Finance and Business Mistakes

There are often conflicting messages about mistakes. There are many sources talking about how healthy it is to not worry about making a mistake so long as you learn something productive in the process. There are other points of view about how important it is to avoid mistakes whenever possible. In the end, perhaps both of these perspectives are accurate. There are quite a few books which focus on the positive aspects of mistakes. Here are three prime examples:

• “Mistakes that Worked” by Charlotte Jones
• “Celebrating Failure: The Power of Taking Risks, Making Mistakes and Thinking Big” by Ralph Heath
• “Better by Mistake: The Unexpected Benefits of Being Wrong” by Alina Tugend

In the world of finance and business, mistakes are frequently talked about in terms of how costly they were. But this does not make mistakes any less likely in business and financial environments than anywhere else. In fact, the title of a recent book suggests just the opposite:

“Think Smart - Act Smart: Avoiding the Business Mistakes That Even Intelligent People Make” by J. Nightingale

Because some business finance mistakes are likely to cause bigger problems than others, these mistakes can serve as practical illustrations of ones which should be avoided at all costs. Here are some which usually fall into the “avoid whenever possible” category:

• Lack of contingency business plans
• Not knowing when a bank should be fired
• Too much business debt

No matter how prepared they are to avoid mistakes like those shown above in the bullet points, most company managers and small business owners will be exposed to one or more of these mistake learning opportunities at some point in their career. Of the three, contingency business planning offers the best opportunity to help avoid business and finance mistakes, and it is therefore particularly prudent to take steps ensuring that contingency business plans are used effectively in organizations of all sizes.

Not knowing when to fire your bank is a mistake that will be especially difficult to correct, and this is why mistakes like this should be avoided or eliminated in the first place. In the most positive outcome for this example, contingency business planning (if used effectively) can frequently facilitate a totally different result in which firing the bank is made unnecessary by better negotiating and communicating. However even when this positive outcome is not feasible, contingency planning can contribute to replacing one commercial lender with another much more smoothly.