So much of successful business is about experience – something that it is impossible to have until you’ve already begun. So your ability as an entrepreneur to learn from mistakes in business, and to know when to ask for advice, is, in my view, directly related to how much you will achieve.
Whether it is going bankrupt, learning how to mitigate risk, or knowing your limits and bringing in other talented leaders to help you grow, all business leaders face times in their career when they simply have to pick themselves up and move forward. These are the defining moments that make you the leader you have the potential to be.
I believe all successful entrepreneurs have experienced “failure” on some level during their career, and the lessons they learn become a big part of their ultimate success. While failure might be a bit of a dirty word this side of the Atlantic, I’m sure that the experiences the entrepreneurs share in this article will do a lot to debunk that perception and take us a little closer to the much healthier view of our US counterparts.
Read your contracts – and read them again
John O’Connell, chairman of the Scale Up Group and founder of the Enterprise Awards
Let’s kick off with my own mistakes in business example. Approximately 20 years ago I learnt that failures in due diligence could have a potentially catastrophic impact on your business. I inadvertently allowed a liability clause to be slipped into a contract at the last minute by a major distributor of our software. We were subsequently sued, both corporately and personally, for more damages than the company or I was worth, by the distributor which could afford legal bills we could not. I persuaded the distributor to convert its claim into a minority equity position in our company instead.
It is so important to learn how to manage these kind of legal risks as a business. Not only to read contracts carefully, but also how to know when to exclude such clauses or, if you need to, create a separate business for such contracts if you cannot omit the clause. It is also invaluable to get as much insurance cover as you can afford. These are the lessons that only experience or surrounding yourself by advisors can teach you.
Unfortunately being right is worth nothing if you cannot afford to defend your position. Stay close to all of your key relationships and ensure your “chain of custody” documentation will be helpful in any subsequent dispute by, among other things, clearly stating the obligations of both parties.
Timing is critical
Duane Jackson, former founder and CEO at KashFlow
Timing is everything when it comes to business. I discovered this at my own cost when I tried to sell my company before it was ready. As a result, we wasted almost a whole year speaking to potential acquirers at a high financial cost, but as a result, I became a better business person.
My hastiness to sell taught me how to run a better business and put us in a stronger position to sell when the time was right. I came to realise that without a stable senior management team and well-documented processes, we were not worth what I knew the company had the potential to sell for.
As a result of these lessons, I re-focussed on growing the business. I hired the team I needed and put the processes in place to help with growth and planning. When we later came to sell the business, we were in much better shape and I was able to negotiate a deal that didn’t include too many strings or any tie-in.
Mistakes are just hidden opportunities
Michael Tobin, former CEO of TelecityGroup
I don’t believe in mistakes, I believe in opportunities to learn. Many people were quick to judge when I stepped down as CEO of TelecityGroup in 2014. I was called a “maverick” leader in the press, and there was an assumption that this would be a challenging step in my career. After all, how does someone who has taken a business from chaos to being worth billions of pounds move onwards and upwards?
I confess that for a couple of weeks, I did feel the aftershock. I’d gone from 150 emails a day to five – I was used to having no free time, and now all my time was free. It was a little scary, to say the least. I applied for some corporate leadership positions, but I had learnt so much in business that I knew I had valuable lessons that I could teach so many others. So I started taking appointments as a non-executive director, and from there my roles grew and grew. I’m now NED/chairman on 14 different boards globally. I have used my experiences to help other businesses to grow, and to prevent them from making fatal mistakes.
Leaving the corporate world to go out there on my own, with no back-up, just a determination to succeed and help others succeed, was the best move I ever made. It has given me the space to engage in more charity work too, which in turn keeps me grateful and grounded. It’s not just the lessons we learn in business that make us better leaders; it’s the lessons we learn from the challenges of real life.
Never give up
Steve King, CEO at Black Swan Data
I’m a serial entrepreneur, and with that comes a fair share of outstanding opportunities and more than a handful of failures.
My first failure probably sticks with me the most. I started a music studio in Devon when I was 25. I had £50,000 of my mum and dad’s money, but no plan, and it went bust. It left me with a bankrupt company and my parents with a huge hole in their retirement fund. But after sitting my dad down and sharing the bad news with him, he taught me the most valuable lesson of my life: never give up. Those were the only words he said. I learnt so much from that failure, and he gave me the confidence to get back up and try again.
That lesson is my secret power. I’ve finally paid him back, admittedly after a few more attempts and those failures are now knowledge. I realised even significant failures are just part of the process if you can find a way to manage the risk and learn from them for the next time.
Own the responsibility of leadership
Sherry Coutu, former founder and CEO of Interactive Investor
Early in my entrepreneurial career I once ran out of cash – it happened because I had hired a part-time financial director who was not used to working in a high growth company. He was used to static SMEs with little or no growth. It meant I had to raise money for payroll in a hurry – in just three days in fact – and it was expensive in terms of the equity I had to part with given the momentum the company was growing at.
Running out of cash might sound like a relatively frequent occurrence for a new business, but for me, it was something that should have been avoided, and I was determined to understand how to prevent it ever happening again. I was confronted in a very tangible way with the realisation that all decisions in the business rested, in the end, on my shoulders.
I’m still forecasting cash all the time, and I’m careful about who I hire. The world of fast growth business is very different, so it’s vital to hire experienced people who feel comfortable with rapid growth. In the end, it made me take responsibility rather than assume that someone else would. It made me act like the owner I was – I didn’t quite realise the meaning and the responsibility of leadership before then.