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11 Mistakes Billionaires Learned the Hard Way

11 Mistakes Billionaires Learned the Hard Way

It’s been said it’s easier to learn from your mistakes, but you don’t always have to, particularly in business. Working your way to the top can be extremely difficult and mistakes in the business world can be costly. It is important for the entrepreneur to learn not only from their successes, but also from their failures. Although there’s much to gain when it comes to experience, you can save a lot of time and money by learning through the mistakes of others.

Even today’s top grossers have had their dull moments. Here are 11 mistakes billionaires learned to avoid the hard way:

The 1 Percent
    1. Failure to research.

    When making an acquisition or starting a new business, research is essential. Is there competition? Is there a big enough market? Is your acquisition worthwhile? In 1999, the world’s richest man, Carlos Slim, did not do his research and acquired CompUSA for $800 million, only to see the company’s value plummet because desktop computers were quickly being replaced by laptop computers and other emerging technology.

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    2. Fixation on the wrong investments.

    Few things are worse than a missed opportunity. Focusing on the wrong investments can bring disastrous results. Take Bill Gate’s mistake of ignoring search engines, for example. Focusing on the loss of profit that came from piracy lead Microsoft to completely ignore the development of the search engine. This neglect left plenty of space for other companies, such as Google and Yahoo, to fill the gap. By the time Gates realized he had made a mistake, it was too late. Presently Bing has picked up some of the search engine market, but in 2011 it cost Microsoft $2.5 million more than it earned.

    3. Lack of communication.

    When offering goods or services, communication from the top directors to the employee team and from the employees to the customers is vital. You cannot expect the members of your team to immediately know what you are thinking and this is a mistake billionaire Larry Ellison experienced first hand. After acquiring Island Air, Paul Casey was quickly appointed as CEO. The lack of communication that ensued regarding the changes resulted in various flight delays (one of which was seven hours long) and many disgruntled customers.

    4. Cutting vital costs.

    Maximizing profits and cutting unnecessary costs is a natural part of business. However, it’s easy to get lost in the profit frenzy and so one should be careful such costs do not damage quality or the brand. Take for example the case of billion-dollar company Hewlett Packard. Once known for innovation, everything started to go wrong once innovation was replaced by cost cutting. Current owner and CEO Meg Whitman has seen stock price plummet 39% from one year ago.

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    Billionaire Status

      5. Letting good opportunities go.

      If you think you have a good idea or your research has proven your idea to be a sound choice, go for it. Do not let a good opportunity go by, because just like you are capable of coming up with great ideas, so are other people. Larry Page of Google learned this the hard way. In 2003, after he noticed the success of Friendster, he offered to purchase the then social media giant instead of focusing on developing his own. The offer was turned down and the result was disastrous, as Facebook swooped in to take the social media market by storm. Google+ was eventually released in 2011, and to this day has yet to match the social capital and earnings of Zuckerberg’s giant.

      6. Refusing to explore other options.

      Not all acquisitions are in great shape, and sometimes the industry you want to focus on may be shrinking. These things can difficult to accept but it is important to know when to explore other ventures. Billionaire Warren Buffet admits to having made this mistake when purchasing Berkshire Hathaway on emotional impulse in 1964. A New England textile company at the time, he kept the original business running at a loss for 20 years, before finally giving up and focusing on the company’s other, more profitable ventures.

      7. Cultivating a negative image.

      When you are a billionaire and have a brand to protect, you must behave like it. Anything negative that is said about you will reflect badly in your company and this is a mistake Alice Walton, heiress of the Walmart empire, has committed. Walmart is already involved in numerous controversies regarding the giant’s effect on small businesses and wages paid to workers. Walton’s own Texas escapades, which included a DWI, are negative publicity and include a mug shot no PR executive can wipe from Walmart’s already negative record.

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      8. Allowing credibility to plummet.

