We all know that failure is part of the process of growth, but somehow knowing that doesn't seem to ease the pain it brings about. As I've gone through failures, I try and focus on what they teach rather than what they cost. In that way, I can give meaning to the pain and motivate myself to press on with greater experience.
Over the course of my entrepreneurial career, I’ve experienced a few epic failures in addition to a number of smaller ones. Though they were never easy, in hindsight I can see how each one taught me valuable lessons. Failure is tuition for advanced degrees in life. Through it, we can both collapse and give up, resolving to be less bold, or we can learn, grow and be emboldened in knowing that the same mistakes can be avoided next time. To me, it seems that if we’ve already paid the tuition, it’s silly not to use the degree.
If we choose to learn the lessons and press forward, it’s critical that we think through the failures carefully in order to understand where we went wrong. As I’ve considered some of my blunders, I’ve fleshed out many lessons. Here are 5 of the most important things I’ve learned. By reading this it’s my hope that you can avoid the same mistakes.
1. Choose Your Partners Carefully
I remember only one thing that my professor said in my first accounting class in college: “Choose your business partners more carefully than you choose your spouse.” I’ve heard the same thing stated in different ways dozens of times since, but until I experienced the fallout from a poor partnership decision I really didn’t appreciate the implications. In the aftermath of a company collapse, one of my partners not only sued a third partner, but made off with tens of thousands of dollars as well. It was a sickening and heart wrenching conclusion to a once promising enterprise. One that left me teetering on the verge of bankruptcy. It’s only in hindsight that I can see the impetuousness in my decision to partner with one of those people.
The error was made, largely because I was blinded by the significance of the opportunity before me. There was a great deal of money to be made so I allowed myself to overlook faults that I won’t overlook in the future. I didn’t know this particular partner well; I had only done small amounts of business with him in the past. I didn’t know his strengths and weaknesses. I wasn’t personally aware of his integrity. But, he brought a major supplier to the table that allowed the business to commence operating in very short order. So, the worst case scenario of not partnering with him would be that I may not have started the company. Even if I had started it without him, it’s likely that I wouldn’t have been brought to financial collapse. Had my professor seen what happened and been given the opportunity to critique my actions he probably would have noted that I neglected to apply the level of scrutiny that one would apply when choosing a spouse. And that was my failure.
In the future, I will know my partners much better before doing business with them.
2. Choose your clients and suppliers carefully.
This is particularly important if your business hinges on just a few suppliers or buyers. When the loss of one of them could cripple your business, you’d better know they can be trusted. I experienced this by having virtually all of my inputs in one of my businesses supplied by a single producer. When their unscrupulous behavior was revealed, not only did it cripple my business, it caused massive damage to my reputation as well. After all, my supplier’s products were my products; I couldn’t run away from that fact. When the product was revealed to have problems I couldn’t fix, my clients came to me looking to be made whole. I in turn went to my supplier who quickly shirked any responsibility. My clients felt the pain and rightly looked to me for help. Yet, I could do nothing. Had I selected a main supplier with a higher level of integrity I could’ve avoided the situation altogether. But I didn’t. I wanted to move and move fast; I wanted to take the market by storm and couldn’t wait for the vetting of more suppliers. That was a mistake.
In the future, I will truly know who I’m doing business with.
3. Don’t put all your eggs in one basket.
The problem in the second lesson could have been alleviated if I had sufficiently diversified my supplier base. Sure, pain would have been felt but the damage to the company could have been mitigated by covering the faulty product from other sources. Virtually all of my products came from a single seller. I had no other baskets.
I’ve also felt the pain of this lesson in a product marketing environment. When a software company I owned failed to get a foothold in the industry the product had been designed for, I should have been more flexible in pivoting towards other opportunities. The software was great and, had I been more creative I would have identified other markets for it. But I was completely emotionally invested in one small niche; all my eggs were in the same basket. The problem in both of these situations was a lack of flexibility; I wanted to hit a home run when I should have been going for base hits and intentional, steady growth. Again I was blinded by dollar signs and couldn’t (or wouldn’t) step back and look at the big picture.
In the future, I’ll be more aware of the risks of dealing with very small numbers and be more willing to mitigate that risk.
4. Do the right thing, even when it’s hard.
I’m pleased to say that I do believe I’ve always done the right thing. I’ve never lied to or cheated someone in order to make money. If I had been willing to be deceitful perhaps some of those businesses wouldn’t have failed and perhaps it would have made no difference in their demise. But I do know, I would have lost more sleep than I did. I wouldn’t have been able to live with myself. I struggled so much just appearing like I was acting unethically, had I actually engaged in underhanded dealings, I believe the additional turmoil would have been more than I could bear. Going through a business failure is difficult enough without adding the additional strain of corruption of your personal moral code. So, when it became clear that my supplier was in fact defrauding the industry there was no choice but to inform my clients and cease all contracted shipments. It was hard and costly. But it was the right thing to do.
In the future, I will always make choices that are consistent with my moral code, even when they cast me in a bad light.
5. Don’t avoid problems and be frank with clients.
When things began falling apart for me, my own shame and embarrassment instilled in me a deep desire to avoid clients because I simply felt that I couldn’t emotionally handle their dissatisfaction. They were rightfully angry at what had happened and needed me then more than ever. But, I lacked the courage to face them the way I should have. One of my business partners on the other hand, not only spoke with clients over the phone, he flew across the country to visit with many of them in person. His diplomacy went a long way and was critical in keeping us going as long as we did. Keeping clients abreast of major events and company decisions is playing the long game. It demonstrates that you value honesty and have their interests in mind. Delivering bad news may hurt in the short term, but over the course of a career, it’s the only policy worth having for a person of integrity.
In the future, I won’t avoid problems and I will be upfront with my clients.
These are just a few lessons, but I’m interested in what you’ve learned as well. If you have a great lesson or two of your own, please share it in the comments!
Picture Credit: <a href="https://www.freestock.com/free-photos/3d-business-man-giving-conference-growth-72379123">Image used under license from Freestock.com</a>