Young Millionaires on . . . Business Mistakes
Everyone makes mistakes-including our uber-successful 2004 young millionaires. We asked them to share the errors they made on their way to the top so you can learn as much from their slipups as they did.
Christina Bartolucci and Laura DeLuisa, owners of Duwop, a manufacuturer of specialty makeup and body creams
DeLuisa: My biggest mistake is having inventory. When you're a startup company, you can't order what these manufacturers want you to order to get the price you can afford. I'll find things back in the warehouse from two years ago, and we have 3,000 pieces. Why? Getting bullied into these big orders to get a price that would work for my cost. And then being able to sell it and actually keep alive.
You have to fight your vendors. Know that I'm going to be putting more orders in, but this is our first run; you can't make me buy 25,000 pieces if it's our first run of it and we don't know if it's going to sell. I've learned to be a bully back.
Bernard Frei, 39, founder of 365 Inc., an online retailer of licensed soccer and rugby apparel and a soccer and rugby news outlet and database
I definitely continue making them every day, horrible ones. Probably the worst general mistake was never having the time to get around to getting serious financing. And because of that, we've missed major opportunities, and I continue to miss major opportunities. I think probably in five years' time, I will need to get around to fixing that.
Nicole Licata, 35, and Suzy da Silva, 33, founders of CCM Marketing Inc., a media buying advertising agency specializing in the direct-response market
Da Silva: I think our biggest mistake and something that lots of people will [make] is when you have business procedures and rules that your company lives by, and then you have a relationship with a client or vendor that's more of a friendship, you'll allow those rules to cross lines and/or fade. In the long run, it comes back to get you. So stick to your procedures. If people have to pay X amount in advance, then they've got to pay X amount in advance. That's the way it works, whether they're a good friend or long-term client. Now we say these are our rules and we're going to stick by them, and we don't care who you are or how long we've known you, you have to live by these rules. It's very hard, especially when you're out [socializing] with them.
Stewart Levy, 37, founder of Tokyopop Inc., a multimedia publishing company specializing in English-language "manga"-Japanese comic books
I don't know if I can narrow it down to one. I would say that I found myself, and found my business at a certain point in time, to be overextended. This is a very typical tendency. I find myself constantly fighting with that even now. You have a lot of opportunities when you're in business to do new products, new marketing ideas. [At the same time,] people always talk about focus, focus, focus. That to me is the absolute hardest thing to do, even though it's true that you have to have a balance between diversifying your risk and staying focused. If you're focused, that means you're being narrow. But if you're being narrow, you can't diversify. But if you diversify, you're too broad and you can't focus. So it's really hard to strike that balance.
I found myself one time in particular in two core businesses. This is back in the Internet days, where we were investing a lot in growing our Internet business and at the same time our publishing and print business. We got to the point where our Internet business wasn't growing the way we had hoped, and we were stuck. A lot of companies were at the time-they went bankrupt-and we were losing a lot of money from the Internet business. At that time, my president and I sat down and said we've got to make some tough decisions. We decided to stop the Internet business and had to do a layoff.
I think the message from a broader point of view is you really have got to learn to resist your urges to do everything all at once. Even if you have a dream, you can't pretend like you can achieve that dream immediately; you've got to do it step by step.
James Funderburk, 39, founder of Urban Evolution, Civilian and Lotus; Tonic; and J-Squared LLC, which are clothing stores, a private nightclub and a real estate company, respectively
Getting lost in the small stuff and getting distracted from the big picture. I have Attention Deficit Disorder, so being able to multitask is part of who I am. It's a challenge.
Craig Allen, 35, founder of All Star Wine & Spirits, an upscale wine and spirits shop
I [made] some mistakes at the beginning as far as being too complacent and not focused and disciplined and being too friendly with the employees. I was getting ripped off at the beginning. I had kids in there I didn't know, and I trusted them right off the bat. I didn't have a real bookkeeper on hand, and I was trying to handle too many things at once. The [solution] was to get organized. I hired on a bookkeeper. I started delegating [responsibilities] to professionals. It's important to understand that at the beginning, you're going to trip up a lot. I was not trusting the right people and not focused enough to see what happened. If I had to redo it again, I definitely would have done a couple of things different-be a little more business-oriented and not so friendly.
Art Alaniz, 33, founder of Progressive Telecom, a wholesaler and distributor of cell phones and accessories
The biggest mistake I made while starting up my business was involving my family in the business. This is a textbook mistake a lot of people make, and it tends to ruin relationships. Unfortunately, it happened to me.
Jon Cohen, 36, and Rob Stone, 36, founders of Cornerstone Promotion, a lifestyle marketing company, and The Fader magazine
Cohen: I can say we haven't had any disastrous mistakes, but we've made a lot of little mistakes. Over the span of almost eight years, we've really benefited from some of our mistakes. The biggest mistake I see businesses make-and we've made-is not making decisions. The biggest mistake a business can make is being fearful of the consequences of a decision. What we've done well is we've thought things through, made decisions and luckily made them right more than wrong.
Stone: It's so important to communicate your message, not only to clients but internally. Not being on the same page of your employees is a huge mistake.