The most important thing for any entrepreneur is learning from mistakes, and nobody says they have to be yours. Most small businesses can't afford errors. Luckily the recent recession provides many mistakes from which to learn; and at a current cost of $3 trillion, somebody should be getting something out of this.
- Avoid Complacency
The downturn proves there's no such thing as "safe." Chrysler and General Motors: some of the biggest names in the auto business have been bailed out or bankrupted over the past few months. It's easy to blame the credit crisis or oil prices, but the real reason is pure complacency, a risk shared by even the smallest business. When your work starts paying off and you're turning a profit, it's all too easy to forget--or refuse to believe--that the situation can change.
We have the right plan for GM, driven by great products, building strong brands, fuel-economy technology leadership and taking full advantage of global growth opportunities.
--Rick Wagoner, CEO of General Motors, Aug. 1, 2008.
GM is announcing today that Rick Wagoner is stepping aside as chairman and CEO.
-- President Barack Obama, June 1, 2009.
The latest and greatest example of collapsed complacency is, of course, General Motors, whose supremely confident chief executive officer was forced to resign within a year of the above quote. Forced to resign by the president of the United States, in fact, after losing more than $1 billion a month for three quarters in a row while insisting that everything was fine.
The Lesson: No matter how long you've operated or how much money you've made, the market is always changing; ignoring the problem doesn't help.
- Know Your Market
It sounds unfair, but your love of--and dedication to--your business can become a weakness. For example, as founder of a widget-selling website, you might know everything there is to know about Z-rated widget-confabulators, but the average customer doesn't. Even if you stay in touch as your business grows, it can be hard to keep touch with exactly what it does at the ground level.
We seem to forget that a cloistered executive, whose only social contacts are with similar executives who make $500,000 a year, and who has not really bought a car the way a customer has in years, has no basis to judge public taste.
--John DeLorean, 1979; On A Clear Day You Can See General Motors
That might sound like an all-too-nice problem to have, but lessons learned from semi-millionaire wages are easily applicable to everyday office life. Whether or not you're distracted by six-figure sums, it's easy to be buried by the growing responsibilities of hiring, accounting, advertising and everything except what your business actually does. And when you're not on the ground floor actually interacting with those who make, sell or buy from your business, it's all too easy to make strategic mistakes.
The Lesson: By success, responsibility or simple experience you will become a different person from your market. Make sure to remember what you customers want, and act accordingly.
- Move With The Times
It's a fact of life that industries are always altered by breakthroughs--the best horse breeders in the world were wiped out by the internal combustion engine, and businesses based on the telegraph were once the fastest-moving commerce in the world. These days technology surges ahead about once a week, and avid entrepreneurs must stay on top of the wave, especially if their business is based on an online model.
So readers could now get free news not only on newspaper websites, but also from portals and aggregators that had a chance to monetize the content, most of which was created and financed by the newspaper industry.
-- Walter E. Hussman Jr., Publisher; Arkansas Democrat-Gazette, May 2007.
This is an extraordinary statement about a traditional news publishers being crushed under the weight of progress. A smart analyst will see that Hussman correctly identifies the problem and the solution that other people are using to monetize the new medium. He also points out that newspapers and websites are very different mediums. Instead of giving away content for free and depending on pageviews for revenue, the paid subscription model is likely more lucrative for online publishing.
The Lesson: Adapt with the times or face extinction. It's not enough to know that your product/service works--you have to stay aware of what other people are offering.
- Accept Responsibility
If you can't think of anything that's your fault, you're paranoid.
It's an old quote, but it rings truer for entrepreneurs than anyone else. When all your efforts go wrong, or something threatens to derail your investment, it's easy to blame anything and everything else.
Every business has its bogeymen where it should instead have educational experiences. General Motors famously blamed cheap import vehicles for a declining market share, instead of focusing on building cars that could compete in a changing market. Many magazines and print publications blame the internet for their demise, instead of engineering online solutions while their surviving competitors embraced the new. It's a warning sign when anyone blames external factors, because what entrepreneur isn't aware of things he wishes he'd done differently?
Which is, of course, why you should learn from others to begin with.
The Lesson: If you find yourself blaming someone else for your troubles, ask yourself, "What are they doing that I'm not?"