You might be asking why there is a photo of a guy with a bag over his head in this article? well read on and not only will you discover who he is but why the paper bag was stupid! This article is now about success - it is about failure and I have seven tips for all of you about why failure is so important. First, a true to life example:
So my very first business start-up was a company called Dattatech back in 2001. There were originally five of us involved in the business and we all came from senior positions (with the exception of one) at a company called Powerlan – a listed computer services business in Australia. The good thing was we all had different skills sets in terms of industry focus and we thought that would bode well. We also all came from essentially front line sales roles and again, in the scheme of things, we thought that was very important – I mean if you are not selling things then you don’t have a business right? Well, wrong (and I’ll get to that a little later). I came from the education division, while two of my business partners came from the IT services and hardware sectors.
One person was the brother of one of the founders and his skill set was very much in the development of websites and back end infrastructure (in fact he was excellent at it). The final person came from the same company as three of us but he actually didn’t go forward with us in the end. His speciality was recruitment and human resources.
So, here we were – four people from different backgrounds, different businesses trying to build an IT services company. At the beginning we had no up-front capital that we pooled into the business and later on that would become a challenge because, like all sales people, we believed that we could essentially grow the business (and therefore profit) through sales. What we didn’t have was a great perspective on what was meant by cash-flow and, in fact, one of our biggest downfalls was not having a business plan that clearly mapped out what we did and why and what the end game was going to be.
One thing we were very good at was convincing people that we were good at what we did but the truth is we ended up trying to a lot of everything without truly harnessing our own skills sets and experience. So, were we an education business or a consulting services business? did we sell hardware and IT products? The truth is we dabbled in it all. In other words it was never really clear why we did what we did.
A second thing we were good at was attempting to build a business on the smell of an oily rag – in other words, keeping costs very low. The building we operated out of was initially a trade deal where we would provide various IT services in return for free rent. The problem is, it gave us an under estimated figure of what it really cost a business to run. Notwithstanding, there was no money to pay wages and why? Because even though we had gone from managing large sales teams and budgets for someone else it didn’t mean that we knew how to start one from scratch.
The third thing we did very well was to create immediate brand awareness around the business and that was developed through two channels. The first was the development of a Global Knowledge Management Conference that was an immense success. We bought more than 300 people together at a time when knowledge management was just taking off as a topic and not only did it work, it made a profit. Importantly in the minds of the gathered crowd it appeared that we had actually been around for a long time and we knew, through association with thought leaders in the field, what we were talking about – this is an important lesson because you don’t have to know everything about a subject you just have to be one chapter ahead of everyone else.
The other thing we did really way in terms of brand awareness was on the hardware and consumables side. We formed a partnership with Samsung Australia and developed one of the country’s first online retail stores – Samsungconsumables.com. Because of the partner who had specialised in developing websites it was fairly easy to come up with a front end and boy did he – in fact, I still think I was the best site yet when it comes to online retail.
But here was the rub of it – although we were really great at what sales people generally do which is sell, we were not crash hot and the basic fundamentals of the establishment of a business – the pre planning.
In the end our relationships were tested because we just didn’t have the cash flow in place to ensure that we were paying all of the bills we needed to – and not in the case of the business – it was on the home front. Making sure the rent and mortgages were paid, gas was in the car and food was on the table. In turn this put immense pressure on not our own personal relationships but also those with our spouses and friends. While we pushed along for nearly two years we never quite got the balance right.
Ironically enough we have all gone on from the experience learning from all of the parts we failed on and the further developed our key strengths. In fact, the lack of skills I had around formal business planning and administration saw me strengthen those areas that really led to my success today.
So what were some of the important lessons I learnt from my first business start-up failure?
1: Planning is essential: I say it a lot these days but I won’t get out of bed for anything unless there is a business plan in place. It doesn’t need to be a complicated plan and it doesn’t have to be perfect but the one element that needs to be locked in from the start is the “Purpose” – why am I (or are we) doing this?
2: Cash flow is king: It’s not just about paying the bills the business incurs its ensuring you have enough money to live on. You need to ensure you have enough money to keep the doors of our business open and the roof of your house remaining tightly fixed above your head.
3: You don’t know everything: I always look for people who fill gaps in my own skill set as opposed to getting into business with just other sales people – why? Because all sales people do is sell to each other, other people and themselves so when it comes time to accept you have a problem you spend more time convincing yourself you don’t. Having someone who knows about administration and operations is so important and a skill worth investing in. People see this as a cost at the beginning of a start-up – I see it as an investment in our future success.
4: Playing to your strengths:By investing in people with different skill sets it frees you up to do what you do best
5: Passion and purpose are brothers: Always be passionate about what you are selling and why because that passion will be ultimately be linked to the purpose of the business. There is no point starting something unless you are fundamentally passionate about the why. The how comes through the planning process and partnering with people to help you meet the end-game.
6: Learn to fail: I will see this a hundred times a week – I fail in order to learn a lot. IT IS OKAY TO FAIL! Ignore the motivational and inspirational speakers who just talk endlessly about the road to success and success is success and how wonderful it is. Seriously, you become successful because you learn from what didn’t work the last time. When you read books about Steve Jobs or Henry Ford, Sir Richard Branson and others don’t read them specifically to be inspired by their success – read them because you want to know what the struggles were at the beginning and how they worked around them in the end.
7: Remain determined and keep perspective: Whatever you do remain determined that you will succeed. It may not be today and that’s fine – but by remaining determined there is nothing that won’t ultimately come through hard work. Keeping perspective means challenging yourself and, therefore, try not to be single minded and take criticism. I hated when people thought my ideas were not great all those years ago – today, I wish I had have listened! I keep perspective on what is happening around me and don’t any longer get locked into my sole way of thinking – in other words I am less stubborn today than I was twenty year ago! (ironic given I have just read a book that tells me as I get older I will become more stubborn and grumpy!).
Those seven lessons enabled me to go from that first start-up with an immense amount of new learnings and, within that next five years, I would go onto run multi-million dollar businesses and a multi-billion dollar corporation.
Finally, unless you tell yourself you are always in learning mode and that failure is ok when lessons come from it then you may as well put a paper bag over your head like shia lebouf and try and tell everyone you are not famous anymore – dude who are you kidding? In other words – don’t put a paper bag over your head to hide from your problems!
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