Six founders share the startup mistakes that made them better entrepreneurs

Making a mistake can feel like a failure to some people. In reality, mistakes are an opportunity to increase your chances of success, especially in business. As these startup founders have discovered, learning from your mistakes can make you better at running a business.

Delegating too much financial management to the accountants

In her first company, a fast fashion startup, Nikki Hesford, founder of The Small Business Academyadmits she saw financial management as accounting work and a “boring legal requirement.”

“I didn’t understand that having a weekly/monthly/quarterly view of my income and expenses was the foundation for everything else in the business; my cash flow, marketing budget, sales forecast,” she says. “Even though that information was readily available in my accounting software, I didn’t use it regularly or try to understand the data. Now that I’ve learned from that mistake, I’m now picky about financial information.”

Incorrectly estimating the size of the customer base

Andy Cockburn, CEO and founder of Martech company Mention Mebuilt his first startup in 2006. He says, “We raised money from investors upfront, built a big, cutting-edge platform for two years, and then launched it, just for a handful of people to use.”

At his second start-up, he took the opposite approach: he only raised money and started hiring once they had proven that the model worked. “We took a lean approach and set ourselves nine tests, including finding out if customers were willing to pay for it, how many meetings it took to sell it, and making sure it worked for customers,” he says. “Once we passed all nine tests, we knew it worked and we were able to scale it up, which we did.”

Investing personal finances in just one place

Daniel Curran, founder of Finders International, initially invested his first entrepreneurial extra money in Blockbuster, which got the chance to invest in a then-young Netflix for just $50 million. Blockbuster subsequently went down.

He says: “Entrepreneurs sometimes make the mistake of thinking their company is their most important investment when their goal should be to build a widely and carefully diversified personal financial portfolio. Profits from those efforts can be useful money to reinvest in your business if needed.

After learning his lesson with Blockbuster, Curran solidified his net worth by investing extensively in profitable ventures such as commercial real estate in London’s Shoreditch long before it became fashionable, Apple stock and most recently Shiba Inu (SHIB) , all of which have excellent returns in the years since. He says, “Entrepreneurs should never overlook the diversity of personal financial investments.”

Assuming senior employees need less guidance than more junior recruits

As co-founder of tech recruitment company Carrington West, it’s an assumption Simon Gardiner admits to making in the past. “For years, I had a hard time distinguishing between what constitutes good mentorship from a senior position and what aspects of induction or training would fall under the line of ‘mildly condescending’,” he says.

After such 360° feedback, it became clear that some of the older people felt that their experience was not as well managed as that of the younger employees. “Now I say specifically, ‘stop me if I treat things in too basic a way.’ This way people get the information fresh or as a memory, without the ego being affected.”

Looking forward to the distribution of income

Becky Shepherd is the founder of a social media agency swimming. In the early years of the business, they had one customer contributing 50% of their sales. When they lost that client due to a business change, the agency was devastated and took a long time to recover.

“We now aim to keep all customer value below 20% of total revenue,” says Shepherd. “My mentor’s advice was that if we win a large company that accounts for 20% or more of total revenue, we should double down on our new business efforts to lower that percentage and eliminate vulnerabilities.”

Not realizing that the market doesn’t always say what it wants

Ted Lawlor heads the media group If only they knew And The Event Journal. In the past, he has introduced many new features to the market based on what his target audience has suggested they want.

“It’s not until you release the new features that you realize that your audience’s actions may be different from their words,” he says. “For example, they might say they want an exclusive member group, but if you put in the effort to make it happen, the audience realizes they don’t want to participate.” Lawlor is now trying to weigh the opportunity cost of the time spent creating a new feature against the potential revenue or impact the feature could have. “This helps me avoid disappointment,” he says.