Young Millionaires 2005: Making Mistakes--and Fixing Them
Even young millionaires aren't perfect. Here are their biggest biz mistakes and how they solved them.
Everyone make mistakes--even our 2005 young millionaires. We asked them what their biggest mistakes were and how they fixed them. Read their answers to avoid their mistakes and for inspiration when you make your own.
"Our biggest mistake was buying a practice in San Diego that turned out to be losing a million dollars a year. We powered our way through and found the business opportunity that was buried deep within. Our biggest mistake was also our biggest success."--Jonathan S. Bush, 36, co-founder of Athenahealth, a Waltham, Massachusetts company that provides internet-based revenue-cycle management for the health-care industry
"Making the wrong hires was the biggest mistake I've made. A wrong hire could be very bad for the company. You invest in finding someone, interview and train only to find out that they're not a good fit. One advice I have is if you hire people and you don't think they fit the culture, make the change really quickly. Don't take too long to make the change. I kept wanting to give people a chance, but within a few months, you should be able to tell whether someone's going to fit in your culture or not."--Babak Farahi, 32, founder of Multivision Inc., an Oakland, California, company that records and broadcasts coverage for clients
"I think the biggest mistake we made is sometimes letting people who are not a good fit with the organization stay too long. So I think the opposite of the hire slowly is the fire quickly. I think when you're small, you're concerned with paying unemployment and what's going to happen but I think it's much more important to have the right people in the right place to effectively grow your business and build a great inclusive culture than if you are concerned about how those things will affect you."--Doug Zell, 39, co-founder of Chicago-based Intelligentsia Cofee & Tea, a coffee roaster, retailer and wholesaler
"The biggest mistake was not preparing a financial business plan. I have one now. I would not prescribe operating on sheer adrenaline. I hired a professional consultant to evaluate our business, and he prepared a financial business plan with cash flows, open to buys, et cetera, and he helped me to understand what my business actually does.--Billy Strade, 35, co-founder of The Closet, high-end clothing retail shops in Orange County, California
"Jumped at the opportunity to sell to a large retailer that had unreasonable terms. We eventually turned away their business. Though it was a high-profile account for us, the cost of doing business with them was not worth it. It is really important to carefully weigh the costs and benefits of each opportunity. Sometimes what appears to be a great break is often not good for business at that point in time.--Donna Slavitt, 38, co-founder of World Packaging Corp., a New York City manufacturer and distributor of promotional, private-label and licensed items
"The biggest mistake I made was I gave up control of my company. I literally had to move mountains to get my business back, and when I did, now I control it. Never give up control of the check-signing privileges, and never sell yourself short. A lot of entrepreneurs sell themselves short because their business gets big, and they think, 'I should bring in some smarter people to run it.' The fact is the entrepreneur is what makes it successful. All the other people should surround that person to make him look good. Early in the internet days when there was so much money flowing in and out, I thought, 'These guys are smarter than me; they've got more advanced degrees than I do. I'll let them sign the checks, spend the money.' Now every single dollar, I know where it's being spent."--Andrew Fox, 33, founder of Clubplanet.com, a New York City-based online nightlife destination service
"I was helping a small cookie manufacturer bake cookies for them. On a handshake I did an agreement with them. I would let them use my facility for one day a week, and they'd cover my utility costs. Since I didn't have a contract, there was a lot of ambiguity or memory loss on the other person when it came down to protecting my company. We fixed it by chatting about it, putting everything down on paper so the thefts didn't take place anymore, mistakes didn't take place anymore. After that, we pretty much severed our [deal]."--Joseph Semprevivo, 34, founder of Joseph's Lite Cookies, a Deming, New Mexico-based manufacturer of sugar-free and fat-free cookies and food products
"There's one that stands out. I don't know that it's necessarily a mistake, but it's something entrepreneurs need to be aware of. When you're running a small business, the people you work with become almost family. It's a blessing and it's a curse because you tend to give a little more leniency to them than to someone you don't have a rapport with. So having a small business where you're really in the grind together day in and day out, you have to know when to let someone go. I may have let a person or two stay on board just a little bit longer than I would have otherwise normally allowed. It was more so out of loyalty and friendship. At the end of the day this is your baby, this is your business, and it comes first. And if the person is really your friend, you're going to be friends regardless."--Shawn Prez, 34, founder of New York City-based Power Moves Inc., a street promotion, marketing and event-planning company
"My biggest mistake has been being overambitious when ordering inventory. There have been cases where I should have bought 400 pieces, and I bought 2,400. This is at a time when the items are $25 a piece, so it's not an insignificant amount of money. When we place orders, we do so months in advance before they're out, so you have to guess the demand, and the orders are locked in. So I might've made an order when things are going great for a week and the items fizzled, so we're stuck with $50,000 of overstock. It really eats up cash flow. I'm basically done now with that. At this point I'd rather make decent money on the stuff we do sell and run out early vs. having to clear it all out and make a tiny markup for the added expenses."--Joel Boblit, 29, founder of Somerset, Wisconsin-based BigBadToyStore Inc., an online toy retailer specializing in collectible action figures