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Oops, My Bad! 5 Ways Your Business Can Improve by Admitting to Mistakes No matter how much you try, you will make mistakes. But they can help to improve your company's effectiveness and reputation if you handle them well.

By Michael Houlihan

Opinions expressed by Entrepreneur contributors are their own.

Everyone makes mistakes. No one likes admitting to them. As businesspeople we worry that customers will be intolerant of our missteps and foul-ups. The truth is, though, denying them only magnifies an already awkward situation and ends up hurting your reputation. Handling them right, on the other hand, can actually shore up relationship, spark improvements and benefit your brand.

When Bonnie Harvey and I founded Barefoot Cellars we started out in the laundry room of a rented Sonoma County farmhouse. We knew almost nothing about winemaking or the wine business. We made many mistakes over the years. Yet, we decided to own up to them and view them as opportunities to learn and grow -- and in the process we gained respect and loyalty from our customers.

A few suggestions on handling your next business "my bad":

1. Cop to it. People actually like a little imperfection now and then. It demonstrates a level of authenticity, vulnerability, and humanity with which we all can identify. Plus, it's harder to be angry with someone who says, "You're right. I messed up," than with someone who insists the fault doesn't lie with him…even though you know it does.

Related: 5 Ways to Take Customer Loyalty to the Next Level

2. Recognize how it happened. When you investigate how and why an error occurred you can fix the faulty procedure or process. Real progress in companies is often built on the backs of mistakes and the improvements they spark. That's why Barefoot made sure employees weren't afraid to make or report mistakes.

Basically, we would say, "Congratulations! You found a new way to screw up, and that's a good thing. We didn't know that this could happen, but now that it has, we can keep it from happening again." Then we would brainstorm what went wrong and make adjustments.

3. Aim, don't blame. If you are accountable for the finished product the customer will hold you responsible for a mistake -- even if it wasn't really yours. Instead of pointing fingers, aim your focus on what you can do to prevent the situation from reoccurring.

Once during a business trip to Chicago I was supposed to show some new wines to retailers, and the samples had been shipped to my hotel. However, when the package arrived, the hotel didn't realize I was on the reservation list and sent it back. Technically, it wasn't my fault, because the hotel didn't do their due diligence. But to my buyers, all that mattered was that the new wines weren't there.

From then on, we worked to make sure this would never happen again. Ultimately, every box of wine was decorated on all six sides with instructions to the hotel not to return the box, and details of when I would be arriving. We included Barefoot's contact information and instructed the reader to get in touch with the hotel manager, whom we had told to expect the package, before sending it back. Overkill? Not really, because the problem was solved.

Related: In a PR Crisis, There's No Room for 'No Comment'

4. Write it down. When you are still smarting in the aftermath of a fiasco, you may assume you'll always remember what you did wrong and that it will never happen again. But as life goes on, your memory gets fuzzy and old habits creep back in. And you certainly can't pass your own experiences to the rest of your company through osmosis. Make the lessons you learned part of your company's policies. This might mean writing a new procedure, checklist, or sign-off sheet, or drafting a new clause in a contract.

5. Resolve that it won't recur. Barefoot once put the wrong bar code on a store's shipment of cabernet, which meant that the wine rang up for less than it should have. When we caught the mistake, I showed up at the store's corporate office with a check for the store's loss, plus the time and expense of dealing with the problem. Then I described to the manager how we were changing our internal processes to make sure that the problem would never happen again. That store thanked us for doing the right thing, and kept the orders coming.

Remember, what people recall most of all is not what went wrong but how you handled it. Don't miss out on these golden opportunities to show your integrity, reduce the drama, and improve the way your business operates. That's how you make "my bads" good.

Related: How to Maintain Clients' Trust While Managing a Crisis

Michael Houlihan is co-author with Bonnie Harvey of the forthcoming The Barefoot Spirit: How Hardship, Hustle, and Heart Built a Bestselling Wine, publishing in February 2013. He and Harvey started the winery that grew into the Barefoot Wine brand in 1986 and sold the brand to E&J Gallo in 2005 and founded The Brand Authority, a Forestville, Calif., marketing and branding company.

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