smooth sailing.

The small business owners I’ve seen succeed shared two traits: resilience and a willingness to learn and take action.

That second part is everything because the right attitude plus information is what helped me sustain my freelance business for the past 17 years. Sure, sometimes this isn’t enough to keep your doors open, especially when life happens, such as bad credit, pandemics, and market shifts.

But where there‘s a will, there’s a way (more so, if you have a cash cushion to see it through).

If you’re just revving up your business or considering starting one, knowing the startup challenges is key. It preps you for the bad, the ugly, and the worst.

So, let’s review what small business owners told me about their startup challenges and how they overcame them.

Table of Contents

• Biggest Startup Challenges (According to Business Owners)
• Overcoming Startup Obstacles

Biggest Startup Challenges (According to Business Owners)

Learning from others‘ mistakes is one of the best ways to avoid them. So, let’s jump right into the top startup mishaps and tips to get past them.

1. Securing Funding

As a freelance writer, I didn’t have to worry about funding since all I needed was a laptop and the occasional hundreds (sometimes a thousand or so) to pay for courses and books. But folks going into ventures requiring inventory, real estate, and other tangibles don’t have it as easy.

In this case, it takes money to make money.

Sadly, the world works against the newcomers by requiring good credit and a year or two of being in operation. But how on earth do you establish credit rapport if it takes having established credit to get credit?

Then, you can forget about venture capitalists, who may also demand years of positive cash flow and profits to back your startup.

A vicious, unfair cycle.

And it’s the biggest problem most startups face. Based on a survey we conducted with entrepreneurs, we found that 54% struggle with earning and maintaining finances/money.

It breaks down into these sub-challenges:

• 22% can’t access funding.
• 19% have budget challenges.
• 13% want to but don’t earn recurring revenue.

The good news: There are better options out there today to help small business owners hop this hurdle. The bad news: Many come with predatory fees and terms that make borrowing loans seem so not worth it.

How to Overcome This

So, how are businesses faring against the challenges of securing funding?

“To get me off the ground, I borrowed some money from my family and took out a startup loan,” shares Jennifer Bailey, founder and CEO of Calla Shoes.

Bailey says she launched the business with just 35 thousand pounds.

“In the months leading up to the launch of my business, I joined a startup accelerator and got a contract for a new investment fund through that. The accelerator taught me how to do a pitch deck, financials, and also how to pitch, so I went into my first investment pitch day very confident,” Bailey says.

She secured a small amount of seed funding, which allowed her to give up her part-time job and focus full-time on Calla Shoes.

“My advice: Explore all funding avenues and try to make money from day one, especially if you have inventory,” continues Bailey. “Equity investment is necessary for most businesses, and you shouldn‘t go down this route unless you’ve researched where to get investments from and what type of business you want to have (e.g., build and sell a product or a lifestyle or legacy business).”

Others are using alternative funding sources, such as crowdfunding and angel investors, to start their businesses. Another alternative is to partner with someone who has funding.

“Our initial funding came in the way of a business partner,” explains Jennifer Johnson, founder of True Fashionistas. “She had the money, I had the brains, and we combined efforts.”

But be careful about this type of arrangement because if the funder leaves, so does your budget. After the funder left the partnership, Johnson notes that the business was financed with credit cards.

“In the long run, it was not so great and certainly not something I would recommend to others. It was expensive money, but it was the only way we had at the time to keep things moving. My advice would be to secure funding other than credit cards at the start. Perhaps with the Small Business Association or a bank in your area,” Johnson says.

Pro tip: Look into government grants for small business owners. It’s free money you never have to pay back and can be enough to give you a leg up. Search for local grants with your city, county, and state. And, check out Grants.gov to find federal grants for small business owners.

2. Building a Strong Team

Sometimes, going solo isn‘t the way to go. You need a team behind you to make your engine operate efficiently. I’m talking about folks who can handle the day-to-day tasks, so you can focus on the big picture.

For example, you may hire:

• Marketer to get word out about your business.
• Salesperson to convert leads into buyers.
• Virtual assistant to schedule your appointments.
• Manager to oversee operations and inventory levels.

Then, you can continue finding ways to grow and expand your company. But this costs money (hopefully, you’ve got the funding part taken care of) and requires hiring the right people.

