My first business venture was a complete failure; however, it was also my greatest lesson in entrepreneurship.
Failure, for me, has proven a better teacher than success. The valuable, field-tested business lessons that I learned set me up for future successful startups.
The best way to learn what to do is to ask those who fail what they wish they had done instead!
You see, these entrepreneurs have gone out and made mistakes and suffered failures, so you don’t have to. Be smarter than them and learn from their mistakes and save your time, money, confidence and frustration.
Keep reading to find out what business owners, from various industries, the way they would do differently.
1. No Planning = Planning to Fail
All successful ventures, from throwing a birthday party to launching a new business require pre-planning.
Most entrepreneurs are high-energy people who are enthusiastic about their new business idea and are anxious to get started. They view business planning as a boring activity that only slows their time to launch. But lack of planning is cited as one of the top three reasons new businesses fail.
So if you don’t plan subsequently, you plan to fail!
Management experts have discovered that every minute spent planning saves over 10 minutes in execution. This means that every hour you spend planning your startup saves you a full workday of execution, thus enabling a sooner launch.
Take the time to plan your business ahead of time and work out your business model on paper before you enter the marketplace.
I found that many details that made sense in my mind, proven to be unworkable once I wrote my business plan. This allowed me time to modify my distribution plans on paper, saving time, money and industry reputation.
Get a Mentor - And Listen to Them
The world’s most successful entrepreneurs, including Bill Gates, all credit having a business mentor, and listening to them, as a key element of their success.
Mr. Gates, the second richest person in the world met his mentor Warren Buffet at an event hosted by Gate’s mother 27 years ago. They hit it off when Warren lent Bill his favorite book, Business Adventures, by John Brooks. Now it is Bill’s favorite book too.
Bill says he learned from Warren to, “know how valuable your time is because you can't buy more time”. Because of this sage advice, Bill does not let his calendar get filled up with useless meetings.
Sadly many entrepreneurs have mentors but ignore their mentor’s wise advice because of their own internal negative beliefs, fears and egos.
So instead, work hard on eliminating your own ego and opening your mind to your mentor’s valuable input which will support both you and your business’s success.
3. Hire Help Sooner - Make it the Best
Many entrepreneurs do it all, from sales to sweeping up, but that doesn’t mean it is the smartest use of their time and talents. The best way to maximize your valuable time is to hire your first employee as soon as you possibly can.
The sooner you hire employees, the faster both you and your business will grow. Your first few hires will teach you how to recruit, interview, manage, communicate and fire - all which will prepare you and your firm for your next growth phase.
Ultimately your firm’s success will be dependent upon whom you hire. Plus, you will probably be spending lots of time with your startup team so make sure you trust them and enjoy their company.
Also, don’t get cheap and try to save money by hiring inexperienced people or using an unpaid intern, then expecting them to perform as well as a talented and enthusiastic professional.
4. Monitor Cash Flow - Not Just Sales & Profit
The avenue of failed entrepreneurs is littered with those who ignored cash flow.
These business owners were overly focused on sales and operations and neglected the lifeblood of every business - cash flow.
Studies prove that over 82% of small business failures are due to cash flow issues.
Start now to switch your mindset by learning the difference between cash flow and sales, and how to use your accounting software to crunch numbers to guide you to good business financial decisions.
Know that making a profit does not mean that you have the adequate cash flow to meet your obligations, payroll and purchase materials to continue our product output.
Once you learn how to anticipate cash flow problems, you can secure a business line of credit for your working capital needs and avoid the danger of under-capitalization.
5. Be Honest With Yourself - Flexibility is Your Friend
As the leader of your own small business doesn’t fool yourself about your strengths, companies finances or market share.
Your refusal to face facts and be realistic about your abilities and your firm’s assets will only hinder your success and could shut down your company.
If you find that you lack in knowledge or skills, get real and either hire an expert or get schooled yourself. This honest and proactive approach ensures your firm’s ability to keep up with changing industries and technology since the only constant changes.
Additionally be realistic and know that you will not become an overnight success and not every prospective customer will buy your product.
Young entrepreneurs are more likely to, because of their lack of experience, to overestimate their business acumen and underestimate the amount of work, time and money it will take to get their business launched and thriving.
Work hard on overcoming your own naivety and blind spots and be rigorously honest about yourself and your situation so you can work towards changing it instead of pretending it is different than it is.
Marsha Kelly sold her first business for more than a million dollars. She has shared hard-won experiences as a successful serial entrepreneur on her Best4Businesses blog. Marsha also regularly posts business tips, ideas, and suggestions as well as product reviews for business readers. As a serial entrepreneur who has done “time” in corporate America, Marsha has learned what products and services really work well in business today. You can learn from her experiences from shopping the internet for tools, supplies, and information to build your businesses and improve lives financially.