I wanted to immortalize some of the mistakes I made over the past two years in my previous business. These weren’t fatal to the business, but like many plane crashes, ‘pilot error’ is really just a combination of small mistakes and oversight.
While I was able to bootstrap my previous business from zero to about 40k a month in earnings in under a year, I’d (like to think I’d) be earning 5 times that if I was in the same position today, but hindsight is 20/20 isn’t it.
Now, instead of writing a long Mark Cuban style blog post telling the entire story, I’d rather focus on the key lessons I learned about business and about myself in the process.
Being great at building a business and being great at running a business are two entirely different skillsets. Identify exactly where talent is needed and hire it at a competitive price. I made the mistake of hiring people to do the things I did great (sales, design) when I should have hired people for the areas where I was weaker. I should have invested the money in all A’s. (accountants and attorneys.)
Avoid partnerships after the onset of your business at all costs. If you choose to take on a partner, get money for any equity relinquished and retain a majority stake. (He exchanged his clients for equity – a major mistake on my part, there are hundreds of ways I could have structured that differently.)
Keep overhead at an absolute minimum on all fronts. This seems obvious but it’s an easy trap to fall into even for the leanest and meanest of companies.
Big clients are great, but having one client comprise a large share of your revenue is a lot of exposure.
Don’t rely 100% on one marketing channel, keep marketing in your control as much as possible. SEO > PPC.
Avoid investing too much of your business in singular temporary trends. Create a revenue model that will still have traction in 5+ years.
Don’t get geeked by numbers. It’s nothing compared to what you could and should be earning.
If you aren’t stimulated to work by what you are doing, create another revenue source.
Shop lawyers around and don’t pay for two at once.
Overall, I am extremely happy with the experience and proud of what I accomplished. For every mistake listed there are ten things I got absolutely right. So, while I’m not dwelling on the past, I certainly am going to leverage that experience in the future.
EDIT: April 3, 2011 3:09am
I just wrote a new post, entitled A Litmus Test for Your Next Business and as I wrote it, I thought back on this post and realized there were more
lessons mistakes that I had made in my previous business. Going into my next business, I definitely am going to give it the ‘litmus test’ referenced above. As an entrepreneur, you can never stop educating yourself and increasing your business acumen. As Mark Cuban says, you only have to hit it big once.