This takes time and could lead to many mistakes, especially when you hire too quickly or for the wrong reasons.

How to Overcome This

Outsourcing is the only way to scale in my business, so I had to learn systems and processes. I needed to document how I do things to teach others how to do the same without looking over their shoulders. So, the sooner you document all of your processes, the sooner you can bring people on board and run a smooth operation.

But even after you have your documents in order, you still have to find and convince the right talent to join you.

“If you want great employees to join your team, give them the power to lead,” advises Darryl Stevens, CEO of DIGITECH Web Design. “One of the biggest advantages of joining a startup is the ability to flex your decision-making muscles and help build something from the ground up.”

If you have problems offering the best salary, you can compensate in several ways.

“Attracting and retaining top talent was challenging because of limited resources,” continues Stevens. “We focused on creating a positive and inclusive company culture where employees felt valued and had growth opportunities.”

Stevens notes that offering flexible working hours, professional development opportunities, and a collaborative environment helps the company attract and retain employees. “We also implemented an employee referral program, which brought in skilled candidates through trusted recommendations,” Stevens says.

Pro tip: No need to start with full-time employees. Look for contractors to outsource to and pay them based on the deliverable or project. This way, you can adjust your budget monthly based on the ups and downs of your startup.

3. Dealing With Imposter Syndrome and Gaining Credibility

You’ve just opened your doors, offering a service. How can you prove to new clients that they should invest in you? As a freelancer, my skills are my product and it was tough getting good clients (emphasis on good) to hire me.

That’s because they all demanded a portfolio in their industry, preferably published with known companies.

Imposter syndrome is real when you lack the experience, background, and client list to prove your worth. But everyone has to start from somewhere.

How to Overcome This

As a content writer, I used marketplaces that big companies used to work with freelancers (Clearvoice and NDash) to build my portfolio and credibility. Then, once I got five samples, I added them to my website and started pitching myself to bigger brands (like HubSpot).

Whatever type of business you start, you must go after your industry’s low-hanging fruit. That may be selling products that you know folks will buy just to get them to your site to check out the real products you really want to sell. Another option is to offer coupons in exchange for emails (to send promotional emails).

Or, if you‘re a service provider, you can offer a cheaper rate or even do pro bono work just to create samples for your portfolio. Since you don’t have the capital, you can use sweat equity to build your business credibility.

Darryl Stevens says the most significant challenge he faced was establishing credibility in a crowded market. “As a new entrant, convincing potential clients to trust our services was tough,” shares Stevens.

To overcome this, Stevens focused on building a strong portfolio by offering pro bono work to local businesses and non-profits.

“This provided us with case studies and testimonials and helped build a network of referrals. Additionally, I made it a point to personally meet with clients, ensuring that they felt valued and understood,” Stevens says.

It also helps to have a clear, compelling brand message that speaks to a specific target. Don‘t be a Jack or Jill of all trades. Be a master of one or two that solve your customers’ biggest frustrations.

This will help those who visit your site understand that you’re the right business for them. It will also help with word-of-mouth referrals from past customers. They know exactly what you do and will think of you as a go-to for the product or service you provide.

Pro tip: As you grow your client and customer list, ask for reviews and testimonials soon after they buy from you. Place the feedback on your website, social posts, and other marketing materials to sell your credibility and land more business.

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4. Scaling Operations

When you start a business, you‘re eager to grow it quickly. This is true whether you’re a freelancer looking to land bigger contracts, an ecommerce store wanting to sell more goods, or a local service provider desiring an expansion to neighboring cities.

But from my experience, scaling requires excellent organization (e.g., those documented processes) and a thought-out plan to scale (who you’ll hire and why). You need people and capital to make this work, otherwise you may scale faster than you can keep up with.

I’ve seen this happen with small agencies that landed big deals but couldn’t fulfill the demand because they lacked the freelance talent to pull it off.

How to Overcome This

If you’re looking to scale fast, pre-vet help and have them on standby. Also, get the proper tools, such as a CRM, sales software, project management platform, and accounting software (or other industry-related software that’ll streamline your workflows).

In my business, I use Perplexity to speed up my research process, Grammarly to help with editing, Slack to keep in touch with clients, and Trello to manage all my projects.

But again, without the people to hire or outsource to, you’re only able to scale so far.

