“This column was originally published on Entrepreneur.com on 11/26/18″
Imagine trying to succeed as an entrepreneur after experiencing a big failure. Your entire industry just crashed. Your highly anticipated product launch was a total flop. Your biggest client or affiliate ditched you. Your funding fell through and you can’t make payroll. Your right-hand person just quit. You just suffered a massive data breach and your online reputation is tarnished.
Sounds stressful, right? The above is just a small list of the many major failures I’ve experienced in my journey as an entrepreneur. But, I didn’t let any of that stop me from turning $600 in starting capital (all the money I had at the time) into the eight-figure business I run today.
Here are my five best insights that came from failing my way to success.
1. Reputation is worth more than money.
I’ll never forget when my first boss, just after I’d graduated college, asked me to put together a proposal to win a lucrative contract for his business. He asked me to load up the proposal with lots promises that would considerably drive up our operational costs but would greatly improve our service.
The client was so impressed with our proposal they awarded us the contract on spot. I left that meeting feeling very proud and excited. When we left, I asked my boss “Should we get started on making all the improvements right away?” and he responded, “That was just to win the contract, we’re not actually going to do them.”
I was devastated. To me, we made a promise, and that promise needed to be honored. But, I looked up to my boss because he was my mentor, so over time I began to normalize that behavior and started saying or doing whatever it took to make a buck.
After many years of overpromising and underdelivering, I had earned myself a well-deserved reputation of being a fraud. That damaged reputation cost me a lot more than whatever money I made from my short-term thinking, and it took me many years to reverse the damage I had caused myself in order to succeed today.
The lesson: Money doesn’t always last, but your reputation does. A good reputation takes a long time to build. Its foundation is laid by consistent performance, not promises. If built correctly, your reputation will be the best investment you can make, and it will always pay long-term dividends.
2. Don’t build a minimum viable product.
I took this MVP approach to create an online makeup school. I partnered with some of the top beauty influencers on Instagram and YouTube to teach the content. Instead of getting hung up on developing the best learning platform, my idea was to roll out an early product to get feedback from students and to improve it as we went along.
The launch was a huge success. Sales were astronomical. But, they were short-lived. We got buried by negative online reviews from students disappointed with the learning platform. Even as we improved, the reviews stuck with us, and eventually we had to shut down the product and pivot to an entirely different concept. After that experience, we’ve been taking our time to build quality products, and the results have been outstanding.
The lesson: It’s important to take time to build the right product. Products may be easy to improve but online reputation isn’t. Negative reviews can carry with you for a long time. And in a digital world where online reviews and word-of-mouth are everything, they can quickly destroy a business.
3. Nail it before you scale it,
In 2010, I launched what CNN dubbed “The Walmart of Weed.” It was a 15,000-square foot “marijuana superstore” that sold all of the cultivation supplies needed to grow medical marijuana. The grand opening drew so much attention across the globe that my inbox was full of thousands of emails from entrepreneurs wanting to franchise the concept.
Excited by the interest, I got so focused on rolling out the concept nationally that I forgot to make sure the business worked locally. I succeeded in opening many stores, but what I didn’t anticipate is as each new store opened, the last store closed. After numerous store closings, I had to pivot from a retail business to a consulting business just to stay afloat.
The lesson: It took Sam Walton 25 years to go from one dime store to 38 Walmart stores. Today, Walmart has over 8,500 stores worldwide. That’s because it takes time to dial in a successful business model. Focus on building a strong foundation before even thinking about the empire you’ll build on top of it.
4. Practice radical transparency.
I grew up in a conservative Indian household where there wasn’t always a lot of open communication. The lack of communication often created division, and it was uncomfortable telling my family what I was really thinking or what was happening in my life. What I didn’t realize was that I was letting those same patterns of closed communication from childhood spill over into my businesses.
I learned this when I decided to do an anonymous company poll to get a pulse on how my team was feeling. A few people responded saying they felt there was a general mistrust within the team and that they felt in the dark as to what was happening around them. Those sentiments echoed exactly how I felt growing up. I was guilty of building a company culture that stemmed from my family culture without even knowing it.
Today, I communicate openly about our finances, failures, short-term goals, long-term plans and much more. Almost nothing is considered sacred. Since adopting this policy of radical transparency, the entire team feels so much more comfortable discussing issues openly and working together as a team.
The lesson: If you’re not transparent with your team about everything, it will create mistrust and eventually lead to division. The best leaders are radically transparent with their team members. They inspire employee loyalty and honesty by being an example of those qualities.
5. Don’t fake it until you make it.
In my late twenties, I had gained a lot of notoriety on social media as an “Instagram baller.” I was driving around in flashy cars and living in a four-story Hollywood Hills mansion. I had a decent amount of money, but nowhere near the rate I was spending it. My thinking was that if I could just keep up with the high-flying image long enough, soon business opportunities would come pouring my way.
The exact opposite happened. People thought I was so rich that I didn’t need the money. Instead of wanting to partner with me, they wanted to profit from me. I was spending so much trying to keep up my image that I couldn’t sustain it and ended up going broke.
After losing it all, I decided to be honest and open about my story. The market rewarded me ten-fold and my engagement with my audience deepened considerably.
The lesson: Today, information travels so quickly that it’s impossible to keep up a facade. The market will see right through it. People value authenticity. Keep it real with others and you’ll accomplish your goals much quicker.
“Copyright 2018 by Entrepreneur Media, Inc. All rights reserved.”