Tag Archives: mistakes

5 Vital Truths About Business Mistakes

Advice, Business Mistakes, Entrepreneurship,

(Note: I posted this last Thursday on American Express OPEN Forum. I’m reposting here.)

I’m not a baseball fan and I try to avoid sports metaphors, but there are some things I love about baseball that I treasure for their relevance in entrepreneurship and business management.

Baseball doesn’t pretend perfection. Pitchers get to miss their target three times free for every batter. Batters get to miss the target two times free. The best batter in history hit just a bit over .400, meaning six outs per every 10 times at bat. Anybody who batter better than .300 (three hits out of ten at bats) is highly regarded, if not a star. And people make errors on defense — and they call them errors, record them, and keep stats on them.

Small business owners should have it so good.

I’ve been running my own business for several decades now, which is long enough, I have to admit, to learn to live with mistakes. So now I want to give back, a bit, and share these five vital truths about mistakes:

1. You make mistakes

What worries me most about how much we all make mistakes is the whole mystique about excellence that leads to denial and distortions. I think of the song by Shaggy, ‘It Wasn’t Me.’ Reflect on your own work: do you make mistakes? If you don’t answer that with an immediate ‘Yes,’ then you’re in danger of being one of those delusional managers who blames others.

Don’t kid yourself. The longer you survive in business, the more mistakes you’ll make. It comes with the territory. Like in baseball, if you get up to bat you’re going to make those outs. If you’re the pitcher, you’re going to throw some pitches that weren’t strikes. And out on the field, you’re going to make some errors. You have to recognize it to deal with it.

If you’ve been at business for a while, then anybody close to you — like friends and family and especially team members in the business — can quickly point to a mistake you’ve made to fit any context. Be aware that it’s true for anybody in your position. Remind them, if you feel it’s appropriate, that you’re in the business of making mistakes, and if it weren’t for what you’ve done right, you wouldn’t still be in the game.

2. Accepting mistakes is good, but analyzing them is better

Much as I admire the general principles of Zen (as I understand them), just accepting the fact that you’re making all those mistakes isn’t good enough. Grab them, bring them into your head, and twist them around a bit to see what they can teach you about yourself, your business, and people in general. Keep an inventory of mistakes you can use to apply to future problems. They’re food for thought, eye openers, and reminders. Don’t forget them. Analyze them. Understand them.

It’s about vision. Humility does a lot more for business vision than corrective lenses.

Some people say amnesia is good for thinking and process and mental health; I disagree. Don’t dwell on your mistakes. Don’t beat yourself up over them. But keep them close enough to help with the future.

3. Beware of the quicksand mistakes

I’ve written about quicksand problems before. Life is full of them, which means business is full of them, too. When you’re trapped in quicksand, struggling makes it worse (or so I’m told; I haven’t had the experience). The quicker you struggle, the faster you sink. You relax and accept your fate and you’ll last longer, and maybe get rescued.

Some kinds of mistakes are quicksand problems: if you acknowledge them and change direction, you’re way better off than if you try to fix them or hide them. Call out the mistake, file it, analyze it, and use it. Don’t pretend you didn’t make it.

4. Understand uncertainty

We need to remind each other that we walk a perpetual treadmill of uncertainty. We never once make a decision knowing the future, but we are all the time discovering we guessed wrong, in the past, about what was going to be happening in the future. You have to always keep in mind that when you made that mistake you didn’t know what was going to happen. You were guessing, then, about what you know now. Ease up on yourself.

5. Mismanaged mistakes are team killers

Those of us in command must always remember that our people make mistakes, too, just like we do. Leadership and management come together on this point. When you give a task to somebody on your team you have to recognize that they make mistakes just like you do. You have to help them deal with mistakes, leading by example, and collaborating. You can’t pretending these mistakes didn’t happen. But you can’t grind people’s faces into them either.