“A major setback I experienced was the initial difficulty in scaling my services,” says Tilda Whitaker-Bailey, known as The Coach’s Mentor.

Whitaker-Bailey says she realized that her time and reach were limited with one-on-one coaching. “To overcome this, I developed scalable offerings like online courses and group coaching sessions. This helped me reach a wider audience and diversify my revenue streams, ensuring more stability and growth,” she says.

Pro tip: If you decide to scale, ensure quality is never compromised. One of the challenges I faced was bringing on editors and writers who delivered poor-quality work, which meant I had to sacrifice time to do it myself or more money to pay someone else to fix it.

5. Navigating Regulatory Compliance

Regulatory compliance is an issue for those in industries with strict laws. For instance, finance, medicine, telecommunications, transportation, environment, energy, and food and agriculture. I also see ecommerce regulations becoming more stringent, revolving around consumer protection, data privacy, taxation, competition laws, and shipping and logistics.

Keeping on top of the latest rules in your industry is critical to avoid fines and penalties, or worse, having your business sued or shut down.

How to Overcome This

There’s only one way to truly avoid legal trouble: having the right legal counsel.

Stevens says navigating regulatory and compliance issues requires thorough research and professional advice.

“We consulted with legal and financial advisors to ensure we met all local, state, and federal requirements. Implementing a compliance management system helped us to track necessary filings, permits, and licenses. Staying informed about regulation changes and maintaining good relationships with regulatory bodies were essential practices,” he advises.

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Pro tip: Research your industry and learn the latest regulations before starting your business. Make sure you have the money to pay the right professionals to help you stay legally compliant.

6. Managing Cash Flow

Your business is finally making money, and now you need to make sure every penny is accounted for and invested in the right areas of your company. It’s easy for money to get lost without the right tools. This is why I recommend using accounting software to track the flow of money and the performance of your business.

For instance, I use Bonsai to invoice clients, track revenue, and tag expenses. It even helps me to determine how much I should pay in quarterly taxes. It’s a guesstimate but better than owing $XX,000 during tax time.

When you don‘t manage your cash flow, you risk going into debt. Or misallocating your dollars towards everything but business growth (e.g., excessive marketing to the wrong audience or luxury office expenses). If you’re taking every cent to fund a lifestyle or aren‘t earning enough beyond paying your team, it’s time to find ways to grow revenue or decrease expenses.

How to Overcome This

If you’re super organized, then you may not need fancy software. You can use spreadsheets and manually enter the data yourself or hire a bookkeeper to do it for you.

“I used spreadsheets which I constantly updated and looked at,” shares Bailey of Calla Shoes. “I found it hard, I’m not going to lie!”

Bailey says she struggled with managing cash and inventory. Ecommerce stores don’t know what top items will be in advance of selling. Further, with shoes, you’re managing different styles and sizes. When tackling these challenges, Bailey turned to a friend in the industry.

“One of my shoe business friends has a great model for getting going, which was creating her community on Instagram, only buying a relatively small amount, building lots of excitement up to the launch of a new style, and then selling out pretty much straight away. If a style really worked, she would buy more of them. It meant she wasn’t stuck with loads of shoes and cash tied up in stock,” Bailey says.

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This is an excellent way to test the market before you invest in a product. But if you’re looking for a way to go deeper with tools and processes, you can use these tips from Stevens.

“We used detailed budgeting and forecasting to track expenses and revenues closely,” continues Stevens. “Invoicing promptly and following up on late payments helped maintain steady cash flow. Additionally, we adopted cloud-based accounting software, which provided real-time financial insights … Maintaining a lean operation focused on essential expenditures allowed us to manage cash flow effectively.”

Other ways to fix cash flow issues are to:

• Develop detailed financial projections.
• Implement strict budgeting and expense tracking.
• Consider invoice factoring or lines of credit.

Pro tip: If your cash flow issues are due to clients’ late payments, negotiate payment terms in advance (or request payments upfront before providing a product or service). You can also offer discounts to encourage customers to pay on time (e.g., 10% off if they pay Net 15 instead of Net 30).

7. Adapting to Market Changes

I never witnessed a major market shift in my lifetime like the one we experienced during the pandemic. It forced almost every industry to make major changes quickly, whether it was going remote, switching suppliers, or drastically changing operations.

