Seven famous founders share money mistakes, smart moves

— -- The crumbling of Wally Amos' cookie empire taught him how to be a better man, and a better business leader.

The creator of Famous Amos Cookie Co. opened his first cookie shop in 1975. A decade later, the once-growing company faced severe financial trouble, forcing him to sell the company in pieces to outside investors.

A competitor's tastier cookie didn't cause the trouble. He did.

"I thought that I knew more than anybody else," he says. "I thought I was the main attraction, and I wasn't listening to other people."

When he later tried to use his name and image for a new product line, he was sued by the new owner of Famous Amos.

Now 73, he's trying to use the lessons learned with two new firms, Uncle Wally's, specializing in muffins, and Chip & Cookie, a gourmet cookie producer.

"Teamwork — that is the greatest lesson I learned from losing Famous Amos," he says. "It's not about me, Wally Amos. It's about respecting the rest of my team members … giving them access to make suggestions."

His blunders weren't, and aren't, unique. Big-name producers of makeup, yogurt, eco-friendly cleaning products and hip sportswear all have had their shares of big-time gaffes.

Early in her career, cosmetics entrepreneur Laura Geller signed blank checks and handed them to her bookkeeper. After a couple of years, she discovered that her tax bills weren't being paid. When Geller tried to get a straight answer, she says, her bookkeeper simply disconnected his phone and disappeared. He was gone — and so was her money — but she was still on the hook for those past taxes.

"It was such as horrible time in my life," says Geller, whose namesake cosmetics brand is a hot seller on QVC. "Those lessons shake you up enough to realize that you can't trust everybody. … You have to be mindful."

That experience and other troubles made her path to success a "rocky road." But she also stresses that small-business owners should expect some rough times.

"No entrepreneur should ever think that it's a joyride or they're going to come away with just a couple bumps and bruises," she says. "It's an education. You just have to hope that the bumps and bruises aren't going to put you out of business.

USA TODAY reached out to successful business people to hear about their financial foibles, their best business decisions and their lessons learned.

Daymond John: FUBU

John's apparel prowess began on the streets of Queens, N.Y. Shocked by the expensive prices of "tie-top" hats, he asked his mother to teach him how to sew so he could make his own hats and sell them. A banner sales day in 1992 — $800 in sales — further spurred his entrepreneurial drive.

He worked with a friend to create the FUBU logo (which stands for For Us, By Us) and began to produce sportswear from his home. FUBU is now an international clothing brand, and John is a celebrity judge on the TV show Shark Tank.

•Money mistake. John says he spent years "not understanding how little things financially make a big difference down the line." Only about six years ago did he first begin to really grasp financial concepts. He made flubs such as not putting more company money in the bank to take advantage of compounding interest. And personally, he learned not to spend his money on "frivolous things," such as high-end watches.

"I was always told, 'Jewelry is an investment,' but it's not," he says. He says he spent about a million dollars on watches that are worth only about $50,000 now.

His advice for new entrepreneurs: glean financial and business knowledge by taking classes or finding an internship in the field in which they want to work.

Savvy move. John realized early on that there are many legal issues that go with starting a business such as making sure patents and trademarks are in order.

"The first important thing to do is legally structure the company," he says. Building a company "is like building a building. If you have a weak base, it will crumble."

Jim Koch: The Boston Beer Co.

In 1984, in his mid-30s, Koch ditched a business consulting career to pursue a family tradition: brewing. Using his great-great-grandfather's recipe, he created Samuel Adams Boston Lager. Koch's company is now the country's largest craft beer producer.

•Money mistake. In the company's infancy, Koch focused on finding the right ingredients and making quality beer. Tied up with those duties, he didn't follow up with customers who didn't pay bills. All the while, Boston Beer kept shipping suds.

The company was running out of money, "because the only people that were paying me were the people who did it out of the goodness of their hearts," he says. Once he discovered the problem, he hired a firm that specialized in helping small businesses manage cash.

The takeaway: Mind the money, even if you have to pay someone to do it. "A good financial person is more important than you think," Koch says. "I thought, 'If I make good beer and it sells really well, the rest should take care of itself.' But it doesn't always."

•Savvy move. When the company launched, Koch spent an "uncomfortably large amount of money" to ensure that he would get the specialized hops that he wanted.

"The only way I could get (farmers) to grow these unique hops for me was to guarantee them a five-year contract," he says. "That seems crazy, buying ingredients five years in advance, but it meant that I've always been able to get hops, even when there were shortages. If the crop comes in at 50% of expected yield, I'll be OK, but the other guys who didn't have a contract will have no hops."