Think of this concrete example: You want somebody to reserve hotels for your business travel. You don’t like the hotel they reserved. What, and how, do you tell them so that they reserve you one you like better next time? If you do this one wrong, they’ll never reserve a hotel for you again without giving you so much information and making you make so many choices that it would be easier to just do it yourself. When that happens, it’s not their fault, it’s yours; it’s your reaction to some past mistake.

(Image credit: DeepspaceDave/Shutterstock)

Top 10 Business Planning Mistakes #1: It’s Planning, not Just a Plan

Business Planning, , , , , , , ,

(Note: this is the tenth and last of a 10-part series listing my revised top 10 business planning mistakes. The list goes from 10, the least important, to 1, this one, the most important.)

Planning is vital for your business. Start with a business plan and a regular review schedule, then track results and changing assumptions and revise the plan as needed to accommodate a changing world. The value isn’t in the original plan, but rather in the planning that follows, which becomes steering your business.

Planning isn’t just a business plan. It’s business management. The real benefit comes from setting up the assumptions and the links between strategy and specific actions, plus the metrics, and the task assignments. As assumptions change – and of course they will – having the plan already in place increases the power of revisions.

Planning, like steering and management, isn’t just a map and a destination; it’s constant course corrections, the original route map subject to modifications for real time events. So it’s more like a GPS system with real-time traffic and weather information, so you can adjust the route.

That business plan isn’t the end in itself; it’s just the first step. Expect it to be wrong, and plan to revise it. What you’ll gain is controlling your own business destiny prioritizing, setting up metrics, managing change, and steering your business better.

In the illustration: plan vs. actual becomes steering and management.

(image credit: Jiri Hera/shutterstock.com, istockphoto)

Top 10 Business Planning Mistakes #3: Lost in the Clouds

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(Note: this is the eighth of a 10-part series listing my revised top 10 business planning mistakes. The list goes from 10, the least important, to 1, the most important.)

It’s not that I don’t respect talk about high-level strategy, business models, and business ideas; it’s that the high level strategy-in-the-clouds kind of planning is quite often a waste of time. Nothing but hot air.  I’ve written this before, elsewhere, but here it is again:

Good business planning is nine parts implementation for every one part strategy.

And how about this, an old riddle with a business point:

Question: in the classic bacon and egg breakfast, what is the role of the chicken and what is the role of the pig?

Answer: the chicken is involved. The pig is committed.

Good business planning generates commitment. It’s much more about concrete specific details than high-level strategy. It includes dates, deadlines, budgets, forecasts, and specific tasks and responsibilities. It’s about metrics, throughout the business, metrics for everybody, and the practice of following up on metrics to manage performance and the difference between performance and expectations

Does your business plan lists dates and activities and who’s in charge? Why not? Do you track actual results, and the difference between what you planned and what actually happened? Why not?

(Image: istockphoto.com)

Top 10 Business Plan Mistakes #8: Making Financing the Goal

Angel investment, Business Planning, Venture Capital, , , , ,

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(Note: this is the third of a 10-part series listing my revised top 10 business planning mistakes. The list goes from 10, the least important, to 1, the most important.)

It’s just too damn bad that so many entrepreneurs assume to start a business you do a plan, get financed, and then you start. As if the goal of the plan is getting financed; and as if the getting financed is the win, regardless of financed how and by whom and on what terms.

And that’s a big mistake. You should choose investors as carefully as you choose a spouse.

Contrary to the myth, winning the investment isn’t always a win. Getting investment from the wrong people isn’t a win. It’s a recipe for disaster. Marrying your company with incompatible investors can turn a dream into a nightmare. And yet so often when you talk to entrepreneurs they seem to think that just getting that investment is the same as winning the race. Find somebody to say yes and you’ve succeeded.

