Even the most successful entrepreneur has likely weathered at least one colossal fuckup. Because the reality is running a business is hard, and when you’re first starting out, mistakes are all but inevitable. The difference between someone who makes it, and someone who, say, ends up pleading guilty to fraud and being sentenced to six years in federal prison is the simple ability to learn from those mistakes. You know, more or less. (Tip: Make sure your business model isn't outright fraud.)
That in mind, we asked a few successful business owners to tell us about what they learned from their worst career blunders.
Spend your money wisely
I made a mistake that a lot of new entrepreneurs make—I believed the antiquated notion that I needed a brick and mortar office to satisfy clients. I poured nearly $20,000 into renovating and decorating the space only to outgrow it six months later. I had five to six people squeezed into this tiny 1,000 square foot space, and the worst part was most of my clients didn’t want to come into the office at all. They wanted 100-percent virtual (Zoom or Skype) meetings and wanted to electronically execute my contracts. They had zero interest in my physical office and what it looked like. Between the remodel, decoration and rent alone, I could have poured an additional $60K into my marketing budget just in those first two years alone had I started virtually.
My advice? Most clients don’t care about where you work. All they care about is the quality of your work, so save your money (and sanity) and don’t open an old school brick and mortar location for a professional services business. - Chelsie Lamie , Personal Injury Lawyer
I own an online apparel company, and we heavily utilize social media to sell our product. I was approached by a very large Instagram influencer (3.6m followers) over email, who asked if we could send her products to promote. I was ecstatic, and immediately sent her a $100 gift card to get whatever she wanted. The next week, I checked to see if the gift card was used, and it was.
I wanted to see what she’d ordered, so I went to the order associated with the issued gift card, and noticed it was placed under a name very different than the influencer. I thought that was weird, but maybe it was an assistant who placed the order. Then I realized the order was not placed to L.A., where this influencer lives. It was placed to Chattanooga, Tennessee.
I happen to live in Chattanooga, about ten blocks from the delivery address. I double checked the email address, and noticed she made a very subtle letter switch ("ea" instead of "ae" in the middle). I realized then it must be some random girl pretending to be an influencer to get free stuff.
I decided to drive over to her house and get my stuff back, and when I knocked on the door, her mom answered. I politely explained the situation, saying that her daughter is pretending to be a celebrity to get free stuff. Mom was fuming—made her apologize and give the clothes back. She was probably no older than 14! I was scammed by a 14-year-old!
The lesson I learned was this: When working with influencers, especially through email, BE SURE they are legit. Ask for verification of some kind. Don't get burned like I did. - Matt Schroeder, owner of Shelly Cove Apparel
Who wants what you're building?
One big learning experience for me was the importance of creating products that customers actually want to use, not just what I thought they would want. For example, early on, I thought credit unions needed a product that compared interest rates across different credit unions. I spent six months building it and when I finished I called credit unions to partner, but no one was interested. I realized if I would have called six months ago I could have saved myself a lot of valuable time. This experience taught me that it’s critical I try to sell the product before building it to avoid spending precious time building something that the world may not even want. - Tim Chen, Founder and CEO of NerdWallet
Diversify your bonds
My PayPal account was frozen with more than $20,000 in it, which is a problem many entrepreneurs face when they first start. That $20,000 was all the money we had in our business account, but the payment processors didn’t trust us fully yet, as they hadn’t done all the due diligence on their side. They saw we had a large amount of transactions and it made them sound the alarms. It took more than eight months for the dispute to be solved and, in the meantime, we had to honor our contracts with clients and find alternatives to survive. My advice for new entrepreneurs is to ask their payment processors to conduct all necessary due diligence on them at the start; It would have saved us around $100,000 throughout the years as that first time was not the only time it happened. - Ignacio Perez, Co-Owner of Sai.Coach
Contracts: they're important
When I was first started my PR and digital media company, I was connected to an up and coming tech designer via a mutual friend. Because I was new to the game and focusing on proving myself, I agreed to a profit share system WITHOUT A CONTRACT. That's right—no contract. I felt that it was fine as we ran in the same groups and were friendly with each other and didn't want to make a big deal of it. We placed him everywhere, I mean: Mashable, TechCrunch, Fast Company, WWD, Perez Hilton. Fast forward six months after one of our campaigns is coming to a close and money is due and *POOF* he disappears with the $15,000 owed, which was a lot of money for us at the time. Lawyers were summoned, papers were drawn, but at the end of the day, the money we were owed was less than what it would have cost to fight him.
Lesson learned: always have a contract and don't skimp on getting it right the first time. I don't care if the agreement is with your sister. - Shirin Shafiee, Founder and President of POPCreative PR
Business was going well, until one morning in 2012 I woke up and we had zero orders. I thought it must be a fluke, but the next day, still nothing. Turns out, Google made an algorithm change that basically took us off the search map. The SEO (search engine optimization) company we’d been working with was, without our knowledge, using tactics like keyword stuffing and link buying. The algorithm change penalized those tactics, which meant we no longer showed up on the first page for business-related search terms. At the time, we knew next to nothing about SEO, and we trusted them when they said they knew what they were doing. We tried to fix it by hiring two more SEO companies and were burned again. After that, I decided to take matters into my own hands. I spent a lot of time researching SEO and realized that relinquishing control of something so important was a bad idea. We started from scratch, did our SEO in-house, and rebuilt the website. If you have an online business, it’s VERY important that you learn about SEO. No one cares about your business more than you, and you should understand the mechanics of why and how people are finding your site. - Audrey Craig, President and CEO of GB Design House
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