Mistakes you make when you first start your business can make establishing a profitable business all but impossible. Adopt the wrong business partner, lease expensive office space before you generate enough revenue to pay for it, burden yourself with an investor before you have a working business model . . . These errors in judgement can easily cost you your business.
That said, the history of any business is based on mistakes made and lessons learned. The more seasoned you become as a business owner, the more willing you become to make little mistakes that might lead to big profits. The trick is, of course, knowing which mistakes to make.
- Do not make long term irrevocable agreements with individuals or businesses based on revenue you expect to earn. Don’t borrow hundreds of thousands of pounds to open a restaurant when you’ve never run one before or vest someone with half your business because you “need a partner” and they “seem like a nice person”.
- Do not risk assets you can’t afford to lose. Mortgaging the family farm in order to buy next years seed eventually costs you the family farm.
- Do not invest all your time and effort into a business in an industry you haven’t researched. If you’ve never run a newspaper, quitting your day job to run one may be the most expensive mistake you’ve ever made.
On the other hand, there are patterns of “mistakes” that business professionals make that almost always lead to great profit.
- Do risk fixed amounts of money on small capital investments that may lead to great rewards. If you run a beach business, take a chance on buying that snow cone or cotton candy machine. Its made money for others in similar situations, why not you?
- Do risk fixed amounts of money following the wild hunches of good employees or successful partners. In fact, some businesses give people who work for them one day a week and a limited budget to invest in wild-eyed schemes. Why? Because it creates a “system of innovation” from people familiar with the company’s business model.
- Do risk saying “Yes” when someone approaches you with a task they need done and they have a check in hand. Sometimes your customers will tell you exactly the business it wants you to create.
The opportunity to fail in these situations is fairly high, but take this kind of chance routinely and you’ll also see some of your biggest successes. In some cases the payoff will be immediate. Perhaps the new refreshment machine will give you your best summer ever. In some cases they will take years to materialize. For example, the young employee you took a chance on will leave your business to found the world’s next hot startup and he’ll remember you and your enterprise fondly enough to want to invest.
Over time you’ll find a well planned pattern of mistakes leads directly to personal and professional success.