Why the best business people fail… and how you can be a successful failure too

failureYou might think failure doesn’t enter the vocabulary of successful people. But willingness to fail is a key criterion for success. Here’s an unavoidable truth about business – you’re going to fail in your business at some stage. You will probably do some really dumb things and at times you may feel like an idiot. You could make bad decisions, decisions that cost you money. You might make poor employment decisions or lousy client decisions. Failure is guaranteed. What’s important is having the ability to pick yourself up and say, ‘That was stupid, I feel like a fool, but what have I learned?’ Successful people learn from their mistakes and carry on.

I love the story about IBM from the 1960s. A manager made a decision that lost the company $10 million. He was summoned to the office of the CEO, Tom Watson. When asked why he’d been called there, the manager said, ‘So you can fire me.’ Watson replied, ‘Fire you? Of course I’m not going to fire you. I’ve just spent $10 million educating you!’

All business people fail at something at some stage. The smart ones learn and use the experience to their advantage next time.

So next time you think you won’t do something important in case you fail… remember Michael Jordan’s famous quote:  “I can accept failure, but I can’t accept not trying”.  And get out there… do it!

This was an excerpt from Liber8 Your Business – The revolutionary business planning technique that will set every small business owner free.  Pre-order your copy here.

My 5 biggest business blunders and what you can learn from them

oopsI’ve noticed when I’m working with clients that my greatest wisdom and biggest ‘aha’ moments come when I’m sharing a story about something really dumb that I did.  I think it was Winston Churchill who said ‘life is too short to learn from all your own mistakes’.  In business, I’ve made plenty and one of my jobs as a mentor is to help my clients to avoid making the same mistakes as me (they will have enough of their own to learn from, I can at least save them a little pain!).

So here are five of my doozies.  Read, weep and learn!

1.    I wrote my own employment contract

My first business was an advertising agency.  I’d prepared a business plan whilst at a business school in Hawaii.  I’d started my career as a secretary and then became an advertising copywriter.  I was a creative person with zero business skills.   When it came to employing my first staff member it never occurred to me that I needed a proper legal document written in accordance with the employment laws.  No, I just thought I should write down what I expected and get us both to sign it.  This actually worked fine with my first employee who was a young student fresh out of university and even more naïve than I was.  He just wanted a job in advertising and was willing to work his butt off to make it.  He was also very talented and happy to do whatever it took to make the place successful.  Lucky me!

My second employee proved not so lucky.  A young designer on his second job -not quite so talented, not willing to work so hard and with a huge drama hook waiting to explode.  I worked him very hard, demanded a lot of him, was fairly intolerant of his mood swings and plunked my high expectations fairly on his resentful shoulders.  One day (after using the f word many times in a shrieking voice) he walked out and didn’t come back.  Instead a personal grievance claim arrived from his lawyer.  In the letter his lawyer called my employment contract ‘a joke’.  He was right.  It was… but I wasn’t laughing!

Lesson:  Do not do your own HR.  Get your employment contracts approved by an employment lawyer.  Get help recruiting people and be sure to be clear on your expectations from the outset.  Make sure you hire people for their cultural fit as well as their technical skills.

2.    I got creative with my book keeping

A copywriter with no business experience… yup… that was me!  I realized I needed to keep track of the money stuff so I bought an MYOB accounting package.  I then merrily set about inputting all the data myself.  And when I was too busy I got my young copywriter apprentice to do it.  Two creative copywriters doing the books – brilliant!  Before long we realized we didn’t know what we were doing (really?) so I put an ad on Student Job Search and got an accounting student to do it for me.  Turns out he didn’t know what he was doing either.  By the end of two years in I had no way of knowing how we were going financially, no way of reporting.  It was more like BFM (Big Fat Mess) than MYOB.  Thankfully at this point I hired the most amazing person who not only tidied up my books, she became my right hand person and taught me how to run a business the right way – with an annual budget and monthly reporting.

 Lesson:  Do not do your own books.  Even if you do know what you are doing, as the business owner you should be spending your time on income generating activities… not on book keeping!  Learn how to manage your business using an annual budget, sit down every month with someone (ideally outside your business) and explain your results to them.

