5 Mistakes I've Made So You Don't Have To
I like to tell people I've made so many mistakes as an entrepreneur that I can't help but succeed from this point on. Unfortunately, that isn't true. No matter how many mistakes one makes as an entrepreneur, there are more ways to fail than can fit into a lifetime. As Jason Fried has pointed out, failure is overrated.
While failure may be overrated, that doesn't mean you shouldn't learn from it when it happens. You're that much better off if you can learn from the mistakes someone else has made, rather than having to make them yourself. As the proverb goes, "A wise man learns by the experience of others; a fool, by his own." In that sense I may be a fool, but if I am, I'm offering you the chance to be wise and learn from my mistakes rather than repeating them.
In my years as an entrepreneur I've made enough mistakes to fill a book (which I'm working on), but here are five of the larger ones:
Ignoring wise advice. I've had some great mentors over the years. It's a pity that when I most needed to heed their advice, I ignored it. I'm sure it pained them to see me make mistakes they had told me how to avoid. But I was stubborn and thought I knew better. If you don't have a mentor who tells you when you're wrong -- get one, and listen to him or her.
Choosing the wrong partner. I started a business and brought on two partners. They were both good guys, but they weren't the right guys. One of them I brought on after only knowing him for 10 minutes. By the time we parted ways I figured the mistake I had made was having partners, and I spent the next 10 years with no partner. Two years ago I decided I needed a partner again. After a year-long search and a test period, I found the right one and it has made an amazing difference in my business. When I say "amazing," I mean our monthly revenues have doubled in the past four months and we're on track to double again in the next four.
Being too easily satisfied. For years my business would grow, plateau, retreat, and then the process would start over again. I never got past a certain point. It was because I was too easily satisfied, and felt like I could take a break. I learned firsthand the truth in the saying that if you're not growing, you're dying. If you ever become satisfied with where you are, you either need to set loftier goals or change your line of work.
Borrowing from the IRS. About 10 years ago I reached a point in my business where money would come in from a client, and I had the choice to give employees their paychecks on time, or pay the IRS. If I paid the IRS, the employees would quit, I wouldn't be able to continue providing services and I would go out of business. If I paid the employees, the IRS would eventually come after me, but perhaps by that time things would have turned around and I could pay them off.
Let me make myself clear -- if you find yourself in this situation, pay the IRS first. You've heard of a loan shark breaking a borrower's kneecaps when a loan wasn't paid on time? Based on my experience "borrowing" from the IRS, I'd rather borrow from a loan shark. At least you can reason with a loan shark.
Getting in debt. Better yet, follow Dave Ramsey's advice and don't borrow from anyone. You can get in debt as fast as you can spend money, but you only get out as fast as you have profits. Even with a small-service business, it's easy to rack up $500,000 in debt and have nothing to show for it, and a very long horizon for paying it all off. Trust me, I was there, and it's not a fun place. Debt allowed me to cover up a lot of mistakes, and it wasn't until the well dried up that I had to fix those problems and make my business successful. Looking back, I wish I never would have taken on any debt at all, because it would have forced me to be wiser from day one.
These days I make fewer mistakes than I used to, but much of my ability to dodge bad situations comes from painful experiences. Take my advice -- it's better to learn by watching someone else make the mistakes.