Try and learn from your own mistakes. First learn why you made them.

Have you ever made a mistake?  One of the first things I do when I make a mistake is figure out “What did I learn from that?”  More importantly, how did I make this mistake and why did I not recognize I was making it?

If you got out of bed this morning chances are you will make a mistake.  If you own your own business I can guarantee you will make a mistake and plenty of them.  Hopefully you will not make the same mistake twice but chances are you will.

How to stop the madness?  Try these three steps:

  1. Be honest with yourself.
  2. Recognize that we all make mistakes.
  3. Learn from your mistakes and remember what you learned.

Here are some real life examples.  I had a client a few years back that just stopped paying his income and sales taxes.  Just did not do it.  His mistake was thinking that he could do this for a while and then apply for “forgiveness” from these payments.  His biggest mistake was listening to a “friend” who told him a story about someone else the friend knew that did exactly that and the federal government and state government just forgave the payments.  The result of this romantic notion is that the IRS has seized his bank accounts, has a lien on all of his business and personal property, and the state shut down his business.  I have not seen this client for a number of years so I do not know if jail time was involved here.  Bottom line was that this guy heard what he wanted to hear form a friend instead of listening to sound business advice.  The mistake – believing what you are told with no evidence to back up the belief.

Another business owner had a highly successful business.  She was so successful that she needed to hire employees to run the back office requirements while she found new clients and did the front office work.  Enter the “miracle employee.”  New employee started out small by answering the phones, getting the mail, answering the mail, and running interference for the office.  New employee would catch the owner late Friday just to get the owner to sign some small checks for office expenses.  One day the new employee made the suggestion that they be allowed to sign checks for the “small expenses” in order to lift that burden from the owner.  The owner agreed, and it evolved from small checks to all checks, all mail, all phone calls, and all bank statements.  The owner would ask the new employee how things were going, would be told everything was fine, and went along her blissful way.  Until the day that the new employee got really sick and missed a day of work.  That is when the owner answered calls from angry creditors, discovered a letter from the IRS about back taxes, and found checks made out to the new employee for cash.  When the new employee returned to work, the owner asked about this and was told it is just a misunderstanding and the new employee would straighten it all out.  The owner was very relieved that nothing was really wrong and went off on her weekend without a care in the world.  Upon returning to work on Monday she discovered the following:

  1. The computer for the new employee with all of the financial files on it was gone.
  2. The bank statements for the last two years were gone.
  3. The personnel file of the new employee was gone.
  4. The money that was supposed to be in the bank accounts was gone.

After a lengthy battle with the IRS, workers compensation, sales tax, and vendors the owner lost her business, house, car, and retirement accounts.  Her mistake – not verifying that what she was being told by her miracle worker new employee was the truth.

Remember that you can delegate authority but not responsibility.  It is always the responsibility of the business owner to ensure that legal business practices are being followed and to verify everything the she hears, is told, and sees in other businesses.

In both of these real life examples, the mistakes each business owner made are obvious. Why do you think they made these mistakes in the first place? And do you think they learned from their mistakes?

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