Fly Three Mistakes High

My über-smart friend Phil Yanov was giving advice to entrepreneurs the other day – about start-ups.  Every founder will make at least three mistakes, Phil said, the key is to make those mistakes survivable.  Fly three mistakes high.

Flying three mistakes high is an aviation term.  When a pilot makes a mistake while flying, the plane looses altitude while the pilot corrects the error.  A pilot should, the adage goes, fly high enough to make and correct three mistakes before he runs out of sky and hits the ground.[1]

How high is three mistakes high?  That depends on the pilot and the aircraft.  Experienced pilots correct mistakes more quickly and loose less altitude per mistake.  Some aircraft glide better than others.  Knowing how high “three mistakes high” is, for you, is the trick of it.

How does this apply to start-ups?  Start-up mistakes cost time and money.  And, since time = money, all mistakes cost money.  What kinds of mistakes to start-up entrepreneurs make?  Let me count the ways:

  1. Hire the wrong person, or don’t hire the right one.
  2. Hire too many people, or not enough people.
  3. Rent the wrong location, or rent the right one for too much rent, or for not a long enough term, or for too long a term.
  4. Buy too much equipment, or don’t buy enough.
  5. Set prices too low, or too high.
  6. Open for the wrong hours.
  7. Buy the wrong inventory, or too much of the right inventory.
  8. Pay too much or anything, or even for everything.
  9. Partner with the wrong person.
  10. Pay too much attention to the business, and not enough to developing relationships with customers.[2]

If all entrepreneurs are going to make three mistakes, and if each mistake is going to cost you time and money, then you fly three mistakes high by limiting your initial bets to bets that you can loose and survive.  In other words, early on it’s important to limit your exposure on any decision to something survivable if you are wrong.

How high is three mistakes high for you?  That depends on how well attuned you are to your business.  Collecting data, and performing analysis on that data, can give you a clue that something you are doing is not working.  The sooner you catch a mistake, the less it costs – the less altitude you loose.  More experienced businessmen, like more experienced pilots, should loose less altitude per mistake because they will catch and correct the mistake sooner.

For example, I once hired the wrong person.[3]  The worker took too much time off, always had some malady, and asked to borrow money for emergency after emergency.  The stories were tear-jerking.  The reasons were compelling.  The worker was getting nothing done, and my business was paying and paying. We continued to pay the worker for days taken off long after all sick leave and vacation were exhausted.  Finally, I had enough and terminated the worker.  Months later, I heard from an acquaintance that had hired this worker after me.  He has kept the worker on much longer, and had been sucked into loaning money he would never get back.  We both made the same mistake – we hired the wrong person.  But he lost more altitude (money) than I did, because he did not catch and correct the problem as quickly.

Businesses, like aircraft, also effect how high “three mistakes high” is for you.  A mistake that interrupts the productivity of a capital and labor-intensive business may cost a great deal of money per day or even per hour.  Make a mistake running that business and you had better catch it quickly.[4]  Other businesses may only burn capital slowly, and can glide along without loosing too much cash even as the entrepreneur corrects errors.  Knowing how well your business can handle mistakes is important.

Finally, in order to fly “three mistakes high”, you need to know your altitude in the first place.  How much time and money do you have?  Undercapitalization is one of the most common reasons small business start-ups fail.  Having the capability of “flying three mistakes high” begins in the pre-start up planning phase.  Successful start-ups plan for mistakes, and try to make sure they have access to capital to fly through the mistakes, and into the blue skies beyond.


[1] Another adage says “It’s not the fall that hurts, so much as the sudden stop at the bottom.”

[2] The guy who is in the back baking the cookies, and not out front creating a great customer experience, for example.

[3] Ok, I have done that at least five times.  That I will admit to.

[4] Try making a mistake that shuts down a customer like BMW’s production line for an hour to see a living example of an extremely vertical glide path.

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