Mistake: A wrong action or statement proceeding from faulty judgment, inadequate knowledge, or inattention
I remember standing in line in their store, holding the gems I discovered in my hand, and anticipating the evening ahead. The store I stood in was one of 9,000 the chain had opened since their start in 1985. With $5.9 billion in revenue, they sat atop their industry like King Kong on top of the Empire State Building. Then the mistakes began. And after multiple blunders and miscalculations, the company finally declared bankruptcy in 2010.
If you’re in your twenties or older, you may remember standing in line at your local Blockbuster, renting the latest comedy or suspense video. When Netflix co-founder Reed Hastings proposed a merger with Blockbuster in 2000, he was literally laughed out their door. The rest, as they say, is history as VCR’s were supplanted by DVR’s and then streaming content.
Every entrepreneur and business owner makes mistakes, usually many of them. Most are small and with a slight course correction, can be overcome. But some, like Blockbuster’s rejection of Netflix, can have a negative impact that simply can’t be overcome.
While it may seem we’re the only ones who’ve ever faced a particular mistake, chances are they’ve happened many times before in other businesses. Below are five of the biggest mistakes made in business and ways to mitigate them in your own business.
- Not embracing change: Blockbuster didn’t look ahead to see how the times were changing and it cost them everything. Many entrepreneurs and business owners expect what they’re doing today will work for them tomorrow and far into the future, but change is constant. In today’s world, it happens faster than ever, and you need to be ready to pivot on a moment’s notice. It’s imperative you stay on top of industry trends by reading trade magazines, attending at least one or two industry trade shows per year, and talking with your customers about trends they’re seeing. Make sure your marketing and advertising channels are in line with where your customers are looking for your products and services. Facebook, Instagram and X (formerly Twitter) are where it’s at today, but social media changes come fast, so keep an eye out for new avenues to market your company.
- Hiring the wrong people: Say your small business needs a project manager…fast. Instead of going through your normal recruitment process, you hire the first person who applies. Turns out they’re a horrible fit and you must let them go. Hiring the wrong people is costly and risky, but it happens all the time. Take time to put a recruitment process in place that includes a detailed job description listing the responsibilities and skills required. Use phone interviews to weed out the chafe, move to in-person interviews with prepared, well thought out questions. Consider pre-employment assessment tests, check references thoroughly, and look at their social media profiles. Once onboard, have a training process that lays out expectations, documents your company’s policies and introduces them to any technology, processes, or specific software they will be expected to use. A structured recruitment and training process helps you hire the right people. And additional steps like mentorship, regular coaching sessions, and celebrating successes will help to keep them engaged and motivated.
- Common financial pitfalls: As the saying goes, “Cash is King” and for small business owners and entrepreneurs, this couldn’t be more true. It’s important to understand the financial picture your business paints and the various pain points you’ll encounter. Underestimating costs, overestimating revenue, spending lavishly, not having a budget, getting into debt, and growing too quickly are just a few challenges businesses face. Mismanaging business finances is a mistake that takes down many well-intentioned owners. Never mix your personal and business finances, keep detailed records, follow a budget, understand tax obligations, and ensure against unforeseen events with an emergency fund. There are many excellent resources online you can tap into and for those of us who are not financially savvy, don’t be embarrassed to ask for help from trusted advisors and friends.
- Trying to do it all yourself: Many entrepreneurs and business owners think they know the best way to do everything…until they don’t! Running a business requires wearing many hats and as a business scales and grows, it’s important you learn to delegate. Not only will this help you avoid burnout, but it can also foster the growth you’re expecting to achieve. When the time comes to start adding employees, make sure you hire people who are competent, have the skills needed for the job and provide them with clear expectations and guidance. Don’t hire people just like you, hire with the goal of empowering them with the resources they need to do their job effectively. Letting go and delegating takes time, but once you have, the benefits will far outweigh any negatives you can imagine.
- Lack of a clear mission and strategy: Many business leaders are so focused on putting out the fires, they don’t see the big picture. It’s imperative for success in any endeavor to have a mission, a plan to get there, and then to adjust strategies as the world changes. Famous brands like Toys R Us, Kodak, MySpace, Borders Books, Sears, and Kmart all failed to adapt to the changing times and lost focus of their mission. It’s imperative to always be looking ahead to improve your product(s) and processes and to rework your mission and strategies. A study by McKinsey found the average life span of companies listed in Standard & Poor’s 500 was 61 years in 1958, but today, it’s less than 18 years. Most businesses don’t fail because of a poor economy, but because of poor management decisions and mistakes. Take the time to regularly look at the competitive landscape and adjust your company’s mission and strategy to grow into the future.
We’re all going to make mistakes, but anticipating the most common ones and planning ahead can stave off many of the negative effects. Car maker Henry Ford once said, “The only real mistake is the one from which we learn nothing.” Admit your mistakes, learn from them, and use them to improve your business.
Stay positive! Don’t lose sight of why you started your business and what you hope to achieve with it and through it. Doing these things while staying focused and energetic will keep you grounded and resilient, even when you make those pesky mistakes!