Learning from your mistakes
Making a mistake, for some people, can feel like a failure. In reality, mistakes are an opportunity to improve your chances of success, especially in business. As these startup founders have discovered, learning from your mistakes can make you better at running a business.
Delegating too much financial management to the accountants
In her first business, a fast fashion startup, Nikki Hesford, founder of The Small Business Academy, admits that she viewed financial management as accountants’ stuff and a ‘boring legal requirement.’
“I didn’t understand that having a weekly/monthly/quarterly grasp of my income and expenditure underpinned everything else in the business; my cash flow, marketing budget, sales forecast,” she says. “Despite that information being readily available within my accountancy software, I didn’t use it regularly or seek to understand the data. Having learned from that mistake, I’m now fastidious about financial information.”
Miscalculating the size of the customer base
Andy Cockburn, CEO and founder of Martech firm Mention Me, built his first startup in 2006. He says: “We raised money upfront from investors, spent two years building a big, sophisticated platform and then launched it, only for a handful of people to use it.”
He took the opposite approach with his second startup, only raising money and starting to hire once they’d proven the model worked. “We followed a lean approach and set ourselves nine tests, which included finding out whether customers wanted to pay for it, how many meetings it took to sell it, and ensuring it worked for customers,” he says. “Once we’d passed all nine tests, we knew it was working and could scale it, which we did.”
Investing personal finance in just one place
Daniel Curran, founder of Finders International, initially invested his first entrepreneurial spare cash in Blockbuster, which had the opportunity to invest in a then-fledgling Netflix for just $50 million. Blockbuster subsequently went under.
He says: “Entrepreneurs sometimes make the mistake of thinking their business is their core investment when their goal should be to create a widely and carefully spread personal finance portfolio. Profits from those endeavors can be useful cash to reinvest back into your firm when needed.”
Having learned his lesson with Blockbuster, Curran shored up his assets by investing widely in profitable endeavors, such as commercial property in Shoreditch in London, long before it became fashionable, Apple stocks, and most recently, Shiba Inu (SHIB), all providing excellent returns in subsequent years. He says: “Entrepreneurs should never overlook the diversity of personal financial investment.”
Assuming that senior hires require less guidance than more junior recruits
As cofounder of tech recruitment company Carrington West, it’s an assumption that Simon Gardiner admits to making in the past. “For years, I found it hard to distinguish between what constituted good mentorship of a more senior hire and what aspects of induction or training would fall below the line of ‘mildly condescending,” he says.
Following some 360 feedback, it became clear that some of the more senior people felt their experience wasn’t as well managed as more junior hires. “Now, I specifically say, ‘stop me if I’m covering things in too basic a manner.’ This allows people to receive the information fresh or as a reminder, without egos being dented.”
Overlooking revenue distribution
Becky Shepherd is the founder of social media agency Swwim. In the early years of the business, they had one client that 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.
“We now aim to keep all client value below 20% of total revenue,” Shepherd. “The advice from my mentor was that if we win a big piece of business that’s close to or over 20% of total revenue, we should double down on new business efforts to bring that percentage down and eliminate vulnerabilities.”
Not realizing that the market doesn’t always say what it wants
Ted Lawlor runs the media group If Only They Knew and The Manifestation Journal. In the past, he has introduced many new features into the market based on what his target audience has suggested that they want.
“It’s only when you release the new features that you realize that your audience’s actions can be different from their words,” he says. “For example, they might say they want an exclusive members group, but when you put effort into making this happen, the audience realizes that they don’t want to join.” Lawlor now tries to weigh up the opportunity cost of the time he spends creating a new feature against the potential income or impact that the feature could have. “This helps me avoid disappointment,” he says.
