Learning from your mistakes
Making a mistake, to some people, can feel like failure. In reality, mistakes are an opportunity to increase your chances of success, especially in business. As these startup founders discovered, learning from your mistakes can make you better at running a business.
Delegate too much financial management to accountants
In her first business, a fast-fashion startup, Nikki Hesford, founder of The Small Business Academy, admits that she saw financial management as accountant stuff and an “annoying legal requirement.”
“I didn’t understand that having weekly/monthly/quarterly tracking of my income and expenses supported everything else in the business; my cash flow, marketing budget, sales forecast,” she says. “Although this information was readily available in my accounting software, I did not use it regularly or seek to understand the data. Having learned from that mistake, I am now meticulous with financial information.”
Miscalculating the size of the customer base
Andy Cockburn, CEO and founder of Martech Mention Me, built his first startup in 2006. He says, “We raised money from investors, spent two years building a big, fancy platform, and then launched it, just to a handful of people. to use it.”
He took the opposite approach with his second startup, only raising money and starting hiring after he proved the model worked. “We took a lean approach and set up nine tests, which included finding out if customers wanted to pay for it, how many meetings it took to sell it, and making sure it worked for customers,” he says. “Once we passed all nine tests, we knew it was working and we could scale it, which we did.”
Invest personal finance in one place
Daniel Curran, founder of Finders International, initially invested his first entrepreneurial spare cash in Blockbuster, which had the opportunity to invest in the then fledgling Netflix for just $50 million. Blockbuster subsequently went bankrupt.
He says, “Entrepreneurs sometimes make the mistake of thinking that their business is their primary investment, when their goal should be to build a broad and carefully distributed personal finance portfolio. Profits from these ventures can be useful money to reinvest in your business when needed.”
Having learned his lesson from Blockbuster, Curran bolstered his assets by investing heavily in lucrative ventures such as commercial real estate in London’s Shoreditch, long before it became fashionable, Apple shares and, more recently, Shiba Inu (SHIB), all providing excellent turn in the following years. He says, “Entrepreneurs should never overlook the diversity of personal financial investing.”
Assuming that senior hires require less mentoring than more junior recruits
As the co-founder of tech recruiting firm Carrington West, it’s an assumption Simon Gardiner admits to having made in the past. “For years, I found it difficult to distinguish between what constituted good guidance from a more senior hire and what aspects of induction or training would fall below the line of ‘slightly condescending,’” he says.
After 360 degree feedback, it was clear that some of the more senior people felt their experience was not as well managed as more junior hires. “Now, I specifically say, ‘Stop me if I’m covering things in a very basic way.’ This allows people to receive the information fresh or as a reminder without egos being damaged.”
With a view to revenue distribution
Becky Shepherd is the founder of the social media agency Swwim. In the early years of the business, they had a customer who contributed 50% of their revenue. When they lost that client due to a business change, the agency was devastated and took a long time to recover.
“Now we aim to keep all customer value below 20% of total revenue,” Shepherd. “My mentor’s advice was that if we win a big business at or above 20% of total revenue, we should double down on new business efforts to reduce that percentage and eliminate vulnerabilities.”
Without realizing that the market does not always say what it wants
Ted Lawlor runs the media group If Only They Knew and The Manifestation Journal. In the past, he introduced many new features to the market based on what his target audience suggested they wanted.
“It’s not until you launch new features that you realize your audience’s actions may be different from your words,” he says. “For example, they might say they want an exclusive group of members, but when you put in the effort to make that happen, the audience realizes that they don’t want to join.” Lawlor now tries to weigh the opportunity cost of the time he spends creating a new feature against the potential revenue or impact the feature could have. “It helps me avoid disappointment,” he says.