10 Things We Learned When Our First Business Failed

As part of the research and launch of my first book - The Six Day Business, I went back through my Evernote (a treasure trove of my random thoughts) and dug up a list I made after our first business failed. It was a brain dump to make a list of all the things that we did wrong, so that we won’t make those mistakes again. In total the list is 35 points long. Here are the first 10 with what they meant to me in context.

1 - Question everything, constantly. Never let assumptions by other people guide your thought process.

It is very easy to rely on the opinions of experts to help you make decisions. This is lazy. As a business owner, outsourcing your decision making process is incredibly dangerous. I outsourced revenue projections to someone that has been in the industry for 25 years, and when they said ‘yes, I think this is possible’ I took that at face value. I didn’t question the how, just that it might be possible. He wasn’t on the ground, he didn’t know (and actually, I didn’t know either). But because they said it was possible, I put that in my P&L and that was that (see point 7 below).

Expert opinions are great, don’t get me wrong. But if you’re asking their advice, make sure to ask the right questions, and not just ego-based questions. If you don’t know what I mean by ego based questions you need to read the Mom Test by Rob Fitz.

2 - Go with your gut - if your gut says no, ask why that is and then think some more.

Your gut or intuition is an incredibly powerful force. It normally knows what it is doing. Learn to be aware of the difference between nerves, and your gut telling you something is wrong. If you do feel something is wrong, take a moment, a day, a week and make sure to figure it out. 

Some wisdom I was told after this whole process was that that “there is never as much pressure in the moment to do something as you think there is”. Looking back it will seem like you had more time to make a decision. You can take the afternoon to think it through - go to the park, have a pint, enjoy.

3 - There (probably) isn’t enough money in the world to make being an entrepreneur worth it if you don’t love the toil, subject matter and struggle.

Money (for most people) will not keep them going. Being an entrepreneur or business owner is an incredibly challenging, tough, s*** undertaking and you need to be working towards something that will keep you going day-after-day. The first business we started full-time (importing and distributing premium watches and sunglasses in to the Romanian market) was not something that I cared about. It seemed like a good way to make some money (in our heads) and it did not work. 

4 - Take in to account other people’s advice, but be aware of what their priorities are.

Again, like question one, you need to take everything with a grain of salt. We had a business partner who was my main source of feedback for my business plan. I was looking at my plan from the angle of “will this support us and is it worth sinking lots of money in”. They were looking at it from the position of, "will this make our company good money, regardless of how it happens". Looking back I can tell that there was a misalignment between our priorities. It wasn’t malicious in any way, but again, I was asking the wrong questions. Instead of “will this work” it should have been “what steps do we take between now and then to make sure we have the best chance of hitting these numbers”.

5 - Don’t believe in your own bullshit - if something doesn’t feel right then it probably isn’t.

“The first principle is that you must not fool yourself—and you are the easiest person to fool.”? - Richard Feynman

We kept ourselves busy, that’s for sure. Between writing the business plan, talking to suppliers, projecting numbers, we were busy. But what we weren’t doing was talking to as many of the people as possible that could sell our stuff. We spent the majority of our time planning (which is definitely the most fun part). We convinced ourselves that we were making progress when we weren’t really, we were just keeping ourselves busy. 

One of the mental tricks we played on ourselves was believing that in January (it was August) we are going to have ￡X revenue. However come December we still weren’t anywhere near that number. In our heads we thought we had loads of time to get there but in reality we had no plan to get there. We weren’t going to incrementally build our way up to it, we were just going to hit it. That’s why today, when I speak to other entrepreneurs I ask them why they are going to make sales in 6 months, why not tomorrow? What’s stopping you talking to a client tomorrow, regardless of whether your product is perfect or not.

6 - Numbers in a spreadsheet are just that, until they aren’t.

What I mean it that you can spend all the time in the world working up a beautiful P&L (I’ll share more about this in another post) but if it’s not based on anything concrete than it’s useless. USELESS. But when you start selling, and have customers, then you have numbers to work from. Even if you just sell one loaf of bread (if you’re selling bread) at least you know that’s possible, and you can start from there. If you’ve sold zero units of something, it is more difficult. Get out and sell some units, then make your P&L. 

This brings me on well to my next point.

7 - Don’t write a business plan - make your first sale. If you can’t make that sale, go talk to as many retailers as possible, people who know the industry, and potential clients (who will buy the end product).

While writing this article I looked back at the P&L and Business Plan I wrote. They were (are) things of beauty. I spent so much time on them I can’t even contemplate. All time I should have been spending hitting the pavements and taking the products we had already bought (again, not a great idea) to stores across the country and beyond. Literally knocking on the front door of these stores and trying to get a sale. Instead I chose the more comfortable option of sitting behind my desk (with a great view, see below) and making up numbers and beautiful slides (see, what was wrong with my business plan).

8 - What makes what you’re selling, different?

We were relying completely on the aesthetics of the product - and the marketing from the parent brands. We thought this was enough. But the truth is, there are lots of good looking products out there, and unless you’re a tastemaker (I’m not), you have the budget for a big marketing spend (we did not) or you’re going to beat them on sheer force of will (which we didn’t) it’s going to be tough.

At the start you really need to think about what makes you unique, your company unique, and your products unique, you need to look at why (a good book is ’Start With Why’ https://amzn.to/2N8CPkw by Simon Sinek).

9 - Sometimes you need to cut your losses.

Or, don’t throw good money after bad. There’s a fine balance between perseverance and knowing when it is time to throw in the towel. It’s not a science. But sometimes, it’s ok, or great! to change direction, or shut down the business. Sometimes it doesn’t make sense to keep throwing money at the problem. This goes back to point 2 where you need to trust your gut at some point. It also helps if you can disconnect yourself from the situation, understand that it’s not the end of the world, and try to make a rational decision (very tough when you’re in the thick of it).

There is no exact science to this but keep your eyes open, be realistic and make sure you know where you’re trying to go.

10 - Just because it took a long time to make a mistake doesn’t mean you should keep doing it.

This fits well with point 9. All of the effort and time you’ve put in to something up to this point is a sunk cost, it’s gone. Sometimes that’s great, because you’ve built up momentum, but sometimes it means you can start with a fresh slate. What if you realigned 100% of your energy today to something new. Not giving up. but sometimes it is time to start fresh.

All of these hints and tips have been included in the Six Day Business - the guide to start a business if you’ve never worked in business before. Check it out here.