Phil Friedman

4 years ago · 4 min. reading time · visibility 0 ·

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Learning From Mistakes

Learning From MistakesEXPERIENCE MAY BE THE BEST TEACHER, BUT IT DOESN'T HAVE TO BE YOUR EXPERIENCE  


In my consulting practice, I often explain to prospective clients that I can help them not because I am so brilliant, but because I've likely already made just about every mistake they might make going forward. Indeed, that most of the time, my experience can guide them around pitfalls into which they might otherwise stumble.

Over the years, I've found it useful to distill the core of what I've learned through hard-earned experience into a set of maxims I can use to remind myself of judgments I've made and conclusions I've come to. Here are some samples which you may find useful, should you decide to enter upon a small-business endeavor:


In business especially small-business  not everything that fails to kill you makes you stronger ... It should, however, teach you what to avoid in future ...

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You should always strive to learn from mistakes and take steps to avoid repeating them.

Always keep in mind that it's better (and ultimately less painful) to learn from the mistakes of others. Which is why accumulating experience is always important, not only for learning how and what to do, but perhaps more importantly, for learning what not to do.


You don't always get as much as you pay for... but you never get more...

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There are very few "great deals" to be had in business. And if a deal seems too good to be true, it almost always is.

Don't look for "steals", but rather for fair value value commensurate with what you're paying. And beware of beating down a vendor's price too low or you will likely end up with a lot less than you bargained for.

Business deals, by the way, are a lot like marriages: they only work if both parties benefit.


Something is usually only worth what you paid for it... Therefore, draw your own conclusions about finagling free work out of people... 


When you actually manage to get free or almost free work out of someone, you get what you get and you don't get upset  to paraphrase a saying that just about every parent knows by heart.


If you don't value your work, nobody else will... So, avoid giving your work away free...

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It always surprises me how many would-be entrepreneurs, would-be consultants, and aspiring small-business people fail to grasp even the most basic principles of free market situations. For example, that the value of commodities whether goods or services is set by the market in accord with what buyers are paying for those goods or services.

Consequently, every time you give away your work, you devalue that work in the marketplace with respect to future sales. And pricing increases are, conservatively speaking, more than ten times harder to achieve than pricing reductions.


You will ultimately save money by not winning the client who wants you to prove yourself first by doing a pile of free work...

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You should have available a portfolio of previous work, as well as letters of recommendation and endorsement from which a prospective client or customer should be able to judge the quality of your work and the depth of your experience.

If you don't have that available, consider that, perhaps. you don't yet have sufficient experience to be in the business you've chosen. Small-business is not a place where you can fake it until you make it.


Positive cash flow is not the same as profit...


No, Virginia, you cannot sell each unit at a small loss, and make it up in the added volume.

It's critical to understand that you cannot indefinitely operate a small business at a loss, even if you can, for the time being, generate sufficient cash flow to service your overheads and (growing) debt. For unless you have a virtually unlimited influx of capital investment as some "unicorn" companies do mounting losses eventually catch up and drive you out of business.


The last person to trust is the person who says, "Just trust me..."

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A trustworthy client or fellow business person will not have any reservations about signing a simple-language letter or memorandum of agreement that details the scope of work involved or the goods to be delivered and the amount and terms of payment.

To be sure, such "letters or memos of agreement" are, in fact, legal contracts. However, as a practical matter, they may not be enforceable because of the high cost of litigation and collection.

Nevertheless, nobody of basically goodwill has any problem with agreeing in writing as to the basic details of a business arrangement. For if nothing else, such memoranda in writing eliminate potential misunderstandings later as to what was agreed to.   ―  Phil Friedman


Postscript:  This article is a sampler only and not intended to be anything near a complete discussion of the issues that face those who are either considering a small-business venture or already involved in one. If you found it worthwhile, you might want to takes a look at the following posts:


"Common Myths About Starting Your Own Small-Business" 

"Avoid Marketing Myths That Bite"

"Avoid the Pitfall of Excessive Positivity"


You might also be interested in reading my new eBook, Small-Business Primer: Real -World  Tips for Starting and Running Your Own Small Business.

For information on securing a copy, , email  phil@portroyalgroup.com and put "small-business book" on the subject line.


About me, Phil Friedman With 30 some years background in small business and the marine industry, I've worn numerous hats — as a yacht designer, boat builder, marine operations and business manager, marine industry consultant, marine marketing and communications specialist, yachting magazine writer and editor, yacht surveyor, and marine industry educator. I am also trained and experienced in interest-based negotiation and mediation. In a previous life, I taught logic and philosophy at university.

