7 Huge Founder Mistakes

This article appeared in the Founder Confessions series on Inc.com. If you’d like to be a part of this series, look for the “Topical Confessions” on the right sidebar to view the current topic.

It’s often said to entrepreneurs that, if you’re not making mistakes, you’re not taking enough risks. The message being that making mistakes is how you grow as an entrepreneur.

This is why failure is worn as a badge of honor in Silicon Valley, and why investors are still willing to back those that have failed. Investors know that in order for their investment to pay off, the entrepreneurs they fund must be willing to take risks.

These seven entrepreneurs confess the biggest mistakes they’ve made while risking it all:

Trusting partners 100%

Two business partners (including one who was mybest friend and best man at my wedding) betrayed me. It cost me two businesses and hundreds of thousands of dollars. No matter who your partner is, find a really good attorney and make sure you are protected.

Not letting go

The biggest mistake I made as an entrepreneur was not giving up control. I lost two phenomenal team members because they were bored and worried I waspaying them for no reason. I have since learned to let others take the lead.

Not knowing when to stay quiet

I’m the founder of a large online community. We clear $180k/year. The biggest mistakeI’ve made happened earlier this year. A media company had asked us to remove some contentthey owned. We complied. We did use their name in explaining why thatcontent was no longer available. They sent a far-less-than-complimentaryletter demanding we remove their name: I responded and said their tone wasless than business-like, and they could correspond with my attorney in the future.We had our Google Adsense pulled in days, went from $180k to $0 overnight.

The lesson: know when tokeep your mouth shut.

Not understanding market demand

I started a wholesale insurance business on the premise “if you build it, they will come.”

Poured a ton of money into websites, employees, marketing materials before ever landing a single customer.

I built it–and they did not come.

Waiting too long to raise money

When I founded a spice company with a first-mover product, proof of concept was too easy.We were in 3,000 stores in our first 12 months of sales. We were immediately creating private label products for Target and Williams-Sonoma.

As experienced CEO’s can tell you–myself now one of them–cash is king. My company was founded on $50,000 in April 2007. Due to our explosive growth, we needed capital much faster than we thought we would, but the recession was upon us and money was nowhere to be found.

Instead of building upon our early success, we were forced to contract and take a defensive position through the recession.

The lesson? Never outrun your capital. Grow organically. Raise more money than you think you need, before you need it.

Giving away too much equity

We ended up doing the rookie mistake of splitting equity 50/50 with our investors very early on. It not only jeopardized all chances of landing a future round, but it also made decision-making painful. Everything was dependent on a consensus. At the same time our investors had the urge to become too involved in the execution of the business despite them not understanding the market and customers. It turned out to be the beginning of a very slow and painful death of our business.

Our biggest mistake waswe didn’t put a stop to this when we still had a chance to save the business.

Expanding too early

After starting two companies, the biggest mistake I’ve made was expanding too quickly. Yes, you want to conquer the world, but the reality is, you may nothave the capacity to do so. If you focus and provide an awesome experiencefor people regionally/locally, you’ll naturally grow nationwide/worldwide.

In other words, be amazing in your own backyard, and the broader community will discover how you’re awesome.


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