Small Business Owners Reflect on Their Biggest Mistakes

Small Business
small business owners biggest mistakes

Sure, failure as a small business owner can be pretty painful, but failures can also serve as useful learning experiences. By admitting to your mistakes and truly understanding them, you can make the necessary changes to ensure a brighter future for your company.

NerdWallet interviewed several small-business owners who were willing to admit to their biggest mistakes and describe how they’ve learned from them.

Expecting others to have the same integrity as you

Grainne Kelly, founder of the BubbleBum inflatable car booster seat

“The biggest mistake I ever made was expecting that others would have the same degree of integrity as I do,” Kelly says.

Grainne Kelly

Grainne Kelly/BubbleBum

While visiting a Chinese factory with an original design for her product, Kelly says she did not ask them to sign the confidentiality agreement before sharing her design, which turned out to be a huge mistake.

“While I was sitting in their office, the managing director of the factory drove to Shanghai, three hours away, and applied for a utility patent,” Kelly says. A utility patent prevents anyone else from making, using or selling the invention for a period of up to 20 years, according to the United States Patent and Trademark Office.

Now, Kelly says she doesn’t talk to anyone without first signing a confidentiality agreement.

“It had cost us in the tens of thousands of dollars, but I have learned so much about intellectual property along the way,” Kelly says. “The lesson learned: don’t expect anything from anyone, and you won’t be disappointed.”

Cutting corners in important areas of the business

Karina Rabin, owner of Hang-O-Matic

Rabin says she and her husband spent a lot of time, money and effort on a retail packaging design for the Hang-O-Matic, a picture hanging tool. An effort to save money on the design by going with an amateur graphic designer proved to be a costly mistake.

“That led us to terrible designs, and we took those terrible graphic designs, which we thought were great, and spent $20,000 on packaging,” Rabin says.

Karina Rabin

Karina Rabin/Hangomatic

“We printed 15,000 retail packaging boxes, which wouldn’t sell. We then had to toss those boxes and finally decided to hire a professional graphic designer with experience in retail packaging and graphic design who designed our new boxes without our direction this time.”

Rabin says she would have just hired a professional in the first place.

“It is very expensive to fix a problem that we created ourselves trying to do it for less,” she says. “Biggest lesson we learned is not to cut corners in very important areas of our business. Sometimes spending more in the long run is best.”

 

Friends and employees: ‘You have to both agree on what to do when it isn’t working out’

Robin Throckmorton, president of Strategic HR, an outsourced human resources management firm

The first few individuals who joined Strategic HR 20 years ago are a huge reason why the business has succeeded, Throckmorton says. However, she says it was hard for those early employees to handle the change that would come with the company’s growth.

Robin Throckmorton

Robin Throckmorton/Jeannie Marrs

“While I saw this challenge taking place with one specific individual, my mistake was to not encourage her to take a break,” she says. “Rather, we tried to get her on-track, butted heads, shed tears, and more.”

After two and a half years of struggle, Throckmorton says she had to let the longtime employee and friend go.

“The relief for me and others on the team was huge,” she says. “Plus, waiting this long actually ruined our friendship.”

“Did I learn my lesson? I hope so,” Throckmorton says. “It’s great to become close friends with your employees, but you both have to agree on what to do when it isn’t working out. And, it’s my job as the boss to make the right decisions for the company, not for me.”

‘Have clear objectives and roles for family and friends wanting to help out’

Cody McGraw, founder of Scout Military Discounts, a free military discount app

The biggest mistake McGraw made as a small business owner was “not clearly defining the scope of work for those who wanted to help out with his business.”

Cody McGraw

Cody McGraw/Scout

“I have a lot of family and friends who were eager to pitch in when we came out about nine months ago,” McGraw says. “I should have had some clear objectives and roles for anyone wanting to help. Instead, it was more on the fly, which is fine to do sometimes, but I wasn’t maximizing all the potential.”

McGraw has learned from his mistake, and says he now has a more detailed outline on the scope of work.

“Also, it’s challenged me to have a plan ready for what may come – full-time employees, clear objectives for certain teams within SCOUT, et cetera,” says McGraw.

‘It’s not about being perfect’

Miraz Manji, founder of TLAC, a printing and publishing company based in Toronto

“Customers are not completely unreasonable — they may be naive at times, but there is always a grain of truth in what they are dissatisfied with,” says Manji.

Miraz Manji 2

Miraz Manji/TLAC

Manji says he’s learned to focus less on personalities and more on business processes, and says failures have provided him with opportunities to make his company even better.

“I have come to realize that we will never be perfect and people will never be 100% satisfied 100% of the time,” says Manji.

“It’s not about being perfect — it’s about being sustainably profitable by reflecting, adapting and growing. In the long-run, this is how tiny businesses like TLAC disrupt the giants in the industry,” he says.

Incorporate and leverage other people’s ideas

Rod Dias, founder of Simple Moving Labor, a nationwide moving company

Rod Dias

Rod Dias/Simple Moving Labor

The biggest mistake Dias has made as a business owner was not incorporating other people’s ideas, “instead focusing only on what I envisioned for Simple Moving Labor.”

“As we grew and hired more people, I quickly learned that in order for this company to continue to grow and succeed, I needed to listen to others more and empower upper management to feel, act and experience their job and daily tasks as if it was their company,” says Dias.

“I know it’s hard for small business owners to let someone else make decisions and lead their company – it certainly was for me – but I think it’s a must,” says Dias. “You have to let go a little bit and really encourage all the birds to fly without a cage.”

‘There’s no place for you, except the place you make for yourself’

Mayer Dahan, CEO of Prime Five Homes

Dahan says his biggest mistake was leaving college to take a position at a property management company right before the recession hit.

Mayer Dahan

Mayer Dahan/Kareem Assassa

“Seven years in a dead-end job with no chance of growth or learning was a wakeup call for me,” says Dahan. “I had believed that the company I worked for would help me grow and take care of me, but as time wore on, I finally understood that I alone was responsible for creating my own opportunities.”

This failure led to Dahan starting his own real estate development company in 2012, called Prime Five Homes.

“The biggest lesson I learned that there is no place for you except the place you make for yourself,” Dahan says. “I would never have learned this lesson unless I had the courage to leave my steady paycheck to work for my own company and make my dreams come true.”

For more information about how to start and run a business, visit NerdWallet’s Small Business Guide. For free, personalized answers to questions about starting and financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.

Steve Nicastro is a staff writer covering personal finance for NerdWallet. Follow him on Twitter@StevenNicastro and on Google+.


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