Mistakes—we all make them, but in an economy this tough, even a small misstep can lead you away from the road to business success. But that doesn’t mean you should close shop until the street’s been repaved.
“When the economy takes a hit, it’s easy to play it safe,” says Marcia Pledger, business columnist with Ohio’s largest daily newspaper, The Plain Dealer, and author of My Biggest Mistake…And How I Fixed It: Lessons from the Entrepreneurial Front Lines (Orange Frazer Press; $20). “But the people who innovate are going to emerge stronger when the economy recovers. Why avoid moving forward when you can avoid making mistakes instead?”
And who better to learn from than entrepreneurs who have successfully navigated roadblocks? Pledger agrees, saying, “The stories I’ve collected can save aspiring and seasoned entrepreneurs alike some headaches, heartbreaks and financial troubles.”
What’s the Deal?
In her 17 years covering business, Pledger has seen it all. Here are her top three lessons entrepreneurs have shared with her—and how you can apply them to your own enterprise.
1. Diversify your client base.
“It’s easy to fall into the trap of relying too heavily on one or two clients,” Pledger says. “Then, through no fault of your own, they’re gone and you’re in trouble. There’s nothing like multiple streams of income.” One small business consultant in the book had been neglecting seeking new clients; carving out time for marketing bolstered his bottom line. Don’t rely on your cash cow—create an entire herd and you’ll be less vulnerable to industry fluctuations.
2. Secure credit before you need it.
With banks being bailed out daily, applying for credit seems like a daunting task. But don’t sidestep it. “Many business owners don’t seek credit until it’s too late. It’s hard to concentrate on building your company when you’re worried about paying bills and employees,” Pledger says. An event planner in the book learned that the hard way when she found herself making decisions based on low cash flow. “She lost good employees and entered into a bad partnership for an infusion of funds. Credit would have supplemented her cash,” Pledger stresses. Seek (and use) credit wisely: Shop for the lowest rates, use it for capital expenses, and create a repayment plan.
3. Let your business plan breathe.
Being flexible is important in this fast-changing economic landscape—but straying from your mission can leave you open to the market’s whims. So revisit and revise your business plan often. “Treat it like a living document,” Pledger says. She interviewed a production company owner who hadn’t reviewed his plan in 15 years. He looked up one day and realized that not only had he gotten away from his niche, but he’d stunted his growth. A reconfigured strategy led to a more focused, more successful company.
This article originally appeared in the June 2009 issue of Black Enterprise magazine.