I think it’s important for people to know that the road of business ownership is not all sunshine and flowers. When others are not aware of this, they feel isolated and alone and these feeling can lead to serious issues. I remember reading about several home builders in Georgia who committed suicide when their businesses “failed”. With that in mind, I thought I’d share my own “failure” story.
I bought a commercial construction newspaper several years ago. My advisors told me to buy something larger but I ignored them. One especially hated the newspaper business but, she being more of an intuitive person and me being more of a logical person, she could not communicate to me the reasons in a way I could understand. So I ignored her. In addition, I, the deal structuring queen, structured a deal that put me at a disadvantage from the beginning with one clause in the purchase agreement which my M&A attorney had warned me about.
I had problems from the beginning. I am a great strategy, operations, and finance person, not a strong sales and marketing person. Newspaper sales is a very short-term, sales driven business. Thus, it was a skill mismatch from the outset. I had had the foresight to lock up the seller for 6 months in his role as lead (ok, only) sales rep but once the seller, who was also the main salesperson, left I was in trouble. What I should have done during the six months was shadow him and document his processes. Why? I know that sales, like any process, requires the right people and the right infrastructure if you wish to grow a team so I needed to understand how he did what he did. However, he also was intuitive and could not explain a darn thing about how to make a good sale…nor could he explain it to others I hired to try to extract the information from him. I am really good at pulling the “how” out of people just through the questions I ask by observing them. But I didn’t do it here.
I hired, fired, hired, fired…so many sales people. Slowly, I learned what questions to ask when interviewing and what characteristics to look for when recruiting sales people. I knew hiring the wrong people was my fault. I hired an amazing editor and creative director from the outset…and they remained amazing throughout the life of my company’s ownership of the paper. Home runs, both of them. But you see. They were tied to operations which is an area I knew how to hire for. Anyway, over time I realized sales people also needed support. Marketing materials. Leads. Market niches. Messaging. Accountability. Tracking. (How could I neglect to use CRM after my 2-year stint at Siebel!) Best practices. As I realized this I put these things in place. One thing I also realized. People who are great at longer term, more consultative sales suck at short term sales. Being a good salesperson does not translate across the board. (Yes, I knew this for other functions but I just did not know this for sales. What can I say?)
Then the strategic plan for the business shifted due to market conditions. Then I began to get bored because the business remained too small for my personality and skill set. I entered into a purchase agreement with one seller and an LOI with another but they both ultimately backed out when they lost significant money when the stock market plummeted in response to housing ills. By then I had recouped some of my investment from cash flow. I should have shut the company down and moved on. Acknowledged “failure” and moved on to the next business. But I didn’t. I continued for another 1.5 years.
The company by then was cash flow positive. But I was stuck in a rut. I just could not acknowledge defeat and cut and run.
One thing I admire about the tech community is that they embrace failure. Fail quickly, learn, and move on. I didn’t do that. I turned around the failure but lost the desire. I had no interest in executing a new business plan for the company.
Let’s fast forward. I did finally move on. I let the editor take over running the company for a few months but then shut it down. What’s funny is that, despite the drastic drop off in commercial construction, we were still cash flow positive (until the last issue the Editor published). The relationships I had built with governmental entities and trade associations had begun to pay off with more advertising from them as they sought to increase their visibility. But again, I did finally move on. I learned and moved on.
With lost opportunities, lost investment, etc., I think of this experience as an expensive learning experience about on par with my Wharton MBA. So, in many ways it’s not a lost investment. I now aim higher. And I ALWAYS bring in outside money (generally as much in debt as possible. I am loathe to give up too much equity.) When you buy companies as I do, you can get enamored. You need others to speak up…and sometimes to slap you back to reality. Outside investors / lenders will do this in a heartbeat. As the typical stubborn entrepreneur, I sometimes discount the input from my close team of advisors. Or they see I am adamant and they relent. But I am also not as stubborn as I used to be. I am a better listener. A much better listener. And a lot less tense, Type A. I’m not sure if you’d call me laid back, but many now call me “calm”. Hah! That definitely didn’t describe me a few years ago. Although it took me a while to get her, I do strongly believe I am significantly better off from this experience.