This article is for you. So you can learn from my mistakes and go on to make some of your very own. My sense is that if we can start to share our business mistakes without fear, we can learn faster, fail with more flair, and generally get better at running businesses, managing people and making a difference.
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I shut down my PR agency in November last year. It’s taken some time to get my ego out of way so that I could unravel exactly where I went wrong. So here, just for you, at the six-months-after-shutdown mark are the five most critical mistakes – and their lessons.
Imagine your demise
Even when we get married, which let’s face it is the most optimistic thing human beings probably do, we have the end in mind. We know before the ‘I do’ what it will take to hit the escape key. It’s not taboo to consider a relationship ending.
Not so with a business.
The result was that I didn’t know how to think about shutting down the agency. It was so unthinkable that I was almost unable to imagine how to do it. And this meant even when the end was in sight, I continued to make business decisions based on the endless longevity of my business.
Lesson one: Nothing is Forever. Not even PR Companies. (I know! Who Knew right?!?)
Believe with optimism, plan with pessimism
Optimism is the fuel of business ownership. It’s almost impossible to run a business if you don’t truly, honestly believe that what you do matters, and that it’s going to work brilliantly (forever).
For me optimism also meant that I made financial decisions based on a firmly held belief that it was always going to get better, a lot better, more better than I could ever imagine. I mainlined optimism!
With hindsight I realise that optimism is not a good driver of fiscal business strategy. Never structure your business around a ‘better tomorrow’ because sometimes it doesn’t come and then….
Lesson two: Optimism is great for people. It is not great for cash flow.
Resources do not need to meet needs 100%
I made incredible assumptions about what resources were needed for my team to operate. One expensive choice was to upgrade our PBX. My assumption – everyone one of my team NEEDED a phone and a dedicated open line on their desks to do their jobs.
A five-year lease, R150k and many redundant phone lines, phones and jacks later I realised that this wasn’t true. I made a similarly expensive choice when it came to a new email server, larger offices and more parking bays. (Did I mention that these were EXPENSIVE mistakes?)
Lesson three: The work will continue at a high standard if you are only meeting needs at 80%. Once it drops to 70%, then invest.
It’s hard to be brave
My PR agency was a service-based operation. I bought time from my team and on-sold it to our clients. There should have never been any need for an overdraft because if the hours I was buying weren’t being sold then my business was failing. But instead of being brave and admitting what was going on (see lesson 2) I planned for a better tomorrow. I didn’t want to make the tough choices, hurt my team’s feelings or feel like a failure so I just muddled on right into a very deep overdraft. The result is that I still carry that debt, and the labour of love that is paying it back will take another three years.
Lesson 4: Be brave. Face up to the first signs of failure and act quickly
Money is the heartbeat of your business
I thought that if I loved what I did, did it well and was a nice person that the money would come. Instead of seeing money as a kind of karmic force, I should have seen it as the feedback mechanism of my business’s success or failure.
Lesson 5: Use your financial statement as a report card and make monthly decisions based on what you see
Not a lesson, more of a statement: Money is the heartbeat. But it’s not the heart
Balancing how a business respects money and people is important. While the financial statement is the report card, the corporate culture and how I as a boss managed and motivated my staff was the school, its teachers, the fields and the libraries. Great businesses balance the sustainability of a solid balance sheet with the resilience of an awesome culture.
Last words:
I loved running Sentient Communications. I would not give up working with all the people who travelled through it for anything. It was tough and, like most difficult things, undeniably worthwhile.
I miss it. And I am looking forward to running another business and taking all of these incredible lessons and applying them. I am sure that I won’t do it perfectly, but at least what I do wrong will be completely different and I can learn from those mistakes too.
Now that mainlining optimism is not prerequisite and failure is actually an option I will most likely learn in the moment, which means each day will find me doing small things differently and better.
Once failure is an option you can turn it in to a game. But that discussion will have to wait for another time.
This article was re-published with permission. | Image credit: Ben Fredericson
