Learning from Other People's Mistakes

My accounting degree taught me a lot about how business works. I learned the ins and outs of running an effective business, but what I wanted to know was why didn’t they?spend?more time on case studies of people that screwed up?

Business schools often have a heavy?focus?on success stories, leaving out the mistakes companies made while on their way to success.

Here are some things I’ve learned from case studies of failed business ventures over the years:

1. Make your mistakes small:?Whether you are bootstrapping?in a small or large company, if you make your mistakes really big and go all in on your initial thesis, you will likely run out of capital before you pivot. And you are almost inevitably going to pivot. As I like to say, you have to retain some gunpowder so that you can keep firing bullets after you pivot.

2. Accept that your first idea probably isn’t going to be perfect:?Recognize that you are more than likely going to have to pivot to either meet demands or generate cash to get your business going. At some point, you will be humbled by the market because they’re going to tell you why you need to make changes to your business. Burning through all of your capital on the first go around may mean setting your business up to inevitably fail.

3. In the beginning, it’s crucial to work smarter, not harder:?With a bootstrapped company, you have such little capital that you have to be extremely capital efficient. Before SmartBid, I had multiple failed business products. However, I always had money left in reserve in case we needed to pivot. When SmartBid was created, it was initially made for the printing business. But when insurance and construction professionals came along and said that our product could work for them, we had the capital to pivot to other industries, reshaping the platform, marketing and brand. That’s when our?success really started to take?off.

Reading case studies and learning from other people’s mistakes can help you from going down an unwelcoming path. Making?mistakes small and reserving?capital for when it’s time to pivot will keep you afloat as a new, bootstrapped business.

Important Question to Ask Yourself This Week:

New business owners: How much capital have you reserved for when it’s time to pivot? How can you build that up to make you feel comfortable with large-scale changes to your company?