In 2003 it felt like my entire world was crashing down on me. I had just spent four years with a team of people, fanatically devoted to developing and launching a product that was so unique, if we succeeded it would completely alter the credit card industry. We failed. I was out of a job, with a family to support, a new home and mortgage, my oldest child just starting private high school ($11,000 a year at the time) and most of my savings lost to the failed start up. It never occurred to me we would fail. I was that confident. Now, I was the most terrified I had ever been in my life. I never felt so all alone. And I felt like a complete failure; a loser.
I eventually bounced back but I learned some profound lessons that stick with me to this day. I have been applying these lessons to my author business and they have been largely responsible for helping me become a best selling author. Here’s what I learned:
- Always maintain “control” over any business endeavor. Control means owning more than 50% of the business stock, ownership, voting rights etc. When you give up control of your business, other than as an exit strategy, you’ve lost your business.
- Be very selective over who you allow to be your business partners. Select partners who have extensive experience in the business you are starting and who have the skills needed to make it successful.
- Never Quit, even when those around you are quitting and telling you to quit. Persistently pursue your big goal.
- Have multiple sources of working capital (money or financing sources) you can tap, not just one.
- Have multiple sources of income. Either a side business, side job, a hobby that can generate cash flow or other investments that generate cash flow etc.
- Use other people’s money in starting a business as much as you can without giving up ownership control. Don’t invest 100% of your savings. Have a savings reserve that will cover your living expenses for six months, in the event the business fails.
- Every new business requires 2-3 times as much working capital as expected, takes 2-3 times as long as expected to become a viable business and generates 1/3 – 1/2 the expected cash flow. As a result your financial assumptions are always wrong. Income and expense projections, which are based on these assumptions, will be wrong. Expenses will be 2-3 times higher and revenue will be 1/3-1/2 lower.
- Make sure you have an exceptionally strong marriage. If your marriage is shaky the start-up may put you in divorce court.
- Do not delegate critical tasks. Never accept that something critical has been taken care of by your business partners. All critical tasks should be controlled by you.
- Keep your new business start-up lean. You don’t need nearly as many staff (employees) as you think you need.
- Test pilot new products or new services for six months before launching the new product or new service.
- Lastly, you will make numerous mistakes. Document every mistake and the lesson learned from it.