Starting a business is very en vogue right now. Everyone wants to be an entrepreneur and work for themselves. And as someone doing that very thing, I can say that it is great in many ways!
It’s also the most demanding, stressful, and hardest thing I’ve ever done. Businesses are not destined to always succeed. Business mistakes are easy to make, but unfortunately they can come with major consequences.
Businesses Can Fail, and We Can Learn From That
As much as I love to soak up stories of people who have succeeded, I also find value in hearing the stories of those who haven’t. There’s a lot to learn from people who fail.
One story came out last year and went viral, about a man who opened a restaurant and closed it amid debt, personal stress, and drug use. I still think about it a lot.
Here’s a brief recap of the story: a man left his government job to open a restaurant (his dream job.) He leased a space that needed over $80,000 in repairs, sold his house, emptied his pension further, borrowed money from family, and started abusing pills to try and make the business a success. Within a year, he had put over $170,000 into the restaurant, it closed and he was deeply in debt from the adventure.
While it may seem dramatic, this is a story with plenty of lessons for other aspiring business owners. Here are three lessons I learned from his business mistakes:
Three Business Mistakes
Capitalize on the good- The owner got a 4 star review by a major Toronto newspaper and had a few good weeks of business. Then he closed the business for a vacation. He still had to pay overhead costs, like server pay and rent. He didn’t have nearly enough in savings to take a break, especially not on the heels of a good review.
If your business gets good press, work harder to capitalize on it. Use it to drive more business.
Have a detailed business plan- He went into starting a restaurant with a head full of dreams and no idea of the true cost of things. He had no idea that the space he rented would need over $80,000 in repairs; all he saw was a space that would one day be a restaurant. He also mentions undercharging for the type of food they served.
A detailed business plan of how much your start up costs will be, how much your employment costs will be, and how you plan to make money, will help you see a lemon from the start.
Enthusiasm is not enough- You can love something madly, but that doesn’t mean it will pay your bills. This man went into the food business because he personally loved to cook. He spent most of his time repairing things, running the books, and feeling stressed. Loving something doesn’t mean you can make a business out of it, and it doesn’t mean that it will generate profit.
Business mistakes are easy to make, but they are even easier to learn from. I feel for this man, and I wish him a speedy financial recovery. But I know I won’t be making the same business mistakes that he did.