Entrepreneurs: The Mistakes That Take You Closer To Success

As much as we may not want to, and as much as we may try not to, in life and in business, we have to make mistakes, because even though they hurt at the time, they do provide some of the best opportunities to learn. 

No matter who you are or where you are on your journey, everyone makes mistakes along the way, and I think anyone that tries to tell you otherwise is either lying to themselves or has been extremely lucky. When you make a mistake, the important thing is that you understand the learnings from it, immediately pick yourself up and without stating the blindingly obvious don’t do it again!

From Boom to Bust

One of my first publicity shoots at Astra - clearly no one said ‘Cheese!’ on this occasion

By my late twenties in the 1980’s, I was the Chairman of a small public company called Astra Industrial Group, and I’d built up a bit of a reputation for myself as someone that reverses the fortunes of ailing companies by transforming debt-ridden businesses into profitable ones. 

It was a period of my life where I felt as if I could do no wrong, so when the opportunity arose to turn around the ailing operation of another public company, I got really excited. I’d had a good streak and most things I touched seemed to go my way, why should this be any different? Big mistake.

My team and I were encouraged to make a takeover bid for another small public company by our advisors/merchant bankers. After initial approaches to take over were rebuffed out of hand by the then management, the only information about the business we had to rely on was that which was available on public record. So, we scrutinised the figures available to us with the advisors and made a hostile takeover bid which after a bit of a struggle proved successful and we found ourselves the happy new owners.

However, the celebrations were very much short-lived, because we quickly learnt that aspects of the balance sheet were complete nonsense! A large part of the stock was old stock and had long since gone out of fashion and was now worthless.

This was all happening during the financial crash at the end of the 80s, when things were getting difficult for everyone. 

At the time, whilst appreciating the difficult position we were in, with a really poorly business and the uncertainties in the economy, not to mention our financial gearing, we still felt confident we could ride it through, especially as part of the hostile bid plan was for a fundraising afterwards to de-gear the company. Unfortunately, as it started to rain the bankers did exactly the worst thing possible and took away the umbrella they had lent us in the sunshine of the bid, with no fundraising in sight either, as the markets had become increasingly uncertain. 

When the crash came, the institutions all went running for cover. I’d made the mistake of trusting them, and anyone that had done the same was left exposed - how history repeats itself with the economy we currently face. 

We quickly went from a Group making profits and with cash in the bank to one in debt with no cash reserves, and old stock that needed to be written off! One minute I was the aspiring young chairman of a public company, the next I was unemployed and on my backside with few reasons to get out of bed in the morning and face the world.

Not only had I lost my job, but I had to go home and explain to Mrs P that the beautiful forever house that we’d just moved into with the kids and a very large mortgage, was no longer affordable and needed to go, quickly.  I was unemployed, needing to sell my family house to repay the mortgage and I had also taken a bank loan to buy shares in the ill-fated adventure, not to mention the bank rate had gone up to 12% and mortgage rates to 15%. I really was all in.

Lessons Learnt

This episode of my life taught me many vital lessons that are permanently etched in my brain: 

1. Don’t bet the farm
2. Never financially leverage without a guaranteed exit plan
3. Assume nothing
4. Trust is earned
5. …..and never, ever forget to do your homework in full!

Whilst it may not feel like it at the time, making mistakes is an important part of business. I don’t mean that you should now suddenly start looking for ways to drop the ball at every opportunity, but when you do make a mistake, understand why it happened and implement the learnings you took from it - because each experience is an opportunity to learn, adapt and go again.

Having a detailed plan and a sense of direction is great, but more often than not, you’re going to encounter issues along the way. In these instances being able to understand what isn’t working is critical, because otherwise your detailed plan suddenly becomes not so well-thought-out.

It’s not just important to understand and implement the learnings you have taken from your mistakes and encounters, it’s also important to celebrate your victories further down the line so you can reflect on how far you’ve come since that experience.

Every experience and mistake chisels us into who we are today and who we hope to become. So treat each mistake as a lesson because you never know, that lesson just might take you a step closer to success.

Let’s continue to keep things in perspective.

See you next time,

Theo