3.    I hired someone to do my selling

In year 3 things were gunning along famously.  We’d trebled in size and moved offices three times to keep up with growth.  We’d won our first major contracts with blue chip clients and put our name on the map.  I thought it would be good not to be the one to go out there doing all the selling.  So I hired a business development manager.  He was very expensive and impressed me hugely in his interview with his sales stories.  Within six months it was obvious he couldn’t sell advertising, even if he could sell other stuff.  Rumors came back that potential clients were not impressed with him… he didn’t know the industry well enough to think on his feet or wax lyrical about why our agency was better than any of the others.  He was damaging our reputation and I had to get rid of him.  It wasn’t his fault.  It was mine.  It was too soon to hire someone to do my job for me…. I was still the best person to sell our agency.  I had the experience and the passion.  I went back to hiring other internal roles to free up more of my time elsewhere and threw myself 100% into business growth.

Lesson:  In the early years of business, the owner is the best person to do the selling. No one else will have quite your domain knowledge, experience or passion.  Even if you don’t think you are very good at sales – find a way to make it enjoyable, get some training and focus on being passionate about what you do. 

4.    I burnt myself to a frazzle

In about year 4 I was the queen of burning the candle at both ends.  The business was getting bigger and bigger and with every stage of growth my worry seem to grow to meet it.  I was working long hours and not sleeping well.  I developed what a dear friend called ‘my purple people eaters’ – the imaginary monsters that were going to bring my business down – the employees who were not performing, the clients who were not happy and about to leave, the bills we wouldn’t be able to pay, the suppliers who were bound to let us down – I was living in the world of imaginary enemies and it began to play havoc with my health.  I began to have panic attacks to the point where I feared giving presentations (not good for the head of a leading advertising agency).  I would burst into tears for no real reason.  I was picking fights with my husband and neglecting my friends.  My life was seriously out of balance.  I felt so bad I wanted out.  I wanted to leave my business and go get a job where someone else would take all the stress.  But even that didn’t seem a viable option with a new overdraft and a growing team of people depending on me for their livelihoods.  Something had to change.  Some regular visits to a hypnotist showed that I was suffering from severe stress and I needed a break.  I had no choice but to take a month off and go to Europe.  With a clear head I realized it was time to trust my team and hand over some of the worry.  My life was more important than my business.

Lesson:  You cannot do it alone.  As soon as you start growing your team you need to find a way to share the load.  Focus your energy early on the processes and systems that will enable others to take over big chunks of the work. Share your problems with your team, encourage them to step up and find solutions to these problems.  Reward those who shine for you.  Introduce bonus schemes for clearly met objectives and teach your team to enjoy the game of business alongside you.

5.    I tried to control the big guns

When my business had grown big enough to afford the really senior people, I came face to face with my own ego.  And she wasn’t pretty, I can tell you!  Instead of trusting them to get on with their jobs, I tried to control them the same way I had more junior folk.  I stamped my foot when they wouldn’t do it my way, I threw my toys out and then apologized many times before I finally got the lesson.

Lesson:  When you are ready to hire senior people, make sure your culture and processes are firmly in place.  Have a very clear induction programme that shows how things are to be done in your company.  Get their agreement to your values and vision.  Hire for their cultural fit as much as their talent. And then… let go.  Once you have given them the context, let them do things their way.

So there you have it.  Five of my blunders… many more where they came from!  I hope you enjoyed hearing about my downs.  As I’ve said many times, business is a roller coaster and for every great high there’s a screaming low waiting to snaffle you up.  The trick is to become resilient and build a well systemized business with a great team to help your ride out the storms.  Easier said than done huh?

If you’d like to share your journey with other like minded business owners you might love our Acceler8me Programme.  Click here to apply for more information.

Bought to you by liber8yourbusiness.  Small business mentors and publisher of Liber8 Your Business. The revolutionary business planning technique that will set every small business owner free

Business mentor tip #89 – What to think about NOW if your business is ever to be saleable…

soldHere’s another extract from my very soon to be released book, Liber8 Your Business… talking about the critical factors of the ‘build-to-sell’ model (note, in this chapter in the book I talk about 3 models).  I cannot stress enough how important it is to starting thinking about this NOW rather than when it’s too late.  Check out these 5 critical factors and get in touch with me if you need help…

Critical success factors of the build-to-sell model

1. Set your end goal. Decide how much you want to sell it for and by when, and work backwards. In my book, Liber8 Your Business, I show a simple formula for working out your potential end value, with a link to the online calculator.