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#SMALLBUSINESS #BUSINESSMANAGEMENT #BOOSTPROFIT #BETTERBUSINESS  #BUSINESSCONSULTING  #ENTREPRENEURSHIP  #STARTYOUROWNBUSINESS #ENTREPRENEUR #BUSINESSSTARTUP #RUNNINGYOUROWNBUSINESS #CASHFLOW


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Louise Smith

Louise Smith

2 years ago #44

#53
Yes Phil Friedman 1) I charged what I thought I needed to exist & lifestyle of my choice But unfortunately, I didn't realise until this year that cost of living had increased so much. 2) I like the idea of a credit/payment plan. The basic rule is the client is to pay at the end of each appointment. I have to looked into it quickly & it seems it's legal for me. I understand the non-payment "stiffed" concept as I was previously accepting clients who could not pay the gap but whom I thought would come for the 10 annual appointments. It fell apart when they didn't do the 10 sessions. 3)"your new series of video sessions for social media" "For free. Make it entertaining -- which you are. And different and offbeat -- which you are in spades." I think this is a compliment but it's not how I run my business as I am afraid it will not be seen as Professional ? Also a lot of people don't understand my humour so I can easily come unstuck. "Note: this kind of free series is NOT advertising, not a promotional gift, not I bet banned by your association." I think you are right about this to be continued

Phil Friedman

Phil Friedman

2 years ago #43

#52
I understand, Louise Smith. And the conundrum you face is common, pretty much in all sectors of Small Business. Here are a few thoughts off the top of my head. 1) Get away from thinking there is some magic number that you "ought" to be charging. The only pressure to raise rates that you should recognize is that which derives from your need or desire to maintain the given lifestyle of your choice. 2) Don't barter but instead, offer your own credit/payment plan. Take 50% cash payment down (or whatever you are charging now) and defer the rest for later payment on an interest-free plan that requires only a modest monthly payment. If in some or even if in many cases you get "stiffed", so what? You'll still be making more than you would have otherwise. 3) You can't use testimonials, I'd guess because that violates therapist-patient confidentiality but... your best testimonial is you and your "bedside" manner. So start today on your new series of video sessions for social media. Deal with real problems from your files. Show 'em what you've got. For free. Make it entertaining -- which you are. And different and offbeat -- which you are in spades. And make it polished and professional. One the best at this kind of thing is Melissa Hughes. Her video spots are great IMO. Note: this kind of free series is NOT advertising, not a promotional gift, not I bet banned by your association. If any of this helps, send me $10 for this "Sawbuck Consult". Good luck and cheers!

Louise Smith

Louise Smith

2 years ago #42

Phil Friedman From not your Canadian business friend, not your US business friend, not your worldwide business friend & not your other business friend but still from your business friend ! I have a lot of problems as a Psychologist in my own small business - if I set my fee at the market rate, I would not get 1 client - this July after 10 years, I put my fee up to $100 less than the recommended rate. That's on the high side but not the highest fee according to the Market. Not sure if I will get new clients. - I can't barter as it's unethical according to my Code of Conduct - I can't accept gifts - I can't give away promotional gifts - I can't use Testimonials at all So after 10 years, I am evaluating Last week I wrote my last free court report. No one pays the recommended rate & the people that need the reports have no $ I also wrote my last free client submission for a Gov benefit I have decided I have to charge a GAP fee to everyone & can no longer bulk bill (only get the Gov Medicare rebate of one quarter of recommended rate) I have decided I need a different client base If this doesn't work & fairly soon , I need a new job in a new industry ! People ask me if I am a Psychic - maybe that's a clue ?

Claire L Cardwell

Claire L Cardwell

3 years ago #41

Phil Friedman - yet another v. helpful article for small business owners! Thank you!

Phil Friedman

Phil Friedman

3 years ago #40

#49
Devesh, it's not that difficult to understand if one simply keeps in mind that many people who walk around with cash in their pocket still can't pay off all of their credit card debt. Positive cash flow only means that you can (temporarily) put your hands on cash, but it doesn't mean you can actually pay everything you owe. Cheers!

Devesh 🐝 Bhatt

Devesh 🐝 Bhatt

3 years ago #39

Positive cash flow isnt profit. This is going in print for someone whonwoild understand your words better than mine. Thanks

Phil Friedman

Phil Friedman

4 years ago #38

#47
Harvey > "Should you hire a consultant you have to be ready to admit they have the knowledge and you don't." I agree, Harvey. But I don't know of any other reason to hire a "consultant". If you are hiring someone simply to get work done under your direction that, perhaps, you don't have the time to perform, that is not hiring a "consultant"; that is hiring a limited-term contract employee. Cheers!

