Failure. It’s a word no marketer, business owner, entrepreneur wants to hear, but it can be a valuable lesson. Earlier this year, I wrote about the one mistake retail brands make when it comes to Twitter: not engaging with customers on a regular basis.
That’s one big failure.
Alan E. Hall has seen many related mistakes during his 40+ years as a serial entrepreneur, angel investor and venture capitalist. Like most of us, he’s made his fair share of foolish business mistakes along the way. Some even caused the end of a venture.
He’s watched others make mistakes in their businesses as well, some very visible. Fortunately, Hall learned something powerful and vital from each mistake, no matter the outcome. Big lesson learned: Don’t make them again.
From his personal experiences – and those he’s witnessed from afar, fortunately – here are six mistakes Hall believes leaders should avoid at all cost:
1. Not Doing Your Homework Before Launching
Failures don’t know their target markets. Successful entrepreneurs know their customers – the exact wants, wishes and buying behavior of specific individuals. They know their competitors and specifics on how their product or service is better (or worse). They also know if they have a product or solution that’s viable and WHY – and are willing to make some changes to the product to deliver the right features and support to create positive buying experiences for these customers. Knowing specifically what the market wants from the beginning, savvy leaders can build and deliver the precise solutions to meet customers’ needs
2. Not Listening to Your Customers
The homework doesn’t end once the company is launched. Company leaders who don’t listen to and respond to customer needs are making another big mistake. Successful business owners are fanatically focused on taking care of their customers. They wake up every day with buyers on their minds. They think to themselves, ‘I must do everything in my power to keep my customers happy and buying often. I can’t lose them to a competitor.’ These alert entrepreneurs have worked long hours to win their customers’ hearts and minds and now labor every hour to retain and increase their buying activities.
Unsuccessful entrepreneurs believe their products are compelling; that they are well designed and correctly manufactured. They see no need to talk to potential buyers. They also see no reason to innovate to develop new offerings. They suppose customers will never seek improvements or that competitors will never surpass them. They allocate no funds to research. As a result, customers don’t care for their products and don’t buy them.
Unfortunately, the once formidable Kodak stopped listening to its customers – and failed. The 124-year-old manufacturer of film and cameras filed for Chapter 11 bankruptcy protection in 2012, following many consecutive years of negative financial returns. In 2007, its stock price was $90 per share. In January of 2012, Kodak’s share price had sunk to a dispirited 76 cents. What happened? As excited customers were celebrating the arrival of fantastic digital images and digital cameras, Kodak management stayed the course with its traditional film and camera lines. Believing foolishly that its loyal customer base would never desert its famous products, Kodak ignored competitors Sony, Fuji and other innovative digital camera firms. Big mistake.
3. No Goals or Strategy
Consider the profound advice of Hall of Fame catcher Yogi Berra: “If you don’t know where you are going, you’ll end up someplace else.” Where do you want your company to be one year from now? What do you want to achieve? You’d better know or you won’t get there. To succeed in establishing and reaching your goals, you should focus well in advance on what needs to happen and spend all time necessary in advance to ensure their success, with established and repeatable processes to accomplish them. While some goals may be harder to achieve than others, each experience will refine your focus and improve the time and energy you spend on reaching the key objectives that bring the bigger goal within reach.
In addition, when leaders do not understand why the company exists, or have a clear and knowledgeable view of what it can become and how to achieve that vision, the organization will not survive.
4. Not Having a Mentor or Being Teachable
Reaching out to someone who has “been there, done that” can be detrimental to any business. If you aren’t willing to learn from them, though, having a mentor won’t matter. The late Dr. Stephen R. Covey, who passed away in 2012, was a terrific teacher and a personal mentor of mine from my college days. Having had the privilege of studying with Covey, most of my business philosophy is centered on his Seven Habits of Highly Effective People. Ray Noorda of Novell was another mentor of mine. From him, I learned that cash in a business is critical to success. “Cash is king,” he would say. “Make sure you have plenty and don’t waste it.”
Find your own mentor. Listen to them. Draw from their experiences, skills and substantial network to help guide you. Learn what has worked for them and what lessons they have learned from their experiences so you don’t make the same mistakes. You may feel as if you know exactly what you need to do to launch and grow your business, but there’s always a different and potentially better way of which you might not yet be aware.
5. Mismanaging Finances
Many firms with excellent potential end far too early because their leaders don’t know how to manage their finances. Often, company management has not developed a financial plan that considers conservative, expected or extraordinary performance, and what to do financially with each situation. Even worse is the company that can’t generate sufficient sales with appropriate gross margins. No firm can grow or prosper without planned revenue attainment. If there are insufficient paying customers, both current and potential to sustain an enterprise in the short and long term, economic viability is questionable
6. Lack of Integrity
Be honest. Period. Otherwise, risk headlines you don’t want and the potential collapse of the enterprise, your people and your career. Unfortunately, every day we read of crooked business leaders – and their failing businesses – and it doesn’t seem to be getting any better. Even a “white lie” will turn ugly if uncovered. Just ask Scott Thompson, the former Yahoo CEO who was fired this year after falsely claiming on his resume that he had a degree from Stanford. Don’t risk it.
What mistakes have you made – or seen – that you never want to make again?