For instance, we saw platforms like Instacart thrive when no one visited grocery stores. And, some empty office buildings reimagined their spaces into warehouses to accommodate the rise in ecommerce and make up for revenue loss during the shift towards remote work.

If there‘s one lesson learned, it’s that market changes can happen anytime and drastically. While we can’t prepare for every possible scenario, we can try to remain agile to sway with the waves.

“Our biggest pivotal moment in the business was certainly COVID. We were forced to close our store for two months,” says Johnson. “However, it was during this time I had a few real revelations and brought the business to new levels. My first revelation was that we needed to be more diverse as a business in how we got our product in front of our customers.”

Since they had to be physically closed, they had to figure out how to reach their customers beyond their website.

“I decided to start selling live on Facebook,” continues Johnson. “The one issue was that I was so upset and anxious about going into the store because I knew if customers showed up at the door, I couldn’t let them in. My husband went to the store every day to get the product and brought it to our home so I could do the live shows from there. It was what saved our business. We continue to do these live shows to this day.”

How to Overcome This

Pivoting your business at a moment‘s notice isn’t always feasible. However, if you pay attention to market trends and customer feedback, you can get a taste of a major shift that’s coming.

For example, AI is drastically transforming the marketing industry. I’ve seen some writers pivot to being AI editors, who generate content with AI tools and then edit it to sound human. Others are leaving writing altogether to become content strategists.

There are plenty of writing opportunities still out there, but seeing the future as it shifts prepares you to adapt before it becomes necessary. And the businesses that notice these trends (and act upon them) will have a leg up in the market in the future.

So keep your entire palm on the pulse to notice any and all changes as they happen, so you can decide when it’s time to pivot.

Some pivots will be small, others more drastic. Here are several examples of companies that made the right move at the right time:

• Instagram pivoting from a check-in app to a photo-sharing platform.
• Slack evolving from a gaming company to a workplace communication tool.
• YouTube shifting from a video dating site to a video-sharing platform (news to me!).

Pro tip: Don’t be afraid to venture into different industries and markets. I went from talking solely about digital marketing to writing for SaaS brands in finance, HR, and ecommerce. Also, continue to upskill yourself and your team to be prepared for these potential shifts.

Great upskilling areas include leadership, digital marketing, sales, data analysis, financial management, strategic planning, and tech skills. I’ve upskilled with books and online courses on digital marketing, editing, and content strategy, so it doesn’t have to be expensive!

8. Beating the Competition

Some markets are saturated with competitors, and others have major brands that seem impossible to beat. When you enter the field as a startup, your first thought is, “How am I going to stand out and get customers?”

Then, once you become an established brand and have to deal with new entrants, you‘ll also question how you’ll remain relevant.

In either scenario, you’re battling with visibility and brand awareness. Thanks to technology and the web, achieving both is easier and more affordable for startups than ever before.

How to Overcome This

“Beating the competition” is a great goal. But if you ask me, it‘s the wrong mindset, especially for a startup. Your initial goal isn’t to take out the competitors. Instead, focus on how to separate yourself from the competitors to stand out and win customers looking for what you offer specifically.

For instance, there are hundreds of project management apps on the market. Notion chose to stand out by becoming an “AI-powered workspace.” This is a nice strategy newcomers can use to stand out in highly competitive industries.

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The perfect time to enter a market is when there’s a big shift, and top players haven’t adapted yet. So, always look for trends and gaps when building your startup.

Sparktoro is an excellent example of a startup filling a gap in the crowded digital marketing industry. It focuses on a major marketer pain point — getting up-to-date insights about customers (e.g., who they follow, what they’re talking about, which publications they read, etc.).

If you find a demand that isn‘t being fulfilled well or at all, you’ll be in the money faster.

Other ways you can differentiate your startup include:

• Focusing on unique selling points and niche markets.
• Continuously improving products/services based on customer feedback.
• Building strong customer relationships and brand loyalty.

Pro tip: Conduct market research by going straight to the customer. Interview and survey your target audience to learn what they don’t like about current solutions they use and find patterns. Use this to create your product or service to stand out to customers looking for a better way to do X and Y.

9. Marketing on a Budget

Reaching your target audience when your budget is limited can be challenging. Low funds make it impossible to advertise consistently and push out content to gain awareness. Startups lack the capital and the team to do what the giants do, so they quit before even starting.