      A lot of business ventures depend on credit lines. It is important to remember that this is not only about paying your bills, but also about paying them on time. Used-to-be billionaire Eike Batista saw his oil and mineral empire plummet from more than $30 billion to a mere $200 million once key stakeholders lost trust in him after he failed to deliver the results he’d promised. Once Batista lost credibility in one area, he quickly lost it in all of them, and was forced to watch his empire shrink.

      9. Hiring the wrong people.

      Hiring is an important part of every business. Human capital is what makes a company prosper, but when hiring, keep in mind the ideals of each new hire and whether or not they fit with the company. A bad hire in an important position could be disastrous. Billionaire philanthropist Manoj Bhargava admits the worst business mistake he’s ever made is hiring the wrong people—those who enter his charity wholesale business hoping to help themselves instead of helping others.

      10. Being afraid of postponing.

      It is important to jump in to big opportunities; however, it is also important to do self-assessment to know whether or not you and your team are prepared for the next move. Billionaire Oprah Winfrey cites her TV network, OWN, as one of her biggest mistakes. Her blunder? Launching when she wasn’t ready to launch and doing so only because she said she would.

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      11. Taxes? What taxes?

      It hasn’t been proven whether or not billionaires avoid taxes more than the average citizen. However, a tax scandal is one of the most difficult things to recuperate from. The Beanie Baby creator, billionaire Ty Warner, barely escaped jail for allegedly owing $25 million in taxes, a report that will undoubtedly damage both his brand and reputation.

      Billionaire Make It Rain

        These are 11 mistakes that forced billionaires to clean up their act. As an aspiring billionaire, you should be able to learn from the mistakes of others and take these eleven points to heart as you continue your journey.

        Have you hit a stumbling block before that taught you a valuable lesson? If so, I would love to hear about them in the comments below.

        Featured photo credit: Flickr via flickr.com

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        Joel Goldstein

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        Last Updated on September 30, 2020

        Effective vs Efficient: What’s the Difference Regarding Productivity?

        Effective vs Efficient: What’s the Difference Regarding Productivity?

        When it comes to being effective vs efficient, there are a lot of similarities, and because of this, they’re often misused and misinterpreted, both in daily use and application.

        Every business should look for new ways to improve employee effectiveness and efficiency to save time and energy in the long term. Just because a company or employee has one, however, doesn’t necessarily mean that the other is equally present.

        Utilizing both an effective and efficient methodology in nearly any capacity of work and life will yield high levels of productivity, while a lack of it will lead to a lack of positive results.

        Before we discuss the various nuances between the word effective and efficient and how they factor into productivity, let’s break things down with a definition of their terms.

        Effective vs Efficient

        Effective is defined as “producing a decided, decisive, or desired effect.” Meanwhile, the word “efficient ” is defined as “capable of producing desired results with little or no waste (as of time or materials).”[1]

        A rather simple way of explaining the differences between the two would be to consider a light bulb. Say that your porch light burned out and you decided that you wanted to replace the incandescent light bulb outside with an LED one. Either light bulb would be effective in accomplishing the goal of providing you with light at night, but the LED one would use less energy and therefore be the more efficient choice.

        Now, if you incorrectly set a timer for the light, and it was turned on throughout the entire day, then you would be wasting energy. While the bulb is still performing the task of creating light in an efficient manner, it’s on during the wrong time of day and therefore not effective.

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        The effective way is focused on accomplishing the goal, while the efficient method is focused on the best way of accomplishing the goal.

        Whether we’re talking about a method, employee, or business, the subject in question can be either effective or efficient, or, in rare instances, they can be both.

        When it comes to effective vs efficient, the goal of achieving maximum productivity is going to be a combination where the subject is effective and as efficient as possible in doing so.

        Effectiveness in Success and Productivity

        Being effective vs efficient is all about doing something that brings about the desired intent or effect[2]. If a pest control company is hired to rid a building’s infestation, and they employ “method A” and successfully completed the job, they’ve been effective at achieving the task.

