I’m not your standard business or money blogger. I don’t have any spectacular stories of successes. I don’t have any profound lessons I’ve learned from massive failures. I haven’t started a billion dollar company and I haven’t lost it all, gone bankrupt and ended up living in a gutter.
I’m just a pretty average, normal person, trying to navigate my way through life by starting small businesses and without having to work for anyone else.
But I’ve still made my fair share of business mistakes. And perhaps my averageness will make these mistakes more relatable (or maybe not.. let me know). But as I’m quite into that annoying American habit of positive thinking, I’m going to pluck out the positive lessons.
1. I Rushed Recruitment
I once went to Malta and hired a maths PHD on a 12 month, full time contract. He was intelligent, driven and personable. There are many jobs he would have been brilliant for but I went and gave him the most unsuitable job ever.
I gave the Maltese speaking mathematician the role of writing online articles reviewing websites.
How ridiculous! A job writing in English, his second language. A job that didn’t require any maths at all. Over the year we got hardly any value from him. Not because he had no value to give, but because I hamstrung him.
The funny thing, from everyone’s point of view except mine, is that I have done this a few times. Never as bad as that, but I have hired plenty of people because they had the most impressive sounding CVs or I liked their personality despite them being unsuited to the job.
Where I am most guilty of this is when hiring outsourcers to work on a project. I spend hours and hours on the specifications, but then hire the first team to give a reasonable quote. Sometimes after only speaking to them a couple of times via email.
Marcus Lemonis, the presenter of my favourite TV show (The Profit), billionaire and CEO of camping world, says he spends over 30% of his time recruiting.
I spend about 0.01%. Probably less. I don’t enjoy recruiting, but it is really important.
2. I Built Someone Else’s Brand
We once found a product that we liked. Brought it to the UK, marketed and started selling it. We spent a year building the brand and it became really successful.
But guess what happened? Someone else jumped on all our hard work and started selling it too. Overnight our profits were slashed and over the next few months more and more people started competing with us.
It wasn’t quite the end of the world; we negotiated an exclusivity agreement to become the sole suppliers of that product. But it was a terrible place to have to be, we were negotiating from a position of weakness. The brand had already been built and we no longer had as much to offer.
If you’re going to build a brand, make sure it’s your own. We should have just paid a little bit extra at the beginning and rebranded the product, making it our own. It would have saved a lot of money in lost sales and the late negotiation.
3. I Tried to Do Everything
Every now and then I tell someone about all the businesses and projects I have done over the years. After the 10 minutes it takes, the first question I get is, “How do you manage to do so much?”
Well to be honest, I don’t. I manage to just about scrape by.
Some people have a problem where they never act; they get great ideas but they always have a good reason why they don’t ever do them.
I have the opposite problem; I try to act on everything. There have been times when I’ve been juggling eight or nine projects at the same time, all of which could easily be a full time job. None of them get the attention they really deserve.
After selling ETAdvisor we produced a graph of the revenue from our software leasing business.
The light red line is daily turnover. The dark red is the rolling 30 day average turnover. We went from fast growth, to an instant decline, to fast growth again. How big would that business have gotten if we’d never done ETAdvisor? How good would ETAdvisor have been if I wasn’t trying to run another couple of businesses at the same time?
I used to have this idea that, if I did everything, then something would eventually take off. But that’s not how it works. Stuff doesn’t just ‘take off’. You need to put the work in and do it well.
I read a list of new years’ resolutions a couple of months back by Oliver Burkeman on The Guardian and one really stuck with me:
Wise words. I am now trying my best to commit to a few projects, and do them well.
4. I Thought Professional Services Were Necessary
I used to be under this misconception, one that a lot of people also seem to believe: the idea that there is some kind of legal requirement to have a lawyer and an accountant. It’s a lie!!!! Their impressive qualifications don’t give them any special powers.
I’m not saying that accountants and lawyers don’t have their uses. I’m saying that when you’re in bootstrapping mode and trying to build a business penny by penny, you can’t afford the luxury of employing them.
What about lawyers? Surely you need them to create your contracts.
Contracts are important. But guess what? There’s nothing magical about them. Every time you agree to something verbally or shake hands with someone, you are entering into a contract, a contract that has the same legal standing as a 200 page document drafted by a lawyer.
Lawyers can cost anywhere from £200 to £1,000 an hour. Really what startup can afford to pay that?! Remember that money is coming straight out of your pocket.
Want an employee contract? Download a template from online. Want to research the legal requirements around your business? Google it, or post the question on a legal forum. If it’s not something that you can find out easily, then it’s probably not going to be something that your lawyer will know off the top of his head – which means paying them for hours of research.
I remember hiring a legal firm, they marketed themselves as experts in the field, were a top 40 law firm in the UK. They had swanky meeting rooms with free cookies and sparkling water.
We asked them to find some information for us and put together a contract. A few days later, they rung up my housemate (who they didn’t realise we knew) and asked him the answer to our question! A 24 year old, non-lawyer. A couple of weeks later they told us they didn’t know the answer, couldn’t draft the contract, and gave us a £6,000 bill for their time.
And what about an accountant?
There is no legal requirement to have an audit till your company reaches £6.5 million in turnover. For any business smaller than that you just need to submit various documents to the government each year – documents that anyone can fill out.
My accountancy bills in 2014 were about £10,000. This covered about five companies, their tax submissions, VAT applications, payroll, tax planning advice and a half an hour phone call every six months or so. That’s a lot of money and on 3 out of the 5 there’s no reason why I couldn’t have done most of it myself. For my next two companies that will be created in 2015, I will be doing all the taxes myself through a service like Clearbooks or Xero.
But won’t that take much longer? I reckon it will actually take me less time. It’s not like you can just dump a bag of invoices on your accountants desk, you still need to do bookkeeping and send them all the correct figures neatly delimited. You still have to explain to them what all your numbers mean.
Plus, even if it does take longer, how much time do I need to spend for it not to be worth the savings? Remember: saving is better than earning.
I Tried to Get Contracts ‘Perfect’
Ok, so for basic things, you don’t need a lawyer. But what about the big things? Things like selling a company, terms and conditions for your customers, or lease agreements. What happens if you get sued>! There are times when you do need professional help.
I thought it would be easy. Our lawyer drafts a document the other side agrees to it, we all sign and voilà. The end.
But that’s not what happens. Both lawyer’s want the best for their clients. And in the case of contracts they want a watertight, perfect document. Unfortunately both lawyers will disagree on what that is.
Let’s reuse a diagram I have used before, called the never-ending contract drafting circle:
Each round takes a week or two, costs hours in legal fees, and worsens your relations with the other party.
What happens when it is all over? The contract goes in a filing cabinet and noone ever looks at it again.
With ETAdvisor, we spent four months trying to get a joint venture contract drawn up. In that time relations had soured to a point where we ditched the whole contract and just sold the company.
I’m not hating on laywers. We have a very good lawyer who does a very good job. The fault is mine, I should have either put my foot down and force our changes on the other side or just accepted their changes. I didn’t do either – just spent months ‘negotiating’.
Lesson learned. With The Wren we just signed the first thing we could even though there were gaping legal loopholes. We knew what the spirit of the contract said. We knew that if one side broke a term we weren’t going to take each other to court. We knew that even if there were big problems we could renegotiate at a later date.
Here’s my tip: even if you think there are issues with the contract, work out how much value the changes would add, what the chances are of you ever taking them to court if they breach the terms, how much another cycle would cost and, if it doesn’t add up, just sign (or walk away).