How Do Leaders Create Wealth from Mistakes?

The answer to the question posed in the title of this Habit is that mistakes create knowledge, which in turn helps assure the alert leader he or she won't make the same mistake again. 

In business, the more mistakes you make the more likely you will achieve greatness, provided one big mistake doesn't take you down—and provided you make the same mistake only once. Mistakes are inherently important to achievers. Seldom can one start from scratch and accumulate significant wealth without periods of riding a roller coaster. 

Leadership is an art. It defies scientific formula or arithmetic calculation. Leadership is touch, feel, instinct, and thought. It's learning, failing, and growing. 

My entrepreneurial leadership has been far from perfect. I've made many mistakes. Some really hurt. The good news is I haven't made one big enough to take me for a tumble. And all have helped me become better at what I do and more appreciative of success when it arrives. Here are the Bill Byrne "Top Ten Mistakes Made by Leaders of New Businesses": 

1. Improper pricing. Inexperienced business owners get jittery when setting prices. The overwhelming tendency is to go into business with prices that are too low and don't allow adequate profit margins. If the business survives, slim margins often lock the organization into underachievement.
   Why not go into business with unrealistically low prices, attract customers, then raise prices to where they should be? Because it usually doesn't work. The customer feels cheated, which jeopardizes loyalty. Pay keen attention to pricing, especially before opening the business. 
2. Numerical ignorance. Is there a numbers person in your business? If not, get one. You don't need a CPA, but someone in the organization must understand its numbers. You can't create significant wealth in an environment of numerical ignorance or what I call "numnorance." 
3. Poor timing. Timing is almost everything. If the timing of an idea is not perfect, it is better for owners with limited capital to be a little late rather than a little early. Breaking new ground is slow, expensive work. 
4. Competing with someone who is too dominant. Unless it's a new industry, be cautious if a single competitor has more than 30 percent of the market. Dominant competition is traditionally well-capitalized, patient, even ruthless. They play for keeps. 
5. You left your niche. Remember what you went into business to do, and be as patient as possible. Diluting your original plan with extraneous, unfocused activities is dangerous. Advantageous diversification is accomplished from a position of strength. It's fine to be open to new ideas, but don't engage in random wandering.
   The prime opportunities of the next 10 years will be in well-defined, targeted niches. Stay close to a specific audience. Broaden only if you have planned the move thoroughly and if it fits your strategic niche. 
6. Lack of control over suppliers. If you are buying components, for example, and assembling or altering them to make a finished product, you should be sure there are multiple sources of supply. If you don't, you could wind up between a supplier and a banker. 
7. Not differentiating between cash and profit. In the first five years of a business, cash flow management is more important than profit. In spite of this, most pay more attention to profit. Believe it or not, profit may not keep you in business. Cash will. 
8. Excess pursuit. Growing fast is not all it's bragged up to be. Growth requires talent and cash. If you don't have a good amount of each, better watch out. Grow within your means. 
9. Setting customer expectations you don't live up to. Promising more than you deliver causes trouble for any business. For a new business, it is almost sure death. ‍
10. Talent deficiency. I saved the most important until last. Find talent. Reward talent. Respect talent. Keep talent. Significant achievement escapes those who don't attract and keep talent.