Harvey Lloyd

Harvey Lloyd

4 years ago #37

#46
Your 2nd paragraph is what i was refering too. I now understand the value of a consultant and have used some in my recent past. Should you hire a consultant you have to be ready to admit they have the knowledge and you don't. Thanks for your feedback and keep me posted on the Sawbucks results.

Phil Friedman

Phil Friedman

4 years ago #36

#45
Thank you, Harvey, for reading and commenting. As a long-time business consultant, however, I have to take issue with your claim that people can only learn from experiencing things themselves. The core rational for employing a consultant or serially employing different consultants is to learn from their accumulated experience, without having to endure the pain involved in experiencing everything, including damaging mistakes, oneself. I do agree that some people are not set up to benefit from the experience of others. Speaking candidly, over the course of my consulting career, there have been a number of times when someone hired and paid me, then thanked me for my recommendations and opinions, yet proceeded to do exactly what they would have done anyway and, as a result, crashed and burned. Which is why I counsel would-be consultants to get their personal ego out of the equation. You give your honest, considered opinion. You get paid. And your done. It's up to the client to use your advice or not. As to my Sawbuck Consult, it is a promotion I've created and am running in my business in the course of expanding my field of potential future clients. Anyone interested in creating a similar promotion for their own business is welcome to take advantage of one of my Sawbuck Consults to discuss the issue. Cheers!

Harvey Lloyd

Harvey Lloyd

4 years ago #35

Experience is a challenging aspect of developing wisdom. Advice during an experience is more valuable than random advice that the reader or person is not experiencing at the moment. In my youth i received advice from many wise people but it wasn't until i experienced the situation did the advice become meaningful and more often than not, advice i should have heeded a few weeks before. I am finding in my older years that words can't replace experience. Most people need to experience the challenge, suffrage and eventual victory/defeat to gain wisdom i might give them by sharing my experience. You offer sound and meaningful advice within the small business sector. I really like your sawbucks idea. I too would be interested if it gains traction as a method of using social media to expand your customer base.

Charlene Norman

Charlene Norman

4 years ago #34

#43
please do keep me posted. I am interested.

Phil Friedman

Phil Friedman

4 years ago #33

#42
It's somewhat too early to say, as I first introduced the Sawbuck Consult just two days ago. Certainly, it has not yet generated a tsunami of contacts, although about a half-dozen have come in -- of which one, interestingly enough, was from a current client who saw the sister notice on LinkedIn and wanted to claim a retroactive $65 credit on the May 31 billing I just sent to him. (He has quite a sense of humor and is sharp as a tack, so I gave him the credit and rated it as a good client-relations moment.) I'll keep you updated on how it's going, if you like. Cheers!

Charlene Norman

Charlene Norman

4 years ago #32

Serious question Phil Friedman How has the Sawbuck Consult worked out for you? I like the objective and the fact you are trying to get leads to at least show/put a bit of skin in the game. Has it worked? Cuz I too am looking for some ways 'that are proven' (extraordinarily practical advice too btw.)

Phil Friedman

Phil Friedman

4 years ago #31

#40
Thank you reading and taking the time to say so, Chris. Cheers!

Phil Friedman

Phil Friedman

4 years ago #30

#38
Good points, Graham.Of course, in such cases, you're not really "giving it away". You're only accepting in-kind value as consideration -- which is fair enough. It's why I'm now doing "The Sawbuck Consult" -- see http://tinyurl.com/y7nxel9l I don't really make anything on it, but the idea is that if someone we help is successful, he or she may become a future potential client. The sawbuck charge is simply to discourage a lot of traffic from the idly curious. Cheers!

Graham🐝 Edwards

Graham🐝 Edwards

4 years ago #29

Great words Phil Friedman... and if there are times you may want to give it away "for free" at least make sure you are receiving something in kind such as a new opportunity to develop a skill, expand your networking opportunity to people you could never meet other wise, etc. Those are my only two cents (in Canadian dollars). Btw... that bridge looks like a dock we built a very long time ago... two separate teams doing two separate things... it barley met in the middle.