        The task was performed correctly, to the extent that the pest control company did what they were hired to do. As for how efficient “method A” was in completing the task, that’s another story.

        If the pest control company took longer than expected to complete the job and used more resources than needed, then their efficiency in completing the task wasn’t particularly good. The client may feel that even though the job was completed, the value in the service wasn’t up to par.

        When assessing the effectiveness of any business strategy, it’s wise to ask certain questions before moving forward:

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        • Has a target solution to the problem been identified?
        • What is the ideal response time for achieving the goal?
        • Does the cost balance out with the benefit?

        Looking at these questions, a leader should ask to what extent a method, tool, or resource meets the above criteria and achieve the desired effect. If the subject in question doesn’t hit any of these marks, then productivity will likely suffer.

        Efficiency in Success and Productivity

        Efficiency is going to account for the resources and materials used in relation to the value of achieving the desired effect. Money, people, inventory, and (perhaps most importantly) time, all factor into the equation.

        When it comes to being effective vs efficient, efficiency can be measured in numerous ways[3]. In general, the business that uses fewer materials or that is able to save time is going to be more efficient and have an advantage over the competition. This is assuming that they’re also effective, of course.

        Consider a sales team for example. Let’s say that a company’s sales team is tasked with making 100 calls a week and that the members of that team are hitting their goal each week without any struggle.

        The members on the sales team are effective in hitting their goal. However, the question of efficiency comes into play when management looks at how many of those calls turn into solid connections and closed deals.

        If less than 10 percent of those calls generate a connection, the productivity is relatively low because the efficiency is not adequately balancing out with the effect. Management can either keep the same strategy or take a new approach.

        Perhaps they break up their sales team with certain members handling different parts of the sales process, or they explore a better way of connecting with their customers through a communications company.

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        The goal is ultimately going to be finding the right balance, where they’re being efficient with the resources they have to maximize their sales goals without stretching themselves too thin. Finding this balance is often easier said than done, but it’s incredibly important for any business that is going to thrive.

        Combining Efficiency and Effectiveness to Maximize Productivity

        Being effective vs efficient works best if both are pulled together for the best results.

        If a business is ineffective in accomplishing its overall goal, and the customer doesn’t feel that the service is equated with the cost, then efficiency becomes largely irrelevant. The business may be speedy and use minimal resources, but they struggle to be effective. This may put them at risk of going under.

        It’s for this reason that it’s best to shoot for being effective first, and then work on bringing efficiency into practice.

        Improving productivity starts with taking the initiative to look at how effective a company, employee, or method is through performance reviews. Leaders should make a point to regularly examine performance at all levels on a whole, and take into account the results that are being generated.

        Businesses and employees often succumb to inefficiency because they don’t look for a better way, or they lack the proper tools to be effective in the most efficient manner possible.

        Similar to improving a manager or employee’s level of effectiveness, regularly measuring the resources needed to obtain the desired effect will ensure that efficiency is being accounted for. This involves everything from keeping track of inventory and expenses, to how communication is handled within an organization.

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        By putting in place a baseline value for key metrics and checking them once changes have been made, a company will have a much better idea of the results they’re generating.

        It’s no doubt a step-by-step process. By making concentrated efforts, weakness can be identified and rectified sooner rather than later when the damage is already done.

        Bottom Line

        Understanding the differences between being effective vs efficient is key when it comes to maximizing productivity. It’s simply working smart so that the intended results are achieved in the best way possible. Finding the optimal balance should be the ultimate goal for employees and businesses:

        • Take the steps that result in meeting the solution.
        • Review the process and figure out how to do it better.
        • Repeat the process with what has been learned in a more efficient manner.

        And just like that, effective and efficient productivity is maximized.

        More on How to Improve Productivity

        Featured photo credit: Tim van der Kuip via unsplash.com

        Reference

        [1] Merriam-Webster: effective and efficient
        [2] Mind Tools: Being Effective at Work
        [3] Inc.: 8 Things Really Efficient People Do

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