Taking risks and dreaming big is all part of being an entrepreneur.
The world of business comes with its challenges, especially if they are being dealt with alone.
Business owners should expect to encounter mistakes which are an important part of the learning process in order to develop.
Today we will be sharing the mistakes of 6 entrepreneurs and investigating how you can avoid encountering them in the future.
The entrepreneurs and their mistakes this article will be focusing on are:
- Kenneth Lay – the Enron Scandal
- Billy McFarland – Fyre Festival
- Robin Chase – Zipcar
- Rand Fishkin – Moz
- Leo Laporte – Twit Network
- Dharmesh Shah – HubSpot
Kenneth Lay – the Enrol Scandal
Kenneth Lay, born in April 1942, was the founder and CEO of Enron and at the forefront of the famous Enron scandal.
Enron, created in 1985, was the result of Lay’s merging of Houston Natural Gas Company and InterNorth Incorporated. In October 2001, Enron, Americas seventh-largest company, was involved in corporate corruption and accounting fraud.
Throughout Kenneth’s reign alongside businessman Jeffery Skilling, Enron fooled regulators with their leadership prowess, but all the while used accounting loopholes, special purpose entities (SPE’s) and unrecognised accounting practices. Enron hid billions of dollars of debt from failed deals and projects from its investors, allowing the problem to escalate into an uncontrollable situation.
Enron’s share price plummeted to $0.26, from $90.75, seeing the firm lose $74 billion in the four years leading up to its bankruptcy.
Enrons fall was the most extreme case of financial fraud the world had ever seen, and resulted in a change in US legislation to ensure more accurate financial accounting in public companies. The reason why such a notorious crime was committed is still unclear, and has many hypotheses.
However, there are 5 key takeaways from this detrimental mistake:
- Know your employees
- Maintain control of your business – ensuring legislations and common practices are followed
- Keep track of your assets and their location
- Approach financial cases with the utmost attention
- Address financial legalities when they first appear
Billy McFarland – Fyre Festival
The American entrepreneur and convicted fraudster, Billy McFarland, was the co-founder of Fyre Festival. Building a network of wealthy investors, Billy defrauded them of $27.4 million, by misleading advertising and promoting a glamorous party on a deserted island.
Fyre Festival tickets could cost up to $100,000, promising luxury villas and gourmet meals, and the chance to socialise with celebrities like Bella Hadid and Kendall Jenner. The tight deadline and scale of the project resulted in problems with accommodation, security, artist relations, catering and medical services meaning that the festival was indefinitely delayed – but no customers were told.
Much to their surprise, guests were greeted with a cheese sandwich, no luggage control, a wet mattress each if they were lucky, FEMA tents instead of villas, and no festival. The event was soon publicly cancelled and thousands of frustrated guests wanting their money back. Not to mention the thousands owed to locals for the use of the island and labour.
The backlash of this disaster saw Billy plead guilty to two-wire fraud-related offences, sentencing him to six years in prison, which he saw as an “extremely bitter reality”.
Promising and not delivering is a common mistake made by entrepreneurs that only leads to nothing more than aggravated clients and an under-delivering business. Thinking about the consequences of the promises you make is very important and in extreme circumstances, such as Fyre Festival, end in legal implications.
Robin Chase – Zipcar
Successful entrepreneur Robin Chase is the CO and founder of Zipcar, a car-sharing club which allows anyone with the Zipcar app to access a car or van where and when they need one.
Chase recommends entrepreneurs to “Get your customers as fast as possible & learn from them to build your product”.
Why does she say this?
Chase’s second company, GoLoco, a ride-sharing service that arranges carpools for people heading to the same destination, saw her spend too much money and dedicate too much time to the software development.
In doing so, she didn’t engage with her customer base and learn what they desired, which meant having to undo most of her assumptions once customers began to give feedback.
Customer feedback will help improve your product/service and allow it to be delivered to the correct people. Understanding your customer needs, opinions and expectations is an integral part of market research before launching your business idea.
Rand Fishkin – Moz
Moz is a marketing solution that changes the way you communicate with your customers and gathers insights. It focuses on search engine optimisation (SEO) as its primary tool to help the business perform better.
Rand Fishkin is the CEO of Moz and claims to repeatedly build “big bang” projects, which he and his team don’t dedicate the necessary time too. After lucky success, Moz experience problems and further delayed a project due in July 2012, then eventually completing it in September 2013.
Missing an important deadline is bad news and can be costly for a new start-up.
How can you stay on track of your deadlines?
- Organise your workspace
- Set clear budgets and deadlines
- Regularly review your budgets and deadlines
- Intelligently assign resources and review regularly
Leo Laporte – Twit Network
Leo Laporte launched his network in 2005 and closely followed by his first published show, “This Week in Tech”. He has continued to host the show and create engaging content for over 10 years on the topic of hiring staff and advertising.
Often, starting a business can be overwhelming, and the fear of hiring employees to help the company grow can be daunting. Laporte’s biggest mistake was trying to do it all himself; as the founder, he felt responsible for everything the company released.
The passion behind Leo’s creation started to fade by spending time on areas that he wasn’t interested in, such as finance and human resources.
Combining ideas and creating a collaborative working environment can have many benefits:
- Healthy workforce
- Growth opportunities
- Collaborative environment
- Innovative ideas
Dharmesh Shah – HubSpot
Hubspot is a global platform that offers the opportunity for business growth in a better way, through its sales and service software.
Dharmesh Shah is the Co-Founder and CTO of HubSpot, achieving huge success with the company and its $10m in revenue. His newfound wealth made him believe the company could function without him, resulting in the birth of a new side business.
Managing multiple businesses at the same time was a huge mistake for Shah and made his team feel abandoned.
Why focus on ONE business at a time?
Investing every ounce of your time, money and passion into the success of one business is the way to go. Accept that you can’t do it all, hire people you trust and see growth with the business long term.
We hope this article has made you realize that being an entrepreneur is challenging to say the least.
Nevertheless, successful business owners share the mistakes they have made during their career to better your future entrepreneurial journey.
- Build a trusted team
- Be realistic about your marketing
- Keep control of your business assets and finances to avoid legality issues
- Be transparent and only promise what you can deliver
- Understand your customer before launching a product/services
- Set clear budgets and deadlines that are reviewed regularly
- Focus on one business at a time
Post submitted by The Good Marketer, a Marketing Agency in London which drives more traffic, generating conversions and increases sales for Small-To-Medium Sized Businesses.