Profiting from your mistakes

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Nobody likes making mistakes but we’ve all made them. You can’t run a business without making mistakes and we’ve sure made our share. Over the years, we’ve bought things we shouldn’t have bought, misjudged the direction of opportunities, failed to conduct adequate research before jumping into something, and made unfortunate hiring and partnership choices.

If you’re in business you’re going to make mistakes. But mistakes are the foundation for greater things to come because they offer learning opportunities to become a better business owner. If you’re willing to be taught, you can benefit from your mistakes and consider them part of your education. Those lessons will give you an advantage over someone less experienced or unwilling to learn from their experiences.

So what exactly does it mean to learn from your mistakes and how can you use them to your advantage? There may not be a hard and fast process, but you can make sure you benefit from a mistake in the future by obtaining as much information as possible about how or why it occurred.

First, write down a clear definition of the mistake and what actually occurred. Maybe you took on unnecessary debt, bought a business without adequate due-diligence, hired the wrong employee, or signed a contract you regret having signed.

Then ask yourself some tough questions.

Should you have done more research and taken more time to make a decision? Did you choose something unwisely or let your emotions or ego influence your decision? Something led to the mistake and hindsight will usually provide perspective on what you should or shouldn’t have done.

Did you get good advice before making the decision? Mistakes begin with a decision and decisions begin with processing information. As you were collecting information that led to the mistake, did you go to the right people for advice — your attorney, accountant, consultant, other business owners, or people in the industry?

What will you do differently in the future? You should establish clear and defined guidelines for decision making, such as conducting research, waiting a few days before making a major decision or not taking on additional debt unless you know you can afford it.

You can derive additional value from your mistakes if you look for opportunities to help others through what you’ve learned. Many of us would have made different choices along the way if we’d had a mentor willing to share about their own experiences. A number of years ago, when we owned a company in a different industry, we made the mistake of conducting inadequate due-diligence before partnering with a corporate giant. That experience has been extremely valuable in our consulting practice because we’ve been able to share the lessons we learned. What about you? How can your mistakes help other people?

Obviously, no one wants to make mistakes in business. But since they will happen, use them to your advantage going forward. The lessons you learn from mistakes can make you stronger and certainly make you more experienced. If you view them as valuable learning opportunities, you can turn the “lemon” decisions you’ve made into lemonade.