I always enjoy when people I follow share their mistakes.
It helps me to realize/remember that they too are human.
The truth is nobody has it all together and we all make mistakes, sometimes really painful ones.
While mistakes can be a valuable teacher, it’s even better to learn from the mistakes of others.
Many people just went through a crisis with their business and finances, and it seems like the economic roller coaster may continue. The only thing worse than going through difficult times is not learning from it. With that said, I wanted to create 50 of the most important lessons I’ve learned. Chew on them and let me know which is the most helpful/useful.
1. Cash is king. Without it, you are out of business. Don’t run out of it.
2. Watch the money. Pay very close attention to not just profit but cash flow. Again, see #1.
3. When things are going well, it’s easy to become undisciplined. Stay lean even when you don’t have to.
4. Better not bigger. Having a huge business with lots of staff and high overhead is NOT a sign of success.
5. Don’t buy things because you may need them in the future. Just wait until you actually need it.
6. Don’t compromise on your prices. If your structure is such that even more clients don’t improve net income, fix it NOW.
7. Know your numbers. How much does it cost to run your business?
8. Be optimistic but also be a realist. Don’t make decisions based purely on the potential upside.
9. Always be saving a percentage of revenue. You never know when something unexpected might happen.
10. Make a habit of looking through your expense report. Make sure your money is being spent productively.
11. Be careful with fixed expenses. Variable expenses often go up as the business grows which is fine but fixed are there no matter what.
12. Debt is NOT a tool. It’s an illusion. You’re better off having assets, cash flow, and low to no debt.
13. Excessive debt has and will continue to ruin many businesses. Ignoring risks will come back to bite you.
14. Even when you have cash, at some level, pretend you don’t. Just because you are able to do something doesn’t mean you should.
15. Discipline and focus are the keys to success.
16. Thinking time is crucial. Most mistakes followed rushed decisions.
17. Don’t let the bad days get the best of you. If you’re human (If you’re reading this, there’s a good chance you are), you will have bad days. It’s part of the human condition. Just don’t let them sweep you away.
18. Your business is a baby. Do everything you can to protect the baby. Make decisions based on what’s best for the business, not necessarily for any particular individual.
19. Keep an eye on your usage rate. We’ve spent far too long keeping sessions in the schedule that weren’t getting enough attendance simply because we were able to afford it. Stupid.
20. Don’t hire someone just because you want to help someone out. Hire them because they’re a good fit for the position and the position has a good chance to drive the business forward, increase profit, etc.
21. Focus on what you can control. It’s easy to get emotionally attached to clients and then be upset when they leave. Just keep in mind clients leave for all types of reasons and it’s not always personal. People have things going on that you may never know.
22. The process is what matters. Create a vision and goals to achieve the vision because of who you will become in the process. If you don’t reach your goals on time or at all, the process was still extremely useful.
23. Be consistent. Looking at your financials or creating a budget for one month probably won’t yield much in terms of results. Doing it month after month, quarter after quarter, and year after year is a different story.
24. Keep a dashboard. Not measuring progress or looking at your results won’t make problems go away. Oftentimes, looking at the hard things isn’t as scary as you might think.
25. Diversify. This is good advice in almost every area. Diversifying means spreading out. Spread out your investments. Spread out your marketing. Spread out your revenue streams.
26. Sometimes (usually), the best thing you can do is go back to the basics
27. A wish and a deadline are 2 completely different things
28. Who you become in the process of achieving financial success is much more important than the money
29. No amount of money or stuff will make you happy
30. Milestones are crucial for the long game
31. Your environment matters – What are the financial habits of the people you spend the most time with? Do you need to make a change?
32. Progress is weird. You oftentimes don’t feel like you’re moving forward even when you are. For this reason, it’s important to track effort/intentions rather than just outcomes.
33. Who you marry can have a dramatic effect on your finances
34. Where you live can have a dramatic effect on your finances
35. Have systems in place to avoid excessive lifestyle creep
36. What you do in the good times will determine how you make out in the bad
37. The hedonic treadmill is real. Humans quickly return to a relatively stable level of happiness after positive or negative events. For that reason, space out your big events. In other words, don’t spend it all in one place!
38. It’s never too early to teach kids about the important aspects of money including the value of work, saving, investing, and giving
39. There are certain things that lead to a happier life and possessions generally isn’t one of them. More important than positions are relationships and living for something bigger than yourself
40. Your 2 biggest expenses are most likely housing and food. Be especially careful not to buy too much house (or apt) since the expense generally won’t go down
41. Your income is your greatest wealth building tool
42. The less you can worry about what other people are doing the better. Stay in your own lane.
43. One of the best, if not the best, skill you can develop to become successful is avoiding distractions and staying focused
44. The more days you can string together where you are emotionally centered, the better. Learn ways to deal with your triggers in a predictive way
45. Use the power of leverage. I’m not talking about debt, a form of financial leverage but the power of connections. Somebody you know knows the person you want to know.
46. Knowing when to persevere is crucial but so is knowing when to quit.
47. As the owner of your business, you MUST be hands-on and know what’s going on in every area. The Good Book says to know the conditions of your flocks.
48. Success can be the greatest challenge in business
49. Every time you say yes to something, by definition, you are saying no to something else. Choose wisely.
50. No matter how bad you want to get rich quick, true wealth is built over time. Speed requires lots of leverage which increases the risk. I’d rather sleep at night.
51. You get what you pay for – I was reminded of this recently in a huge way. We had a big house project done and we went with a more expensive option and it turned out to be a great decision. Don’t underestimate what you might be in aggravation for a cheaper option.
52. #1 investment – Warren Buffet says that the best investment you can make is in yourself. I couldn’t agree more.
There you have my 50 lessons! I hope you enjoyed reading them as much as I’ve enjoyed writing them. Which one of these do you find most helpful?