When you fail to market your startup, you increase your odds of never gaining traction to keep your business open.

Unfortunately, many new business owners are unaware of the tools, platforms, and strategies available to them. So, they struggle to spread the word about their offer and turn a profit.

How to Overcome This

I feel there‘s no excuse not to learn marketing today. There’s “YouTube University” that‘s free to watch and learn from brands giving away gems businesses can use to grow. And then there’s HubSpot Academy, which I’ve gained more than a few certificates from to stay ahead of the marketing game.

You can learn everything from social media marketing and search engine optimization to email marketing and branding. The knowledge is there for the taking. You just have to take the time to … well, take it.

Create a lead generation funnel to drive folks from these channels into your sales pipeline. Begin with freelancers to build your content strategy, write several monthly posts, and manage your social media accounts daily.

For example, your blog and social media posts will direct leads to a downloadable guide or tutorial, which captures their email address. Then, you can enter them into your CRM and email marketing campaign to nurture them into scheduling a call or demo.

Then, your team (or you) take it from there.

If you’re selling products, I recommend investing in ads early on and using social media marketing. The trick is getting as much visibility as possible from low-cost channels.

Here are several ideas you can try right out of the gate:

• Focus on cost-effective digital marketing strategies (email marketing, social marketing, content marketing).
• Use data analytics (Google Analytics and Google Search Console) to optimize marketing efforts to improve traffic and conversions.
• Hire freelancers to save money on labor costs.

Pro tip: If you can invest in influencers, go for smaller ones (nano- and micro-influencers) with higher engagement. Their audiences are more likely to try product and service recommendations from influencers who feel real (versus celebrities who don’t take the time to respond to the comments).

10. Maintaining a Work-Life Balance

Startup life and balance rarely go hand in hand. You‘re in hustle mode and can’t stop until you feel you‘ve made it. The problem is that startup business owners have a hard time identifying success. There’s always a bigger fish to catch, putting them on an endless hamster wheel.

The drive is great, but making room for your personal life is vital. The last thing you want is to divorce or break up, miss precious moments with children, or fall out with friends and family because you overwork. Then there’s the health factor — burnout is a real condition many of us (including me) have suffered from.

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It can hurt your productivity and cause serious damage to your body (and your business).

Many people ask how to create a work-life balance to ensure their business continues to grow, and their personal lives thrive.

How to Overcome This

There‘s only so much you can accomplish as a solopreneur. If you don’t have a team in place, the odds of burning out increase exponentially.

“Entrepreneur burnout is one of the biggest problems that can kill a small business,” says Mark Pierce, Wyoming Trust & LLC Attorney. “When you have created a business from scratch, letting go and allowing others to help you is hard.”

If anyone understands burnout, it’s law practices.

But to combat it, you must learn to delegate (this is where those documented processes will come into play). You can use documentation and video training to bring on others without having to be too involved.

If you can afford a manager to oversee hiring, onboarding, and day-to-day operations, then do it ASAP. Your future self will love you.

The only other way to avoid burnout is to slow down (but who wants that?). No, but seriously, sometimes too much scaling is bad. I’ve seen agencies grow to seven-figure businesses but end up turning a mediocre salary for themselves. To me, it’s not worth scaling and working overboard only to lose more money than I’m making because I have too many people and services to pay.

So, ask yourself regularly whether growing more is necessary or if you’re financially comfortable.

Here are other ways to maintain a good work-life balance:

• Set clear boundaries between work and personal life.
• Delegate tasks and build a support network.
• Prioritize self-care and stress management.

Pro tip: Use tools to manage your time. I use the Pomodoro method (using an app I downloaded on Windows). Make a schedule that‘s feasible and stick to it. When it’s time to get off, push things to the next day and adjust your schedule accordingly. Always give yourself enough time to complete tasks and include break times throughout the day.

11. Not Taking Networking Seriously

One thing I‘ve learned as an entrepreneur is that you never know where your next customer is coming from. Sometimes, one comes from a surprising place. For instance, someone you’ve connected with online may gain interest in your offer or refer a client to you.

It makes connecting and networking worthwhile (outside of gaining valuable friendships).

Networking comes with many benefits, especially when the individual is in the same or similar industry. For instance, they can offer advice, give you the hookup to a conference, or introduce you to someone who can offer business partnerships and opportunities.