Phil Friedman

Phil Friedman

4 years ago #28

#36
Thanks, Aaron, for reading and for the kind words. I understand what you're saying about components of a product line, but keep in mind that some products are kept in a line not for the profit they generate, but for the customers they bring to the brand or firm. Especially when it comes to "obsolete" or "legacy" products. Good to talk again. Cheers!

Phil Friedman

Phil Friedman

4 years ago #27

#32
Ya got dat right, Franci\ud83d\udc1dEugenia Hoffman, Brand Ambassador @ beBee. Cheers!

Phil Friedman

Phil Friedman

4 years ago #26

#31
Please to be of service, Donna-Luisa Eversley, thank you for reading and commenting. See what you can do about plugging my eBook going forward. 😁😁

Milos Djukic

Milos Djukic

4 years ago #25

#31
Hey Donna-Luisa Eversley, Just looking at the mirror, it is hardly possible. "The Picture of Dorian Gray" :) However, only the inner beauty remains. Fractals are reciprocal.

Franci 🐝Eugenia Hoffman, beBee Brand Ambassador

Good and sound advice, Phil Friedman. There needs to be a clear understanding of the basics of owning a small business in order to achieve success. it's not easy peasy as some may think.

Phil Friedman

Phil Friedman

4 years ago #23

#20
Thank you, MIchelle, for reading and commenting. Yes, underpricing is a problem, but so is believing all the BS you read on social media about hanging tough and charging what "you feel you're worth". It is the market that determines "worth" and if you are more than about 15% above average market pricing, you're going to find it a very hard sell. Except, perhaps, in the area of ultra-high-end luxury goods, where the factor of conspicuous consumption plays a big role. Cheers!

Phil Friedman

Phil Friedman

4 years ago #22

#21
Thank you, Vincent, for reading and commenting. Yes, the tatoo image gives you the shivers, doesn't it? Cheers!

Phil Friedman

Phil Friedman

4 years ago #21

#24
Thank you, Jerry, for saying so. As I mentioned to Wayne Yoshida below, I don't think a small business person needs to be an accountant as such, but he or she needs at least to understand the relationship between Cash Flow and Net Profit. It's also good to understand the difference between Gross Profit and Net Profit. https://www.bebee.com/producer/@friedman-phil/small-businesses-need-to-keep-a-close-eye-on-gross-profit Cheers!

Phil Friedman

Phil Friedman

4 years ago #20

#23
Thanks, Wayne. My father and grandfather were small businessmen most of their lives. Yet, neither could really read or understand a P&L statement, let alone a Balance Sheet. I don't think a small business person needs to be an accountant, but he or she needs at least to understand the relationship between Cash Flow and Net Profit. The best analogy I can think of is a piece of residential real estate. Let's say you own a home that is worth $1 million and you owe $500K on the mortgage. That means you have $500K equity in the property. Let's suppose that real estate values are appreciating at average 10% per year ($50K). Suppose that real estate taxes, insurances, and maintenance are costing total $10K annually. This means that you are seeing an annual PROFIT on your investment of $40K. Which is 8% (on the equity, for that is what you have invested), which is not bad at all these days. The problem is that the equity (and accumulating profit) are NOT CASH, and you need cash to pay the real estate taxes andfor the insurance and maintenance expenses. And unless you can raise that cash separately, you will eventually be forced to sell your home (similar to shutting down your business) for lack of cash flow, even though you're actually making a healthy profit of 8% annually on your investment. As to barter, I like it, Especially for cash-poor small businesses, because it enables them to get some of what they need without first generating additional cash flow. Cheers!

Phil Friedman

Phil Friedman

4 years ago #19

#22
That, Paul, is precisely why it is necessary for a small-business person to understand the difference between Profit and Cash Flow. What you describe is a classic case of "chasing profit" and ending up making less of it because of mismanaged expansion. It has nothing to do with making "too much profit." I point out in my new eBook, as I have on several other occasions in various posts that small businesses frequently fail to achieve the "economies of scale" that are open to big business. So that often by expanding, they increase their overheads all out of proportion to the potential profit that might accrue from additional volume, and end up going backward in terms of profit. Cheers, my friend. I plan to contact you soon about your proprietary system for re-flowing text.

Jerry Fletcher

Jerry Fletcher

4 years ago #18

Phil, Glad to see a new post from you. The advice is spot on. Too often I have to deal with entrepreneurs that don't have a clue about cash flow. I look forward to more of your sage advice.

