Many seasoned and brilliant professionals have written about learning from failure in business. But I’m going to throw my thoughts into the mix as well. One of my favorites is Micah Baldwin who writes about failure on the road to success at his website www.learntoduck.com. His simple premise is the best way to learn to duck is to get punched in the face.
Personally, I remember my failures far more than my successes. Just like I can remember the instant I broke my nose playing field hockey in high school and not the numerous games I played without incident. I know I’m not the only one. Failure makes us think harder, learn from experience, and fight to prove we’re not worthless.
I worked for a small hair accessories company called Sassy Tails from 2006 to 2008. The philosophy of the company was simple: prove to young girls that they are beautiful just the way they are and powerful. Over the course of my two years we expanded our customer base and revenue, brought down costs, and secured licenses with Warner Bros. and Disney. But we ran out of money and couldn’t secure additional funding. I should mention that I learned more and had more fun in 2 years than I may ever have again. I wouldn’t trade that experience for anything.
I’ve thought for a year and a half about what went wrong and what we could have done differently. So, I’ve decided to write them as a series of failures.
Idea Fail: Great Ideas Don’t Fail – I am an idealist, I will be the first to admit it. So the single biggest lesson I learned is that great ideas, with great soul, fail. I thought if our motives were pure that we couldn’t possibly fail. Lesson: Even the best ideas fail.
Projection Fail: Overly Optimistic Sales Projections – I can make a spreadsheet with the best of them. I broke out all of our projections by quarter and product. They were excellent. But our numbers were not based in reality. They were overly optimistic (overly may not be a strong enough word). The danger in unrealistic projections is that you inflate expectations of your investors. Then when you fail to achieve your high numbers, the investors wonder if you’re on the right track. Simple math: whatever you think your projections should be, divide it by 5. Then we’ll talk. Lesson: Unrealistic projections will get you in a lot of trouble.
Investor Fail: Thinking Your Investors Know Everything – While investors are a valuable resource for both capital and knowledge, they are far from infallible. Also, you are not their only priority. Your investors will never be there everyday and have to make decisions based on incomplete data. Lesson: Investors have their own motives, and they don’t always jive with yours.
Timing Fail: No Room for Mistakes – Tom Peters writes a lot about the best companies failing faster and therefore learning faster. With Sassy Tails, we had 120 days to create, get approval, produce, market, and sell product for the Harry Potter license. We were bringing in entirely new product from overseas in a quarter of the time this normally takes. The problem: we had no room for mistakes. When I say room, I mean time and money. Mistakes are a normal part of the production process, but when you’re pushing everything to the limit, there is no space. All of a sudden, minor issues become major ones. Lesson: Make time and leave cash for mistakes.
Trust Fail: Not Trusting Your Instincts – During the same 120 days I knew in my soul that we should get one of our products made in the US and not in China. Not because I think China is bad, just that overseas production does not work well on that tight of a deadline. However, I let myself be swayed, we made them overseas. We were charged too much and the quality was bad. A couple months later I found an excellent US supplier that ended up being a key resource. If I’d trusted my instinct, I would have found them sooner and possibly saved some heartache, headache, and cash. Lesson: Trust your instincts, and stick to it.
Marketing Fail: Not Marketing Properly – I have seen many articles written about the value of marketing professionals. I agree with anyone who says they are worth every penny. A great marketing person/group can give you key insight and keep you on the right track. We made a mistake by allocating more of our cash to production than to spreading the word about our products. We are not in the middle of Iowa in a baseball field saying “If you build it, they will come.” This is no Field of Dreams. If you don’t market your product well, no one will know about it. If no one knows, no one buys. The math really is that simple. Lesson: Build your brand, and market your products. And do not let the nearest 13 year old build your website, hire a professional.
Cash Fail: Cash Flow Problems – Lately, I have been thinking a lot about the importance of cash flow to small businesses. While this seems obvious, many entrepreneurs use debt financing or delayed capital to finance their businesses. And many more just use credit cards. We didn’t pay enough attention to how the cash was flowing, we counted it often as it should be and not as it was. One part of cash flow is getting a dead on picture. WorkingPoint is a great internet based software developed by one of the creators of QuickBooks. The first user is always free, so it is great for new businesses. The other key is searching for good rates with suppliers, and terms. If you can have the product paid for before you have to pay a supplier, you will be in much better shape. Lesson: Know where your cash is going.
Since I left Sassy Tails, I have worked with several other small businesses putting my hard learned lessons into practice. The harder you fall the less likely you are to make the same mistake again. I’m sure I could make a much longer list. However, I will stop here. I’d love to hear your comments.