NEW YORK - Jeff and Diane Hunt started their silk-screening and embroidery business with a can-do attitude.

        “Whatever needed to be done, we'd pull together as a team, and someone would do it,” Jeff Hunt recalled. And that was fine, until CES Screenprinting and Embroidery started getting bigger.

        “It just became impossible to do any task,” Mr. Hunt said. “It was so out of control that we were losing money because of our inefficiency.”

        Things were so bad, he said, that at one point, nearly a fifth of their receivables - money owed by their customers - were unpaid after 30 days. No one had time to call customers to remind them the bills were due.

        CES, located in Indian Trail, N.C., is still in business today. The Hunts did what small business owners must do if they are to be successful - they went through the painful process of analyzing their failures and learning how to avoid repeating the mistakes.

        A consultant recommended the Hunts computerize CES's accounting and create policy manuals to give employees a more structured workplace. Mr. Hunt said it was painful to hear they were mismanaging their firm, but the couple took the advice and implemented the suggestions.

        Along the way, the Hunts learned to delegate more, freeing them to do the tasks they really need to do.

        And Mr. Hunt said his work week has shrunk to 40 to 50 hours a week from 80 to 100.

An honest assessment

        When Mutuals.com Inc. went through a similar process of self-evaluation, managers realized the problem wasn't the money management firm's operations, but the model on which the business was built. That required not just an honest assessment of failure, but a painful decision to shift away from ideas that got Mutuals.com started in the first place.

        Eric McDonald, the firm's president, said the company was operating under an old idea in the financial services industry. That meant big offices to attract individual investors and millions of dollars spent on a computer and Internet infrastructure.

        “We discovered everything we spent money on was not making us money,” Mr. McDonald said.

        The solution was to reposition the company, including a shift toward more institutional business, close the big offices and outsource some operations.

        “It hurt - it was a very difficult and long decision to make,” Mr. McDonald said.

        The result is a better-run company. “All of our time, instead of supporting the infrastructure, is being used creatively,” he said.

Realized their mistake

        When Landon and Heath Slane looked at their mistakes, they also had to change how they were running their fine-jewelry business.

        When they founded Slane & Slane in New York, they had no experience in the industry, and so they hired a manufacturer to handle the details of getting their silver pieces made. They decided to go with one person to try to save money.

        That was their mistake. After the sisters started to become successful, they discovered problems in the manufacturing process that they're still working to correct.

        Landon Slane said the problem was akin to the adage about putting all your eggs in one basket. By relying on one person to handle the manufacturing process, they made themselves vulnerable.

        “We were being a little too trusting,” she said. “It's like going to the doctor and not getting a second opinion.”

        She said they're not going to make the same mistake again: “We're going from one manufacturer now to five.”

What went wrong?

        For Crossbow Group, a Westport, Conn., marketing services firm, looking at what went wrong turned out to be a solution in and of itself.

        Jay Bower, the company's president, said his firm was asked to make a pitch for an account at a large company that had been impressed by Crossbow's work with a competitor. Crossbow was one of two finalists - but much to the surprise of Mr. Bower and his colleagues, they lost.

        Mr. Bower needed to find out what went wrong - “we were really concerned about why we didn't win” - but his first query met with a superficial answer.

        “I knew the reason they said we weren't chosen was not the real reason,” he said. “I decided to dig a little deeper, and the more I dug, the more I heard things.”

        What he found out was painful to hear: that Crossbow's executives came across to the prospective client as resting on their laurels, talking too much about their experience and not enough about what they would do for a new customer.

        That was enough for Mr. Bower and his colleagues to learn from. But what happened next is a wonderful lesson about the power of showing you care about good customer service - the executives who turned down Mr. Bower's firm recommended the company for another job, and this time, Crossbow won.

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