Every entrepreneur and leader will lose money at some point. It’s the nature of taking risks. In 2014, I missed our profit budget by over $250,000 and probably lost more in opportunity cost. The loss meant no bonuses for the team who still worked hard and gave the company their best. It meant slowing down growth plans and it required several positions to be changed. It wasn’t a great year.
Here’s the kicker. There was no need for it and it could have been avoided…in hindsight. I also see many of our clients make similar mistakes although I’m now able to recognize the symptoms and can help them avoid these scenarios.
Here are my 3 key lessons that I hope will help you avoid a similar disaster.
1. Haste Makes Waste.
Our growth rate was over 35% from 2013 and we were running fast. It required us to hire quickly and we bypassed some due diligence in the hiring process. We posted for some key positions and although we didn’t have the right mix of experience/skills of the candidates, we hired based on character and chemistry. This can work when you have the luxury of training the right competence. We didn’t have that. I’ve also recognized that key positions absolutely need certain skills and experience as a foundation. The lack of competence and experience for this role pulled the growth reins back for other divisions in the company. It caused decisions to be made slower and we weren’t able to execute well which caused delays and cash flow issues.
2. Playing Too Much Defense.
We saw we were getting farther behind mid-way through the 2nd quarter (about May) so we decided to pull back on G&A expenses such as marketing. Why would a marketing agency pull back on marketing?? We were idiots. It goes against the advice we always give our clients. We thought we couldn’t continue to market ourselves if we didn’t have the confidence we could deliver to clients. That was just in our heads as the market was there and we could have delivered – we were on defence and trying not to lose. I pulled back from business development and started helping more in strategy and execution. That decision eroded our Q3 and Q4 demand and we couldn’t recover. We tripped over dollars to save pennies.
3. Leadership in the Trenches.
During 2014, I was starting to pursue a passion of mine in speaking and writing. This blog started in 2014. I was also creating longer-term plans and literally started to lead as if we were 5 years into the future which took my focus away from what the business required. My team needed a leader who would get into the trenches and help them now. We even had a great team member go on stress leave as the mounting pressure and lack of support caught up with him. I didn’t get fully back into the day-to-day work until the Fall when it was too late. I failed our team. That’s why I turned down every speaking request in 2015. I needed to recognize the situation and lead in the way that helped our organization in the short-term and get us back on track.
I hate losing. Even as I write this and reflect on that year, it still stings. The good news is that 2015 was the strongest year we’ve ever had and we’re currently on pace in 2016 to do the same. It required a lot of change and effort but it’s made me a better leader. Lead with your eyes open and be fully engaged in what your organization and team need from you.
Have a great week!