Running a business can feel like a rollercoaster--and you're bound to make mistakes. From hiring the wrong people to buying faulty products and services, I've made many mistakes while running my business.
And yet, my company is still alive and well. Whether you are a seasoned entrepreneur like Elon Musk or newer to the startup game (like me), you're bound to make mistakes. By learning from them, your business can grow stronger. You'll learn to do things differently the second time around.
Here are four of the big mistakes I've made--and how to prevent them:
1. Under pricing and undervaluing your products
Last year, I was shocked when I saw my tax statements. I was actually losing money on a few products, taking marketplace fees and taxes into account. I didn't think I could raise my prices and still remain competitive.
After talking to a friend, they said, "Why do you charge so little for your products? These are great!" After the pep-talk, I doubled the price of my products and was shocked to see my sales figures unfazed.
When pricing out your products or service, it's important to take all expenses into account including your overhead, cost of goods, hiring expenses, marketing costs, and more.
Basic business 101--right? Though I learned all these things in school and books, when trying to juggle a million pieces this basic knowledge can sometimes be forgotten. Take a look through your offerings and ask yourself "Is this profit margin enough to help me sustain and grow my business?"
2. Hiring people that "talk the talk" but can't "walk the walk"
I'm a very trusting person. When someone tells me something, I always give them the benefit of the doubt and assume they will do what they say.
A few people I've hired sadly over-promised and under-delivered. I can only blame myself for these mistakes: I failed to perform reference checks or do a deep dive into their background when I was crunched for time.
That resulted in a few hires who weren't as dependable as their talk in their interview. Re-hiring wasted both funds and time I could have spent training someone else.
It's easy to trust someone who promises you rainbows and pots of gold. I've since learned to always ask for referrals of past clients and employers to ensure that the person you are hiring can fulfill their promises.
If you're evaluating a new hire, ask them about their tactical plan to execute any initiatives they might be promising.
3. Not thinking about the long term plan
I'm easily excitable. When someone tells me a great idea or about a fun event, my first thought is, "Let's do it!" I'm guilty of having too many projects or activities going on at once that often distract me from my long-term business goals.
In the past, I've spent a lot of time going to events and conferences that didn't directly relate to my businesses. While it can be fun to try new things, focusing on my business would have been a better use of my time.
Though many of the ideas I've executed have been fun to work on, I should have asked myself at the start, "How does this new initiative align with your future business goals?"
Asking yourself this question can help you evaluate whether to pursue a new opportunity.
4. Putting financial planning on the back-burner.
Whenever mathematical equations come in to the picture, my first thought is, "I'll do it later and focus on the fun part of business: creation!" Over the years, there have been sleepless nights where I've laid awake in bed thinking, "Crap, how did I get in this financial mess?"
It was embarrassing. I felt so much shame that I couldn't even talk about it with friends. But the truth is, many business owners find themselves in the same position. Over half of all businesses fail within the first five years, according to a 2015 Global Entrepreneurship Monitor report.
When you commit to running a business, it's important to first get your finances in order and figure out exactly how much money you need, how much runway you have, and how much credit you have at your disposal for emergencies.
The best thing you can do for yourself when running a business is to hire a knowledgeable accountant or financial planner that can help you create a plan, set your pricing and allocate your budget. If I were to start my business over again, I would have invested in this first, not only when I was in a pinch.
Every business owner is bound to make mistakes. If you make a mistake, take a deep breath and remind yourself that business will always have ups and downs. Don't get discouraged and keep building your dream.