“In the early days of Ondato, we realized that having a great idea and a solid business plan wasn’t enough,” shares Liudas Kanapienis, CEO of Ondato. “We needed to connect with the right people. I started attending every FinTech conference, seminar, and networking event I could find. At one of these events, I met a potential investor who seemed genuinely interested in what we were doing.”

Instead of diving straight into a pitch, he focused on building a relationship.

“Over the next few months, we had several informal meetings — coffee chats, lunches, and discussions about industry trends,” continues Kanapienis. “I made it a point to share our progress, early wins, and how we were overcoming challenges. This transparency and consistent communication built trust and rapport.”

One day, during a casual meeting, this investor asked detailed questions about their product and market potential.

“It became clear that our relationship had grown beyond just casual interest. They saw our passion, commitment, and the potential impact of our solutions. After months of building this relationship, the investor decided to back Ondato, providing not just capital but also invaluable advice and connections,” says Kanapienis.

Unfortunately, many startup founders view other business owners in their industry as competitors or don‘t see the value in networking with them. Those who view networking as a meal ticket may treat every person as a prospect, and that’s a major turnoff.

How to Overcome This

Once you understand the various benefits of networking, you‘ll never stop building yours. The stronger your network, the more value it brings to you and vice versa. So make sure you’re giving just as much as you’re receiving, if not more.

I can say that networking was the key to helping me get bigger and better clients. These individuals are my referral hub, and I consistently refer work to them as well.

If you’re interested in building your network, then you can:

• Attend industry events and conferences regularly.
• Join professional organizations and online communities.
• Develop a strategic approach to building and maintaining relationships.
• Leverage social media platforms for professional networking.

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Pro tip: LinkedIn is a great place to find your tribe. Search for groups that can benefit your business, such as those in marketing, finance, startups, accounting, or your industry.

12. Not Using Mentors

There‘s a lot to learn when you first start a business. Some you’ll learn along your journey, which I call the hard way. If there‘s an opportunity for me to learn from others’ mistakes and knowledge, I prefer this route to avoid a downfall.

Sure, you can read articles like this to provide insights into what other startups have done during a challenge. But there’s nothing like having a person you can talk to any time to get your questions answered. It can save you the heartache of making the wrong tax mistakes, growing too fast, or entering a bad deal.

I‘ve found myself on both sides of the coin. I have mentors I talk to, and I offer mentorship to up-and-coming writers in my niche. I’ve personally seen my mentees grow their skills and income drastically, which is delightful.

The downside of mentorships is that they‘re not always free. Some charge per call, hourly, or on a retainer basis. But it’s worth every penny for the right one.

How to Overcome This

The first step is to ask others you already know about mentors they recommend. Or maybe someone in your network is more knowledgeable and successful than you who can become your mentor.

You can also do a quick LinkedIn search for coaches and mentors in your niche. However, if you’re more outgoing, then you can find them at events.

Stevens notes that mentorship and networking were invaluable. Early on, Stevens connected with a mentor through a local business association who provided guidance on strategic planning and scaling the business.

“Attending industry conferences and local networking events helped build relationships that led to new clients and partnerships. One specific example was a networking event where I met a marketing expert who later became a strategic partner, helping us expand our digital marketing services,” Stevens says.

To make mentorship work for you:

• Actively seek experienced entrepreneurs or industry experts as mentors.
• Participate in mentorship programs or accelerators.
• Be open to feedback and willing to learn from others’ experiences.
• Cultivate relationships with multiple mentors for diverse perspectives.

Pro tip: Consistently put yourself in places where you’re not the smartest or most successful person in the room. This way, every conversation and introduction is with someone who can drop gems regarding your business venture.

Overcoming Startup Obstacles

After running a business for nearly two decades and speaking to other small business owners, I find that the biggest takeaway is to grow your network. Your network can lead to you getting funding, overcoming (or preventing) challenges, finding mentorship, and receiving referrals for talent or client/customer opportunities.

So, if you’re looking to start and grow your business, begin networking as quickly as possible. It can save you a lot of time, money, and disappointment down the road.

And for words of encouragement: The first year may be a tough one, but our survey shows that 42% of entrepreneurs were profitable by the beginning of year two.