2. Name your buyer. It’s important to have a good idea who might want to buy your business in your early planning. Imagine spending 10 years building a business you intend to sell only to realize you have created something nobody wants to buy. If you build a business with a buyer in mind, you have a much better chance of building something they really want.

A potential buyer could be a larger player in your industry looking to grow through acquisition. This growth might be regional – they want a presence in your city or town and it’s easier to buy you than start from scratch. It might be strategic – you have a smart product or service they could add to their existing infrastructure to create additional revenue streams. An example of this might be a large accounting firm buying a small book-keeping firm to add value to their client base. Your service or product could become a ‘nuisance’ to a competitor (read more on a strategy called ‘kicking sand in the gorilla’s face in the Liber8 Your Business book) and they buy your company to prevent it competing or to regain lost revenues. It could be a management buy-out, when senior employees raise the funds to buy you out. It could be a competitor of a similar size wanting to grow and willing to invest to gain rapid growth through acquisition. I’ve sold businesses to two types of buyer. A multinational bought my advertising agency and a local competitor bought my pet care company. My father’s photocopier business sold to his senior management team. A good friend has built three recruitment agencies. The first sold to one of the original partners, who bought out the other partners. The second sold to a multinational looking for regional representation in her city. The third is in its early days of growth and I’ll watch with interest who buys it (I have no doubt it will sell because I know the founders expect this and will build with this in mind). Another type of buyer could be a private equity group or even an individual who sees great potential in what you’ve built.

So who might want to buy your business? What are you building that could add huge value to someone’s offering? Now is the time to start thinking about these things.

3. Remove the dependence on you. To make your business attractive to your future buyer, it cannot be dependent on you. That’s a key message I want you to learn from this book:  No one will outright buy a business that’s dependent on its owner.

If the buyer takes you out of the picture and no business remains, they will either insist you stay in the business or they will walk away. So whatever your strategy is, whatever your end goal, whatever that picture is of your shed or your man on the moon … it needs to not have you in it. I did that at my agency by making sure the clients loved the business but weren’t dependent on me. In the last few years, I hired two senior guys and put them in charge of our biggest clients, so my buyer could see the clients were not reliant on me.

4. Start building a team as soon as you can. I couldn’t afford to bring in those big guns until later in my business growth. I started by hiring people I could afford, with a couple of youngsters straight from college. I trained them to do things exactly the way I wanted. I call it ‘training your clones’ (learn more of this strategy in the bonus chapter called The Acceler8or Approach to business development at the end of the book). I kept building my team that way until we could afford to hire more senior people. And then we had to make sure we had a really strong culture to manage senior people.

 5. Secure future earnings. Getting all our key clients on fixed-term contracts was another critical strategy that worked. They all had two or three year contracts so when the buyer looked at my business they saw a high level of spend committed for the next three years. This was an important lesson I learned from my businessman father. Remember I told you about his photocopier business and how he sold it and retired soon after his fiftieth birthday? One of the best secrets to success he shared with me was, ‘you’ve got to have a back end.’ To explain, he gave the example of his own business. While the sale or lease of each copier was worth a lot of money (especially in the 1970s when these huge machines were a relatively new addition to business productivity) the real value came from the additional contract that went with each machine. This locked the customer into buying all their ink, toner and paper for the life of the machine, as well as regular paid servicing – which meant that, for every machine sold, my father had income guaranteed for the next 10 years, enabling him to predict with complete accuracy his future income. You can see why this made by father’s business attractive for a buyer. They could see a guaranteed return on their investment. It made sense to me when I started my own business, and I hope it does to you too. It will get you a higher price when you come to sell!

And what it all boils down to is this:

A business with committed future revenue that is not dependent on its owner to deliver that revenue is a business worth investing in.

So please, please, please do think about it.  Get in touch with me if you need help with it… laura@liber8yourbusiness.com
Be free and happy
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