Not all good businesses make good investments for outsiders. Investors need exits in 3-5 years, while lots of good businesses aim for forever, not just 3-5 years. And entrepreneurs often want independence, while investors usually feel like bosses. They are owners. Some of the best businesses are bootstrapped, meaning they don’t get outside investment. They use their own funds, or early sales, and they grow more slowly but without requiring other people’s money. And some successful businesses are financed by loans, which increases the risk, but doesn’t dilute ownership.

I say let the nature of the business, and the goals of the entrepreneur,  determine the financial strategy regarding investment. Some businesses simply can’t sprout without healthy amounts of outside investment. Others have no good reason to even think of investment. And most are in between, with investment a matter of what the owners ultimately want. And there is what I’ve called the Startup Sweet Spot, the natural right level of financing for the startup, based on what it actually needs to develop right, which may or may not require outside funding. As in the diagram here to the right, the plan estimates the ideal startup costs level, and if funding for that isn’t available, then you revise the plan.

The correct goal of the planning process is to help the entrepreneurs determine what their startup really requires, and to help them look at options for growth, so that they can decide whether or not they even have something that will interest investors. And, if they do, then also of course whether or not they want investment. Then, if the entrepreneurs decide they want or need investors, then the planning helps communicate the business to the investors, and that becomes a starting point to deciding whether or not the founders and the investors are compatible.

Top 10 Business Plan Mistakes #9: Pitching Without Planning

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(Note: this is the second of a 10-part series listing my revised top 10 business planning mistakes. The list goes from 10, the least important, to 1, the most important.)

I’m guessing that the idea of doing a pitch – meaning a slide deck driving a presentation, about 20 minutes’ worth maximum – instead of a business plan is popular mainly because of a huge misunderstanding. People mistakenly think of a business plan as a big honking document, difficult to do, unwieldy, and off putting. So they want to do anything they can to avoid it. Then in walks somebody who ought to know better saying no, you don’t need to do the plan, just do a pitch.

A pitch without a plan to base it on is like a movie without a screenplay. It makes no sense. The pitch is summarizing the plan.

Whether or not you show a plan document to anybody, whether that somebody sees the pitch and not the plan, the plan is your most recent take on what’s supposed to happen, and both the pitch and the document are outputs of the plan. A pitch slide deck summarizes a plan. It doesn’t stand alone.

In the angel investment group I’m a member of, we read summaries first, then watch the pitches that survived the first cut. But nobody gets serious interest without having a business plan, and a pitch without a plan shows up like a sore thumb. As soon as people start asking questions, the pitch alone doesn’t answer them.

The plan itself isn’t a document, or a slide deck, or a memo; it’s what’s going to happen, and why. It’s a combination of strategy and specific steps to implement strategy. It makes the connections between the different functions and relationships in the business. And usually it lives on a computer.

Those documents, the pitch presentations, and the summary memos, even the elevator speech? Those are all just output of the plan.

Top 10 Business Plan Mistakes, #10: It’s Not a Hurdle

Business Planning, , , , , ,

I’ve decided I need a new top 10 list for business planning mistakes. This isn’t the first I’ve done and I hope not the last either, but it’s a good thing to give these lists a fresh look every so often. And this morning I do a workshop on this topic as part of the Bend Venture Conference in Bend, Oregon; so it seemed like a good time to do it.

I’m doing it like Letterman does, starting with number 10, least important, and counting up to number 1, most important.

No, a business plan isn’t a hurdle you have to get over. That’s just wrong. It’s not a one-time thing. You don’t want to finish your business plan ever. When your business plan is done, your business is done.

A business plan isn’t a thing, like a document, that has lasting value when it’s built. It’s a process. The first plan is the first step in the process. You should review it every month, and revise it as often as your assumptions change.

My first business plan book, written in the late 1990s, carries the title Hurdle: the Book on Business Planning. My bad. Sorry about that. It’s no coincidence that my second one, done two years ago,  is The Plan-As-You-Go Business Plan.

I still like that first book, although not as much as the more recent one. But I hate its title.

(image: istockphoto.com)