18 Huge Business Mistakes I Made That You Need to Avoid
A “business” is a story in your mind. And just like anyone telling a good story, you don’t always know how it will end.
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Which mistakes have you learned the most from as an entrepreneur? originally appeared on Quora - the place to gain and share knowledge, empowering people to learn from others and better understand the world.
My business was killing it. We were making millions in profits, revenues, and had good employees.
One of my shareholders yelled at me for a stupid reason. It's not important why. He realized he was wrong later.
I found a shareholder to buy him out.
Life is really short. This is cliche because it's true. I can always make one hundred dollars back but I can't make one minute back.
The most important thing in life is not how much money you make but how good the relationships around you are.
This is your tribe. This is your family. This is the people who fuel you and your love and become your mirrors and your light and share your dreams and help your possibilities.
All of that is to say the #1 mistake is:
Mistake #1: Be in business with bad people.
Mistake #2: Working with any people you don't like. Fire quickly when you realize someone is no good: an employee, a customer, a partner. No excuses.
Mistake #3: Lying. I believe in this rule: over-promise and over-deliver. Don't lie to make the sale. If you say you're going to do it, do it, then do more. Then you have a customer for life.
Mistake #4: Thinking price is everything. In the 90s I had a web design business. I did the website for Miramax for $,1000 and then the website for Con-Edison for $200,000 even though the Miramax one was more difficult.
How come? Because I wanted to be the company that did entertainment websites. And this attracted great employees and ultimately an acquirer.
I make a mistake once when I was running a hedge fund. Someone didn't want to pay the top fees to me. But they wanted to invest a lot of money. It would have tripled my fund.
I felt insulted so I said "no". But I should have taken the money and invested it. This would have given me more clout with future investors. Price fooled me to making the wrong decision.
Mistake #5: Not answering the phone. In one business I had, I didn't want to tell a customer bad news. I was afraid to take his call.
Eventually we spoke. He said, "listen, I have to pull my business from you. It's not because of what you did. It's because you didn't return my call. If you are going to stay in this business, you have to talk to people."
To this day we still do deals together because I appreciated his advice.
Mistake #6: Not dealing immediately with problems. Problems happen every day in a business: Customers, employees, partners, competitors, etc. You can't waste time being angry. Just one at a time you have to deal with the problems.
Mistake #7: Thinking that products are the business. Products are important. Output is important.
But most of the conversations I have with my teams (over the past two decades) are about people. How do we make the people we deal with happier. If the people around you are happy, then you can solve most of your problems and sell more products.
Mistake #8: Forgetting this slogan: "Ready. Fire. Aim." In other words, say: "Yes, I can do it." And then figure out how.
Mistake #9: Forgetting to exercise my idea muscle. Solution: write down ten ideas a day every day. Never stop. Business is a non-stop work of art. You have to constantly work at being creative to stay ahead of everyone else.
Mistake #10: Avoiding sales. If you are in business, you are a salesman all of the time. You have to think about sales every day. You have to sell to everyone and do deals with everyone.
Now... most people are too aggressive at this. Build relationships so you can learn what people need. And then provide what they need. Always be selling. ABS.
Mistake #11: Not taking care of my health.
I once had a friend who ran a hedge fund. I'm pretty sure he was breaking the law in various ways but it was a gray area and I couldn't tell for sure.
He was massively overweight. He twitched. He was out of shape. He had hookers up at his office all of the time.
He had to shut down his business when his investors all realized something was off.
I asked him, "What are you going to do now?"
He took a puff from his asthma inhaler and said, "I have to get my health back."
You can't raise a healthy, happy child, if you are sick in bed, have bad relationships, are not creative, and are not spiritually healthy.
Same with a business. This comes first.
I ran into my friend a few years later. He was smiling, thin, married to a beautiful woman, about to have a kid, and was sitting on top of a successful business which now, ten years later, is still thriving.
Mistake #12: Forgetting the 80/20 rule.
Many businesses have over a 100 ways to make money. Some ways will make $10,000. Other ways will make $100,000 dollars.
But, instead, focus on the 20% of methods that make you 80% of your profits. Drop all the things that just make $10,000 if you have other ways that make $100,000.
But won't this make you less money? Yes, at first.
But with your 80% new free time, you'll find ways to make $1,000,000. This is how a business becomes great.
Mistake #13: It's a mistake to try and be only a little bit better than your competition.
Most people can't tell the difference between 10% better and 10% worse. So if you spend all of your effort only becoming a little bit better, you won't succeed. You have to be ten times better.
If I do a Quora Session, I don't answer five questions, I answer fifty.
If I do a podcast, I don't do the same interview show everyone else does. I read ten books per guest and get the best guests and write articles on each guest that I publish on five different platforms.
I once created a "social network for finance". I realized when I was halfway done building the site that I had about five competitors. I got scared. I cried.
So I kept adding more and more features. I put all of my investing techniques in the website and didn't hold back. When we launched we had ten times as many features as the competitors.
"Ten times" is not a book title or a fancy speech title. It's how you and your business will beat the competition.
And yet, it's zero-sum. You have to beat them.
Mistake #14: Not knowing this rule: "There's always a good reason and a real reason" and they aren't the same.
If a customer says, "We switched agendas so we won't be able to hire you this year". That's a great reason.
But the real reason is: "We don't like you".
Understanding this can help you decide how to stay in touch with them so eventually the ship turns around and they hire you. Understand that in all of your communications there is always a great reason but you have to work around that.
Mistake #15: Most people are lying.
I once ran a fund of hedge funds. I interviewed hundreds of hedge funds to see who I should invest in. Probably 80% of the hedge funds I interviewed I uncovered to be scams. Many of them either ended up in jail or paying massive fines to the SEC.
And that's in a heavily regulated industry. The same thing (even worse) occurs in industries that are not so heavily regulated.
Corollary #1: Be the honest guy. Then you are the source that everyone comes to.
Corollary #2: Sometimes recommend your competitors. Nothing establishes long term credibility than recommending your competitors on occasion.
Mistake #16: Smoking crack.
I know a guy who is selling luxury man-purses.
They are horrible.
"We'll corner the market on this," he told me.
He's so wrong it's sad. I showed his purse to many people. They hate it. "No way," he said, "People want this."
No they don't.
But he is smoking crack. Crack is addictive as soon as you take one puff. Everyone thinks their business is the best thing since the toaster. But most business ideas are bad. You have to know when to quickly move on.
Mistake #17: Focusing too much.
Everyone says "FOCUS FOCUS FOCUS".
When someone says this, it means they don't know what "focus" means.
If you focus too much, you'll end up with a tiny product in a tiny industry and you won't stay relevant for customers.
I had a business that first made CD-ROMs. But CD-ROMS died as a business. So then we designed websites. And then we wrote software for websites. And then we did strategic consulting (how to build an e-commerce business). And then we started a record label.
Yes. We signed a band and we were going to distribute their music. It was a bad idea.
But we were always trying new things in order to learn and to be creative and it doesn't hurt to try. And by doing that it helped us learn the music industry and then did the websites for five different record labels because we understood the industry.
No artist focuses on just one style. Not even Andy Warhol (he went from illustration to pop art to using his "factory" approach to making films).
Focus on being creative every day. And focus on the good things and don't spend time on the bad.
Mistake #18: Falling in Love.
I get it. You love your business.
But be more of a deal person than a slave to your business. Always be doing a deal. Should you sell the business? Take in money? Borrow money? Merge your business? Buy another business in a side-industry?
I don't know the answers. But think about these things every day. A "business" is a story in your mind. And just like anyone telling a good story, you don't always know how it will end.
But like every story, it will end.
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