By Bill Scott, president, StoreReport LLC
Most of us started out with the drive to do something outstanding with our lives; but, somewhere along the way, we felt compelled to compromise on the important things that resulted in a hum-drum existence of simply making a living, further exacerbated by the feeling that we had failed. These compromises can stem from the wants and needs of family and friends, associates and business partners, and even individuals we reach out to for advice. There is a thin line between being stubborn and holding to our beliefs, and being stupid, and plowing ahead, regardless of the ‘facts’ that have been set upon us.
Every great leader, inventor or entrepreneur knows what I am talking about. We are aware of all the clichés written to bolster our resolve. We have heard them a thousand times. However, the greatest lessons learned frequently come from failure. That is why I say:
Failure is a necessary ingredient of success, and it is not so much how enthusiastic we are at the beginning, but rather, how well we are able to deal with failures that ultimately determine the frequencies of successes in our lives.
I’ve failed so many times during my lifetime that I should be a billionaire by now. At the very least I should have been given a blue ribbon. Each failure is not a step backward. I have come to know them as rungs on ‘the ladder of success.’
Here’s a true story that proves my point:
I learned this lesson early in my life when I was an advertising salesman for a large publishing company. The collection of failures I encountered during the day of attempting to make sales would depress me to the point that I would just give up and go home, hoping for a better tomorrow. A big sale would add a little bit of enthusiasm, but if immediately followed by another failure, I would revert back into the same depressed person I was before. Oftentimes a good sale would encourage me to take the rest of the day off, so I could savor the accomplishment until I went to bed.
The change occurred as I began to welcome the failures as stepping stones toward an imminent success in the near future. Simple, right?
I understood that I had to make eight presentations to acquire one sale. The seven failures I encountered became stepping stones to making that sale. So, rather than getting down in the dumps, I looked forward to the failures, because it meant one more obstacle had been removed from my path of making a sale. And you know what happened? My enthusiasm was contagious, and instead of a 1:8 closing ratio, it rose to 1:7, then 1:6, and soon I was closing one out of every four sales calls I made. Why? Because every sales call become a victory… even the failures.
Once I was able to put failures and successes into their proper place, the more sales I was able to make. It drove me to do better overall, and I quickly rose to being the best salesmen in our division.
For many of us, when we encounter a disaster in business, our immediate knee-jerk reaction is fear, then to wallow in self-pity, and finally to resort to anger. A short time later, one of two things will happen. Either we will give up and walk away, or resolve to figure out a way to get around it. Friends and family are not always an ally in this process. They may use it to validate their fears that we shouldn’t have done what we did to start with, which make it harder for us to bounce back. If we deny their assessment, we may respond with our anger and further degrade our relationships.
Why do most start-ups fail?
This is especially important for you guys that are just getting started in business. Your enthusiasm is going to be challenged. It will test you, alter your vision, and whittle away at your passion. They say most start-ups fail due to undercapitalization, with their passion causing them to make commitments and get started anyway.
But the real reason for the rate of start-up failures is being blind to the reality of the amount of working capital it will take to get your business started. We all have to eat and feed our families. We have to pay our taxes on time. Spending your payroll taxes can land you in jail. You have to pay your vendors and your employees, and maintain your stores. The money has to come from somewhere.
Too many times our enthusiasm is thwarted by making unnecessary mistakes that could have been avoided by careful planning on our part. This is where a business plan comes into play. A good business plan can not only provide us with a road map, it will help us deal with contingencies that will occur in every business at some time or another.
My Experience as a Newspaper Mogul
In the 70s, I started a free newspaper in the small town where I lived. I borrowed the necessary funds from a family member, purchased the necessary equipment, sold advertising, created my first edition, got the results from the printer, and attempted to deliver 5,000 copies out of the back of a pick-up truck in one day.
You are probably laughing now, and I wouldn’t blame you.
Normally I don’t reveal my failures to strangers, but since you and I are friends, I am going to tell you all about it.
I had no idea how I was going to throw 5,000 rolled up copies of my new creation out of the back of a pickup truck, but I realized my mistake in the first hour. I eventually ended up hiring a family with five children to finish the job, but the on-going costs eventually forced me to close the business and go back to selling advertising for somebody else.
Looking back, if I had thought to buy some of those little wire stands and displayed my free newspaper in convenience stores throughout the area, I would probably have made my first million dollars a long time ago. But, I had made promises to my advertisers that I felt compelled to keep, and learned a hard lesson about the newspaper business, got discouraged and quit.
That Wasn’t the Only Time
In 1978, I started building computers in my basement, began writing computer programs, and sold the computers along with the computer programs to local businesses. My assumption was that it would be impossible to sell computers without software, which was probably true at the time; but a college kid by the name of Michael Dell did just that and continues to operate one of the largest computer manufacturing businesses in the world.
Through all of my failures and disappointments, I finally got it right, when in 1981 I specialized in the oil marketing/convenience store industry. The point is, that several failures ultimately led to my success. You’ll find this true in almost every success story, and if you think you can beat the odds, good for you. But you can certainly limit your failures by gathering some knowledge along with a splash of smart work beforehand.
Passion, persistence and hard work pay off. But, it is likely you will have an inordinate number of failures if you charge ahead without a well thought out plan. And that’s where a ‘business plan’ comes into play.
A business plan is a template you can download free on the Internet. There are companies that sell these templates, but you can get them free if you know how to use Google.
You may have heard the adage ‘the trip is more valuable than the destination.’ In your quest to create a finished business plan, it will force you to do what investors refer to as “Due Diligence.”
Starting any kind of business without one is one of the biggest mistakes you can make. In the course of creating your plan, you will often find your destination (where you intended to go when you embarked on your journey), may have change dramatically. In my case (see above), if I had gathered up 5,000 free rocks from a gravel company, and attempted to throw them out of the back of a slow moving pickup truck, I would have realized almost immediately it was humanly impossible for one person to accomplish in one day, thus saving the money I received from a relative, and the humiliation I got from the failure, not to mention a sore arm that took several days to heal.
But even with the existence of a well thought out business plan, we will still be tested. Why? Because the only thing constant about change is change itself. Technology makes it so. Once every three years on average, a business will encounter at least one almost insurmountable challenge. We can lessen these challenges by considering our business plan a living document that must be constantly updated. But no matter how hard we try, challenges with occur, and if our passion includes a desire to cope with these challenges, then and only then will we be truly successful.
While your passion may be one of the most important ingredients of obtaining success, passion alone will not suffice in making you successful, unless you are prepared to fight and overcome these challenges that will occur throughout your business life.
Remember, winning the battle and losing the war is a common outcome for those who are not prepared for the long term.