Zach Clayton, the founder of First Flight Venture Center alumni company New Media Campaigns, was featured in the The Wall Street Journal on Monday, sharing his perspective on the biggest mistakes entrepreneurs make – and how to best learn from them.
By BARBARA HAISLIP
August 25, 2014
Screwing up is part of starting a business.
It can happen to anybody—even someone with a great idea and a solid grasp of how to launch a company. Sometimes they make simple blunders that are easy to recover from. Sometimes the goofs are serious enough to sink the venture, or take a lot of money, time and angst to undo.
Consider Michelle Galligan, chief executive of ViaVero, an accounting consultancy in Columbus, Ohio, who made a bunch of missteps in her first year. She started her company without a business plan. She brought on eight partners without having a single conversation about what roles they wanted to take on. She gave away 80% of the equity “for peanuts.” She spent $100,000 for office space that wasn’t near her clients.
When the company struggled, she rolled up her sleeves and remade the business—drawing up a plan, paring partners, buying back stock and moving closer to clients. In 2009, she says, the company hit $1 million in revenue—and it has been growing ever since.
However serious the mistakes, owners come away with hard-learned lessons. We asked some entrepreneurs about the missteps they’ve made and what they took away from them. Here are some of their best—and most painful—stories.
Don’t Forget Your Spouse: Matthew K. Stewart says he overlooked something crucial while building his construction company: his wife’s feelings.
As he traveled extensively for business, “my wife was at home for many of the trips, taking care of our two small children,” says the co-founder of National Services Group, in Irvine, Calif. “After work, I had nice meals, once-in-a-lifetime adventures and spent time with some of the most interesting people in the world. My wife was not part of that and began to resent hearing about it.”
Things got especially tense after the couple had financial problems and had to tighten their belts at home. One day, after Mr. Stewart sent a photo home of Singapore, his wife, Jill, told him, ” ‘While you are gallivanting around the world eating filet mignon at the Ritz-Carlton, I am stuck at home eating mac and cheese with your kids.’ I realized the discrepancy in our lifestyles right then and vowed to ensure my wife lives the same lifestyle as me.”
“If you have fun trips and fun meetings, make sure she does too,” he says. “We can send our significant others to dinner with their friends, we can support them going to sports events or activities. We can help create weekend jaunts and trips for them if we have the resources.”
Understand Your Clients: If Zach Clayton could do it all over again, he would get to know his clients better right from the start—by working for them.
When he launched Three Ships, a digital marketing company in Raleigh, N.C., he spent lots of time showing clients highly detailed, data-heavy analyses of how his firm delivered strong return on investment. Then he had an eye-opening experience, when a client company offered him a role as an interim chief marketing officer.
“I had no idea how hectic and overwhelming that job actually is. You’re in marathon management meetings. You’re arguing with the head of sales about the right lead goals. You’re hiring a new PR firm for the West Coast,” he says. “I realized clients were too busy solving other problems to go three levels deep on understanding all the technical work we do.”
He has since simplified how he deals with customers to save them as much time and attention as possible. And he urges other entrepreneurs, “If you are starting a b-to-b business, don’t start it until you have spent one to three months working in the office of your customer.”
It’s OK to Spend Money: Bob Bernstein, founder of Bongo Productions LLC, tried to go the cheap route when opening his first cafe in Nashville, Tenn., in 1993. “This bootstrapping was great and taught me lots of ways to save a buck. However, it also meant that I had to rebuy lots of equipment and fix things later,” he says. “For instance, I started with mostly residential-quality dishware. These soon broke. Similarly, I saved money by doing some basic carpentry myself, building shelves, minor walls, and tables. These soon started falling off walls, collapsing or chipping away and had to be redone.”
Don’t Sweat the Small Stuff: Before Clifford Holekamp founded his St. Louis-based chain of podiatric medical centers, Foot Healers, he had thought through how to run a better shop. “At the beginning, I held employees accountable for every detail, including minutiae like office-supply expenses, personal Internet usage and turning off lights,” he says.
“Because I was tracking such a laundry list of performance measurements, the employees really didn’t focus, or excel, on any of them,” he says. So, he decided to focus only on the big stuff, such as revenue metrics and customer satisfaction.
“While the employees did end up sliding on the minutiae, they improved on the much more impactful metrics,” he says. “The result was a higher-performing business with happier employees and less effort.”
Trust but Verify: When Natacha Beim, founder of Canada’s CEFA Early Learning schools, hired a general contractor to build her first school 17 years ago, she went with a company recommended by a large developer. But she wished she had dug deeper into the contractor’s record. The contractor took on too many projects and stopped coming in to work, leaving her in an unfinished space halfway through construction and delaying the opening by several months. She had no choice but to change construction crews midproject. This cost her several months in rent, the majority of her clients and an extra $150,000 in construction costs.
Sell, Sell, Sell: Saad Shah forgot something in the early days of starting Metric-X LLC, a custom-software developer in Rochester, Mich.: “Sales is the lifeblood of the business. Always sell.”
Several times, “when we were busy with multiple projects, we focused almost exclusively on making sure that the projects were successfully completed. This was wrong, because we neglected to proactively find projects for the future. Once the projects that kept us busy ended, we didn’t have other projects already lined up to work on. This is why it is critical to always be prospecting and selling our services.”
Ms. Haislip is a writer in Chatham, N.J. She can be reached at [email protected]