Learn to Survive Setbacks
Posted by Pierre de la Fortune on October 19, 2015 @ 12:01 a.m.
Written by Eve Tahmincioglu
The partners--Sunny Kwak, Cyrille Turnier and Ryeon Kim, who are students at Babson College, and Rudolph Berthold, who's attending Florida International University--had the idea to bring eco-friendly, healthier electronic cigarettes, also known as e-cigarettes, to the marketplace, but they admit their rush to get the product to consumers led to the following three mistakes:
Inadequate research. They didn't do enough research on the Asian manufacturers they chose to make the product samples, and they didn't have solid specifications on how the prototype would work. That led to a lot of subpar initial samples and losses of money and time. Financing flubs. Instead of setting up a business account, they used their own money and ended up with an accounting mess. Outside distractions. They allowed personal matters and college parties to impact the mood and productivity of the entire group, and they didn't always give 100 percent commitment to the business, which slowed progress.
Turning mistakes into action
Instead of wallowing in their mistakes, these entrepreneurs made them a learning experience and quickly got back on track, opening a company bank account, finding a new source in China to make the product, and making the business their No. 1 priority.
The company, based in Wayne, New Jersey, is now selling its product through its greentipusa.com website and sales reps around the country. It could potentially bring in more than $100,000 in sales before the end of the year, says co-founder Kwak.
"Mistakes are always foreseeable, in hindsight. They're bound to be made and can bring a huge setback for your business," notes Kwak. But, he maintains, he doesn't fear business blunders. "All fear is an illusion. It only exists to be overcome, because once dealt with, it no longer exists."
That's the kind of mentality that seems to separate successful entrepreneurs from ones less likely to make it.
"Failure can be part of an entrepreneur's daily life," explains Mukesh Sud, assistant professor of management at the Charles F. Dolan School of Business at Fairfield University, adding that six out of 10 businesses fail. However, he says, "The great ones are the ones that learn from it and carry on."
There's a pattern of mistakes entrepreneurs tend to make early on. Here are the big ones:
Taking on too much debt
Sourcing products from the wrong company or not really knowing how a product will work
Pricing products and services too high or too low
Not hiring enough people or hiring too many
Not sufficiently researching the marketplace for a product or service
So, how do you get over the early flubs?
Spread your risk. Sud stresses this as a way to avoid one mistake dooming your entire business. That means you don't spend all your money on one product or sell to only one client.
Don't beat a dead horse. Greenbulb's owners realized their samples weren't adequate, so they got a new supplier despite the financial hit. Go back to the drawing board. Figure out where you went wrong in the first place in order to get back on track. Get outside opinions. Other entrepreneurs or small-business experts can be a great help if you see no way to get out of the hole you've put yourself in. That's just what Glenn Phillips, owner of Pelham, Alabama-based Forte Inc., did after he almost killed his software business by taking on too much debt and not figuring out how much to charge for his service.
At the time, he didn't have a credit line from a bank so he used business and personal credit cards to fund the business. He had 15 employees, which was more than he needed, and he was borrowing money to pay the bills.
"I was very optimistic I was going to get that next project, but it didn't come because the economy had slowed," he recalls, and his company ended up in a $300,000 hole in 2002. "The easy out was to file for bankruptcy."
Instead, he admitted to himself, "I don't know what I'm doing here," and decided to seek out mentors, including someone he rented office space from who had run successful firms. The mentor tore up his business plan and made suggestions, and Phillips also dug into his financial data and figured out what he was charging and where he was and wasn't making any money.
By 2004 he had paid off the debt, and today the company employs eight and has sales of $800,000 annually.
"My list of mistakes is long and some of the lessons were painful, but good," he says.
For more info please visit: http://www.entrepreneur.com/article/205144
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