Business fails are the best form of learning. Hiring an expert or a coach to walk you through establishing your business can help you minimise the chances of failure but some entrepreneurs will prefer walking alone. Whichever path works best for you, you’ve got to be comfortable with failure and most importantly learn how to improve or deal with it. Don’t be too hard on yourself for the failures and don’t give up yet.
We asked entrepreneurs and business owners about their biggest business failures and here are the inspiring responses.
#1-Hiring inappropriate council
If I could go back and do one thing again, it would be to find appropriate counsel. Hiring inappropriate council constituted a $15k mistake because the incorrect company was formed–costing us time and $15k. If you plan to take your company public, make sure you form the correct corporation. We were told that we didn’t need to set up a C-Corp in Delaware even though they have the most tax-favorable state for this. Even though we are far from going public, its good to know that most investors will only invest in c-corps structured this way. This year we will hit over $15m in gross revenue. This year we will hit over $15m in gross revenue.
Thanks to Gene Caballero, GreenPal!
#2- Following my passion where there was no market
While the events happened in 1979 the lessons for entrepreneurs are timeless:I had a passion for coaching senior executives and quietly
conducted market research to confirm that there was a need for this service.On the strength of my passion, my market research, and my unhappiness in my then job I quit and started my own company. In six months, the following was accomplishes: a one year lease was signed, I had made a public commitment to my business, and we were generating zero revenue. I ditched coaching as a product and asked myself, The West Coast are early adopters of innovation in talent management. What product/service is generating revenue that has not yet been adopted in Boston? The answer was outplacement. We are now in our 40th year providing outplacement services to senior level executives. Lessons Learned: be skeptical about following your passions. Follow your passions only if there is a market for them and customers willing to pay. Look for early adopters and products being used. Can you find a way to improve on what already is generating revenue?
Thanks to Laurence J. Stybel, Stybel Peabody Associates, Inc.!
#3- Following obsolete guidance and advice
From 2003 to 2008, I was the host/DJ/producer of The Groove Boutique, a radio mix show that aired across the United States. The show was #1 rated from NYC to L.A. and led to lots of opportunities for me to tour, produce music, and appear on TV (including hosting a show on QVC). As a result of the ’08 recession, my radio DJ career capsized. I had a difficult time building a new business because I was following the obsolete guidance and advice of career experts, but I devised a methodology that not only got me back to work as a consultant, it also helped thousands of other people who were victims of career disruption. including info about my audiobook. What’s In It For ME?, which was a top selling career title on iTunes and Amazon. I’m now an award-winning provider of multimedia sales support guidance for organizations around the world. I also contribute content about sales and business strategy to CNBC, Entrepreneur, Inc., and many others.
Thanks to Rafe Gomez, Vertical Cloud Inc.!
#4- Getting comfortable with the numbers and finances
Getting comfortable caused me to stop monitoring them as closely and little things started slipping through the cracks. These little things, almost caused my ship to sink. I stopped paying as close attention to the profit margins and to the cash flow because business had been consistently great and I subconsciously expected them to just stay that way without my attention as regularly. When I realized what had happened, I set a meeting with myself weekly to spend time with my numbers each week. Know the revenues, the expenses and your cash flow status. Have financial goals in your business and establish a plan to achieve them. Know what you have to do each day in terms of sales to make your goals. Know what you have in the bank to work with towards your goals. Know what you have to do to create a profit.
Thanks to Amanda Kendall, Elevating Profits, LLC!
#5- Two failures
The toughest business lesson I learned was: don’t spend years developing a product that doesn’t have a distinct customer base. I wish someone had given us that advice earlier, but maybe it’s one of those things you have to learn yourself. You have to feel the pain before you appreciate it. It was difficult to pinpoint our market, as we knew we would never make money off the job seeker. Instead, we went after the broader consumer market. Another tough lesson I learned was: don’t depend on anyone else to make your business a success.
Thanks to Ross Cohen, BeenVerified.com!
#6- The Hiring process
One of the ways I failed early on was in the hiring process. Hiring the first ten employees was incredibly easy for me. I had a wide portfolio of hard-working friends from engineering school and previous places I worked that I picked from. We also happened to all be relatively young, early in our careers, and able to jump at risky opportunities. However, when that available talent pool was exhausted, I didn’t have the structure in place to ensure the next wave of talent was as good. So be careful with your hiring, take a lot more time, look at a lot more candidates, check a lot more references and don’t just make a hire out of desperation. A bad hire is more painful than no hire. A mediocre hire can be the worst because someone just doing the minimum and taking up space on the org chart and payroll is preventing a good hire from being there for years.
Thanks to Brian Gill, Gillware Data Recovery!
#7-Not getting rid of weak people earlier
Beware that the people you start with are not always the ones who grow with you. The hardest lesson I learned when I started my company is not getting rid of weak people earlier than I did in the first few years of my business. I spent more time managing them than finding new customers. I knew in my gut they were not up to snuff but out of loyalty to them I let them hang around much longer than they should have. It would have been better for everyone to let them go as soon as the signs were there. They became more insecure and threatened as we grew which was not productive for the team. As soon as I let them go the culture got stronger and the bar higher. A team people like to be surrounded by other stars. It is true that you should hire slowly and fire quickly. I did not make that mistake again later on so learned it well the first time. I wish I had known it even earlier though but lesson learned for sure!
Thanks to Paige Arnof-Fenn, Mavens & Moguls!
#8- Relying on social media for marketing
One of my biggest business fails was putting most of my marketing efforts into social media. Then one day, after 10+ years on the platform, my Facebook page was hacked and disabled. In one fell swoop, there goes 23k of my contacts (between my personal and business pages and groups) that I no longer had contact with. Years of pictures, messages, posts, etc. Not to mention the fact that I no longer had a business profile on the site I used most for my marketing and paid advertising. Nevertheless, I’m happy to say I was able to bounce back successfully. I had already built an audience on my website, my email marketing list, in-person marketing, Instagram and word of mouth. This just caused me to put my marketing efforts where I should have been putting them all along: EVERYWHERE! Lesson: Don’t rely solely on social media for your marketing. Spread it out over many methods so that if one day it’s gone your business will not suffer. I’m contemplating rebuilding on Facebook but it’s not a necessity. I will keep up my current marketing efforts and have definitely learned to diversify in everything, not just my financial portfolio!
Thanks to Jenni StyleFairy Graham, JCHIC Lifestyle Brand!