Adam Lowry and Eric Ryan: Method

In 2000, two roommates had a brainstorm: eco-friendly cleaning products. They whipped up some samples in their bathtub and handed them out to friends. Method was born. The company in 2008 reached $100 million in sales and is sold in retail outlets such as Target.

•Money mistake. "As an entrepreneur, you just feel a desire to just grow, grow, grow and show top-line (increases)," Ryan says. "Sometimes it leads you astray."

After the founders expanded their brand into the car-cleaning marketplace with a product called Vroom, they realized they moved a bit too fast.

"We ultimately ended up selling the line (to another company), but it was a big distraction from our business at the time," Ryan says. "There are times that you need to preserve fuel and be careful about how many growth opportunities you pursue, because you burn capital."

•Savvy move. "Hiring a CEO as our first employee was one of the best money moves we made," Lowry says.

The more-experienced Alastair Dorward helped the founders make better management and financial decisions. Dorward had the acumen "to grow smart rather than just grow fast," Lowry says.

Liz Lange: Liz Lange Maternity

Lange showed the world that maternity wear doesn't have to be dowdy. Her designs are sold at high-end boutiques and Target stores.

•Money mistake. "In the beginning, I was selling a lot, but I wasn't making as much money as I should have, because the markups and margins weren't mathematically correct," she says. To remedy the issue, she hired employees who had experience at big retailers such as Macy's.

"I learned a lot from my employees, because they weren't entrepreneurs and had been at more general places," she says. "I was the visionary, but they understood the nuts and bolts" of running a fashion and retail business.

•Savvy moves. Lange hired an accountant from the company's inception. Another wise move, she says, was seizing a viable exit strategy when it came along.

In November 2007, Lange sold her majority stake to a private-equity firm, Bluestar Alliance. "It was a smart financial move, but it was painful because, as an entrepreneur, your business is your baby." She was receiving "really good offers" for the company and felt that the time was right to sell.

She's still involved in the business, she says, but has more time to spend with her two children, who are 8 and 10 years old.

"It was hard," she says. "But for every entrepreneur, there has to be an exit strategy and a time to get out."

David Liu: The Knot

Founded in 1996 to help frustrated wedding planners, The Knot (theknot.com) has expanded from a single website to a media juggernaut that focuses on topics such as weddings, parenthood and buying a home.

•Money mistake. The Knot founders jumped when a big bank said that it would raise capital for them.

"We were like, 'Oh, my God, this is great. We're on the fast track,' " Liu says.

But the fundraising process dragged on much longer than Liu expected, creating heavy and unnecessary stress on the team. In hindsight, he realizes that his tiny firm — and the money it needed — was just "chump change" to the bank, so it wasn't a priority client.

The lesson: consider all money-raising options and don't get too excited by the first opportunity.

•Savvy move. Liu says a consistent money mindfulness allowed the company to survive the dot-com bubble burst. While other Web entrepreneurs rented fancy buildings and outfitted them with designer furniture, The Knot staffers worked out of a run-down building that had a rat problem.

"Over the long term, it was a really good decision, but in the short term, it was painful," especially when workers sometimes would find rodent paw prints all over their desks in the morning, he says.

Gary Hirshberg: Stonyfield Farm

Hirshberg helped take Stonyfield Farm from a seven-cow organic farming school in 1983 to an organic yogurt giant that reaps more than $330 million in annual sales.

•Money mistake. By 1986, the company had outgrown its original production facility. A friend had a plant Stonyfield could use, so he and Hirshberg forged a deal. Unbeknownst to Hirshberg, the friend had defaulted on his Small Business Association-backed loans, and the facility fell into foreclosure — with all of Stonyfield's yogurt locked in the building. Hirshberg had to come up with $130,000 to get the yogurt alone out of the facility, and to also quickly find a new one.

"My mistake was leading with my heart and trusting my friendship and not doing my thorough due diligence," he says. "It was just ugly, and our friendship really ended over that. It was just a complete meltdown." His lesson: Even if it's "awkward," always do background research before making any deals.

•Savvy move. In what Hirshberg deems "a moment of chutzpah, courage, whatever," he asked the landlord of a facility that he rented for an option to buy the building and the land around it. "Which was absurd," Hirshberg says, "since I couldn't imagine that we'd ever be able to do that." But several years later, the company expanded, and he needed the extra space, and he bought it all.

Stonyfield is still produced in that facility. "If you don't ask, you don't get," Hirshberg says.