How to succeed in business - by making lots of mistakes!

One of my physics "heroes" is a guy not too well-known to the general public, though he's well-known in physics circles. His name is John Wheeler....

He helped develop theories of nuclear fission in his younger days in the 1930s, and also developed the theory of Black Holes in the 1960s.... He's still around (though I think John Wheeler is now in his 90s)....

John Wheeler's approach to solving problems is this.... He's said:
"Our whole problem is to make the mistakes as fast as possible."

The idea is that, once you have made all the mistakes, you'll inevitably find the correct solution.

If you are going to progress, you HAVE to make mistakes! In my study of successful entrepreneurs, I've found that this is just as true in business - with one condition.

In physics, if you make a mistake, all you've lost is a little time. You can go back, and try it again.

In business, however, if you make a mistake, you could potentially lose thousands of dollars. So many entrepreneurs I have studied have ways to make sure this doesn't happen.

Donald Trump says - "Take care of the downside, and the upside will take care of itself." He makes sure that, even if a deal goes bad, he generally won't lose too much.

Richard Branson uses his negotiation skills to the same effect. When he started Virgin Atlantic Airways, his biggest cost was purchasing the plane from Boeing. He negotiated a "way out" for himself in the purchase contract: Boeing agreed that if Virgin Atlantic Airways didn't work out, they would buy back the plane at the price he paid. By doing this, Richard Branson ensured that even if his airline failed, he could still survive largely unscathed.

Many of the most successful entrepreneurs make sure they have a "backup plan".... If something doesn't work out, they have a way to "get out" of their venture with minimal losses. Others have multiple ways of profiting, so that if they don't make money one way, they have a few other ways they think they can make money as well.... These "backup" plans aren't afterthoughts - they are planned from the beginning.

Some entrepreneurs also make sure that they'll make their money back on a venture after just a few sales.... This reduces their risk. By having low product development costs and high profits, some entrepreneurs can break even after just a handful of sales. Any sales after that are pure profit.

Some entrepreneurs also use other people's resources to reduce their risk as well. Nowadays, Richard Branson's new ventures are usually joint ventures. His partner puts up all the money, and Richard Branson provides the Virgin brand name and the free promotional publicity (something he's very good at). If the venture doesn't work, he's virtually risked nothing. Michael Ross's Art of Leverage is a great report on how to leverage other people's resources, if you want to learn how to profit by using leverage in a small business....

So, the point of this is - you have to make mistakes if you want to progress. Don't be afraid of making mistakes! But - be sure you've taken care of the downside before you start... That's the conclusion I've come to from having studied the ventures of many of the world's great entrepreneurs.

- Dien Rice