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Have you ever made a mistake? Of course you have. Like me, you have a few doozies in the closet to air out, too, if you are honest. Mistakes come in all sizes. From the minor mishap to the really stupid to the criminal, we all have our moments of ignorant brilliance.
As luck would have it, mistakes do not define us. Maybe you were drinking and driving and got caught or have been convicted for possessing an illegal drug; maybe you ruined a relationship due to infidelity or sheer apathy; maybe you trusted someone and they betrayed you; maybe you made an investment and after it was too late suffered a major financial setback to your early retirement plans. None of these mistakes define you; how you deal with the mistake does.
The Wealthy Accountant’s Inferno
Before we start talking about you or solutions, I need to confess a great sin I once committed. Many years ago my commercial tax software provider branched into DIY tax preparation. Accountants using their software in their office were given a free license to market the online program. Needless to say, I was excited. I developed a business plan to take it to TurboTax and all the other online DIY tax programs. I would compete on price and quality.
As tax season approached I put my marketing machine into action spending $80,000 in TV, radio, and online advertising before I discovered this was not working as planned. When the dust settled the revenue from my little project netted a bit over $3,000. I took a $77,000 loss on an idea I thought really had potential.
I made one huge mistake and a bunch of smaller ones. The mistake did not define my business or me. It certainly hurt the pocketbook, but I was lucky to have an established business where the investment came from cash flow; no borrowed funds were used.
The first person I had to admit I made a mistake to was me. Accountants also understand the psychological risks of ‘sunk cost’ where you keep pouring money down the drain to try to make up for previous losses. It was a major loss with a lot of lessons learned. First, I needed to stop the bleeding. In this kind of business venture the upfront spending was high so I ended up too deep, quickly. Realizing the advertizing was not generating the expected results I pulled the plug. If I did not closely monitor the traffic and revenue daily I would have been in much worse shape.
The idea was solid; my business plan sucked turnip greens. It happens to the best of us. All my experience did not guarantee positive results. It was a massive financial mistake. But was it really? I lost $77,000 in less than a month on a business idea with awesome potential. A few problems I identified were: my price was too low (people don’t always respond to price alone) and the software, while commercial grade, was still a first year program (call it a beta version because it was).
That financial loss had me tasting blood in my mouth. I might have a dollar or three tucked away, but $77,000 is a lot of money. (On the bright side, I had a nice tax deduction. (At least I can laugh about it now.)) I finished that tax season and reevaluated. Yes, I lost a pile of money. I still had the software and the software company was improving it by the day. Rather than cry I started writing articles for content farms online and putting in a plug for my online tax program wherever I could, all at no cost except time. Each year I brought in another $500-$800. Still a far cry from recouping my losses, I was at least learning as I went.
As the years passed, my software firm made massive improvements to the program until it became one of the best if you had a firm knowledge of tax preparation. Because I never quit I was always looking for opportunity. I learned my lesson from the initial loss, yet never lost sight of the possibility for gain. Remember when I said a mistake doesn’t define you; how you respond to a mistake does? Well, if it were not for that tremendous loss ten years ago I would never have met Mr. Money Mustache and this blog would never have seen the light of day. You see, I went to Camp Mustache to present an idea to Pete and instead of selling him on my idea he hired me as his accountant and plugged my DIY tax program on his site. That led to over $8,800 in revenue this year. Still not back to breakeven, it is a lot better than it was with plenty of future opportunity.
By focusing my attention after a huge mistake I gained more than I could ever have imagined. This blog is not profitable as I write, but it is growing and daily revenue went from pennies to a few dollars per day. My guess is it will have a small profit by year-end with larger future profits. I also meet awesome new people and do something I love doing, writing, which is a fancy way of saying I get to talk a lot to a large group of people. I’m good with that.
Steps to Fixing a Mistake
This is where I provide a magic bullet to fix all mistakes. Sorry. No one solution fixes every problem for every person. There is a template I can share to make the process easier, though.
- Acknowledge the errors of your way. Never be afraid to admit you fucked up. Stop worrying about other people; you notice the pimple on your face 1000% more than anyone else. You made a mistake; join the human race.
- Take a break. Most people have a gut reaction to realizing they made a mistake. The shoot-from-the-hip response is probably another mistake. Take a page from the book of Stoics: sit quietly and reflect on what happened. Practice negative visualization. Image the worst that can happen. For me, the loss of money made me feel poor and stupid. By practicing negative visualization I was able to close my eyes and see all the worst things that could result. When I opened my eyes I realized none of that has happened yet. There was a way out. It would take time and effort. At minimum I had a passive $500-$800 annual income. It ended up much better as time went on. Can you imagine if I would have quit in frustration? You would have nothing to do at this moment since I would not have written this. (Wait a minute; bad example.)
- Take action. Let’s use some other examples. Imagine you betrayed the trust of someone you love and it was discovered. There are things you can do to make the situation a whole lot worse. There are also things you can do to make it better. The relationship might be irrevocably destroyed, but if you learned a lesson and do not repeat the same mistakes you will not destroy a future relationship. And who knows, sometimes the best things in life come from the greatest adversity.
- I made a plan and it backfired. That is not a character flaw; it is life. Get over it. Maybe you did something super-stupid like drink and drive and kill someone. There will be consequences, no doubt, but you can either spend the rest of your life crying about it or you can make a difference. In open court you can apologize for your actions and take the time in jail to improve yourself. Scientists tell us most cells in our body are replaced every seven years. Seven years from now the human being who made that massive mistake no longer exists! Always make the next version of you a better one.
- Have your pity party and then roll up your sleeves and use your experience from the mistake as a tool your do something positive. Think of it this way. Most millionaires are self-made. It is rare to see someone with an easy life doing remarkable things. From pain and loss come the greatest discoveries in human history.
- Learn from the experience. Read good books on the subject. An alcoholic can take steps to change her life completely. Joining a support group, getting involved in civic organizations or your church, and reading good books are all ways you can grow.
I wish I had a better answer, but that would make life too easy and end all the great accomplishments achieved through adversity. Never forget mistakes do NOT define you. How you respond and react to them does.