Business mistakes - what are/were yours
Discussion
Everyone knows there is a wealth of information in this forum from business owners, but everyone makes mistakes, especially when starting out.
What mistakes did you make that, looking back, you would have done differently?
What assumptions did you make that turned out to be false?
Has anything happened that you didn't expect which has turned out for the better?
Whilst it will be interesting to hear the anecdotes, mostly I think that this will help any budding businesses that are in the process of setting up or who are at the early stages.
Thanks!
What mistakes did you make that, looking back, you would have done differently?
What assumptions did you make that turned out to be false?
Has anything happened that you didn't expect which has turned out for the better?
Whilst it will be interesting to hear the anecdotes, mostly I think that this will help any budding businesses that are in the process of setting up or who are at the early stages.
Thanks!
Not having a shareholders agreement and believing my business partner was an honourable man.
We had a split of shares 45% (him), 35% (me), 15% (key employee).
Everything was running along fine. Making around £200k a year profit.
Then he sold his house. Made £2M profit from it.
He was 55 with £2M in the bank and just decided he didn't want to do it anymore.
Fair enough.
He sold his shares to A.N.Other company for £25k. £25K!!!!!!!
A.N.Other company gave me a choice of selling my shares to them pro-rata and they would take all the Employee's on. Or dont and they wouldn't.
Meh...it's a lot more complex than that, but ultimately, no shareholders agreement not good.
We had a split of shares 45% (him), 35% (me), 15% (key employee).
Everything was running along fine. Making around £200k a year profit.
Then he sold his house. Made £2M profit from it.
He was 55 with £2M in the bank and just decided he didn't want to do it anymore.
Fair enough.
He sold his shares to A.N.Other company for £25k. £25K!!!!!!!
A.N.Other company gave me a choice of selling my shares to them pro-rata and they would take all the Employee's on. Or dont and they wouldn't.
Meh...it's a lot more complex than that, but ultimately, no shareholders agreement not good.
Mine were pretty common ones that I always hear other people say they made:
1. Not charging enough. Most small businesses lack the confidence to charge the rates they should.
2. Taking on bad clients. Happily working with companies with no money or bad payers even though my gut instinct said I shouldn't.
My advice, don't be afraid to ask for what you think you are worth and don't be afriad to say no to new business.
1. Not charging enough. Most small businesses lack the confidence to charge the rates they should.
2. Taking on bad clients. Happily working with companies with no money or bad payers even though my gut instinct said I shouldn't.
My advice, don't be afraid to ask for what you think you are worth and don't be afriad to say no to new business.
I would second that.
It is perfectly natural for a few people to think that what you are offering is too expensive. If they don't then your prices are too low.
Don't fall into the trap of selling solely on price.
Any old sod can start up tomorrow and undercut you, so if that is your game, you lose out. Also the endgame of that is only the largest will survive as only large companies can survive on single figure margin.
It is perfectly natural for a few people to think that what you are offering is too expensive. If they don't then your prices are too low.
Don't fall into the trap of selling solely on price.
Any old sod can start up tomorrow and undercut you, so if that is your game, you lose out. Also the endgame of that is only the largest will survive as only large companies can survive on single figure margin.
We were stalking a much larger competitor, with a view to buying it. Had most of the finance in place.
My business partner then met the CEO of a yet larger competitor and, trying to be the big 'I Am' he told this CEO about our plans - including what we were going to pay.
Said CEO topped our offer by £5m or so and bought the target more-or-less overnight, becoming, as a result, the biggest player in the UK market.
My mistake? Letting Buggerlugs go anywhere, do anything, or talk to anyone without supervision.
My business partner then met the CEO of a yet larger competitor and, trying to be the big 'I Am' he told this CEO about our plans - including what we were going to pay.
Said CEO topped our offer by £5m or so and bought the target more-or-less overnight, becoming, as a result, the biggest player in the UK market.
My mistake? Letting Buggerlugs go anywhere, do anything, or talk to anyone without supervision.
Dick Dastardly said:
Mine were pretty common ones that I always hear other people say they made:
1. Not charging enough. Most small businesses lack the confidence to charge the rates they should.
2. Taking on bad clients. Happily working with companies with no money or bad payers even though my gut instinct said I shouldn't.
My advice, don't be afraid to ask for what you think you are worth and don't be afriad to say no to new business.
I'll second that!1. Not charging enough. Most small businesses lack the confidence to charge the rates they should.
2. Taking on bad clients. Happily working with companies with no money or bad payers even though my gut instinct said I shouldn't.
My advice, don't be afraid to ask for what you think you are worth and don't be afriad to say no to new business.
fesuvious said:
record shops, to cars
Thats quite a leap!
Yep, thats for sure, both fun though classic cars more profitable.Thats quite a leap!
With my shops we were always busy and selling loads of cd's until our accountant told us we made no money and looked at me and said "Turnover for vanity, profit for sanity"
I guess this is a favourite accountants phrase but still rings true with me today.
Luckily avoided bankruptcy as the increased value of the leases just about covered the losses of the business, pure luck! I personally lost everything though, house, bike, car, gf, ho hum. Still dont regret doing it though, stories to tell!
justin-banks said:
fesuvious said:
record shops, to cars
Thats quite a leap!
Yep, thats for sure, both fun though classic cars more profitable.Thats quite a leap!
With my shops we were always busy and selling loads of cd's until our accountant told us we made no money and looked at me and said "Turnover for vanity, profit for sanity"
I guess this is a favourite accountants phrase but still rings true with me today.
Luckily avoided bankruptcy as the increased value of the leases just about covered the losses of the business, pure luck! I personally lost everything though, house, bike, car, gf, ho hum. Still dont regret doing it though, stories to tell!
Ken Sington said:
singlecoil said:
My mistake was assuming that if I built it, they would come. They didn't. It worked for Kevin Costner, but that was a film.
What was "it"?Went into a franchise that wasn't tested. It was called Motorlogic and sold cars via a visiting consultant/laptop to people who didn't like showrooms or didn't have the time. A good idea in theory but the company had been a traditional leasing company and then tried this method and franchised it out straight away. Loads of mistakes from the management and I didn't realise until a few months later that the concept was unproven and untested. Lost £15k. Lessons learned...
Probably the most important mistake that many many people make, and it's one they can't do anything about, is to fail to be lucky.
Sounds daft, but it isn't. NOBODY knows what is going to happen tomorrow, and ideas that seem like good bets now can quickly prove to be disasters when thing change. If skilled people can't predict the result of a horse race with any certainty, when a large number of factors are obvious, then how can they hope to do so with new businesses which were, by definition, not there yesterday.
There are plenty that will say stuff like 'you make your own luck', but they don't understand what luck is.
The best you can do is put your self into a position where you can receive good luck if it's going to come your way.
Sounds daft, but it isn't. NOBODY knows what is going to happen tomorrow, and ideas that seem like good bets now can quickly prove to be disasters when thing change. If skilled people can't predict the result of a horse race with any certainty, when a large number of factors are obvious, then how can they hope to do so with new businesses which were, by definition, not there yesterday.
There are plenty that will say stuff like 'you make your own luck', but they don't understand what luck is.
The best you can do is put your self into a position where you can receive good luck if it's going to come your way.
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