I have been fortunate enough to be part of several startups. While some of the startups went on to become big companies, a few of them failed miserably.
Here are some lessons that I learnt from my failures:
- Investing in businesses that you don’t have experience in – After I made some money from my telecom dealership venture, I invested in a call center – Skycomm. I had no idea about the business and trusted the people who ran it. The company failed (at the start of recession) and I lost a lot of money
- Trusting people blindly – Not many people make this mistake. however, I was a fool to trust many people blindly. Even when you are in a business with your best friend, make sure you have legal agreements in place to protect yourself and your friend.
- Hiring non professionals – Sometimes, you may hire friends and relatives as the first employees in your business. Even though this might seem more economical initially, this usually becomes a burden later on. This is not often observed in US or Europe, but you will see a lot of this in the Indian subcontinent and the Middle East. Always hire professionals if you can afford to do so. Only good people can take your business forward
- Doing everything on your own – Many young founders do this mistake. Many a times, entrepreneurs find that they prefer doing everything themselves – from book keeping to marketing. This may be all right in small companies, but if you want to grow, find a partner or hire somebody (you can hire people to work part-time or outsource some work online).
- Not seeking legal guidance – This was one of the biggest mistake that I did. I ended up signing an agreement where I ended up giving away a stake in a very profitable company. I might have been stupid, but when a person whom you trust so much brings an agreement for you to sign, many people don’t read it in full. So never, ever sign an agreement unless you fully read and comprehend it
- Diversifying too fast – At one point of time, I was running five different businesses. I was making good money in some of these, but losing money in two businesses. In hindsight, had I been more careful, I would have been a multi-millionaire now. Sigh.
- Not closing down a business when you have to – Sometimes, emotional attachment to a business prevents you from closing it down when you are losing money. I lost an additional million rupees in my call center venture just because I did not close it on time