Wayne Yoshida

Wayne Yoshida

4 years ago #17

Thanks Phil Friedman. Profit is necessary to stay alive. My dad tried many businesses - and failed each time. He was a great teacher of things not to do. What do you think of barter? I have used this a few times, my best example is a one-time exchange of some marine radio equipment for electrical contractor work and a Delta drill press. The best example is the red paperclip story from Kyle McDonald: https://en.wikipedia.org/wiki/One_red_paperclip Maybe a good topic for a future post?

Phil Friedman

Phil Friedman

4 years ago #16

Thank you, , for sharing this piece. Cheers!

Phil Friedman

Phil Friedman

4 years ago #15

#16
Thanks, Gert, for the kind words. If a start-up small business person is without references, then I'd suggest he or she develop a strong portfolio of original sample work and several endorsements that speak to the person's ability and character. Cheers!

Lada 🏡 Prkic

Lada 🏡 Prkic

4 years ago #14

Phil, I'm glad to see you continue to write here. "Always keep in mind that it's better (and ultimately less painful) to learn from the mistakes of others. Which is why accumulating experience is always important, not only for learning how and what to do but perhaps more importantly, for learning what not to do." The lesson learned feedback is of crucial importance in the project management. My team and I, we learn from our mistakes, but no less important is to pass the knowledge gained on the mistakes (as well as successes) on to others to prevent the same mistakes on the next project. We learn from our and other people's experiences.

Gert Scholtz

Gert Scholtz

4 years ago #13

Phil Friedman Grounded advice Phil that surely comes from many years of experience. I wonder what you would recommend to someone starting up a business with very little or no references to show? Great illustrations to your narrative, and sharing this into other social media sites.

Phil Friedman

Phil Friedman

4 years ago #12

#14
Thank you, David, for the kind words and for reading and conmenting. I work to keep it realm and it's gratifying when someone as experienced as you sees that. Cheers!

David B. Grinberg

David B. Grinberg

4 years ago #11

Great advice here, Phil, as usual. You are a wise man with a lot of knowledge and life lessons to share. Please keep sharing them. I wish you all the best and much continued success, including calm seas ahead, captain!

Phil Friedman

Phil Friedman

4 years ago #10

#12
I frequently counsel small business people in the service sector to keep their hourly billing rate at market average -- too low and a prospect takes it as an indication of low quality, too high and the guy buying worries about having to justify it to his boss or himself. But I also counsel them to make sure to capture all billable hours religiously, for in the end it's not the hourly rate that makes a job profitable, but the total amount billed. I can't tell you how many times I've run into clients and customers who would rather pay $50/hr for 20 hours than $75/hr for getting the job done well in 12 hours. Cheers!

Phil Friedman

Phil Friedman

4 years ago #9

#8
Nicole, I agree, just as under-pricing your "product" (whether goods or services) is a problem, so too is pricing on the basis of what you think you're "worth" (especially after reading all that bunk on social media) or on the basis of "what the market will bear" (unless you really know what the market will bear). Unusually high quality commands a premium in the market, but except in the area of luxury items (where conspicuous consumption is working), it's a hard sell at pricing more than 10% or 15% above market average. Thanks for reading and commenting. Cheers!

Phil Friedman

Phil Friedman

4 years ago #8

#5
Thank you for saying so, Milos. Cheers!

Phil Friedman

Phil Friedman

4 years ago #7

#6
PS-Paul - You are correct that a business can be profitable and yet fail because of a lack of sufficient cash. It's like having a house in which you've accumulated, say, a million dollars in equity. But you could still lose it to foreclosure if you don't have sufficient cash flow to service the mortgage and pay the real estate taxes. Cheers!

Phil Friedman

Phil Friedman

4 years ago #6

#6
Paul > "Sometimes, too much profit can be as bad as not enough..." Sorry, Paul, but that is never true. If you mean emphasizing a search for profit at the expense of other strategic considerations, I agree. But too much real profit? Hardly. That's like saying I don't want to make more money because I'll end up paying more taxes. Thanks for reading and commenting. Cheers!

Milos Djukic

Milos Djukic

4 years ago #5

This is very good article! Just trust me Phil, my friend :) Would-be Fractal

Phil Friedman

Phil Friedman

4 years ago #4

Also heads up to other business friends -- Don \ud83d\udc1d Kerr

Phil Friedman

Phil Friedman

4 years ago #3

And heads up to my worldwide business friends -- Gert Scholtz,

Phil Friedman

Phil Friedman

4 years ago #2

Heads up to my US business friends -- Wayne Yoshida

Phil Friedman

Phil Friedman

4 years ago #1

Heads up to my Canadian business friends -- Jim Murray