My company ChangeMakers has already been in business for ten years. During that time I have had opportunities to make a lot of mistakes, but I have also found some interesting solutions. I thought it would be worth writing about them – maybe they will make you reflect on your own business.
That’s right – make you reflect. But don’t take my lessons as gospel. I’m just human, prone to make mistakes like everyone else, which means that I might have drawn the wrong lessons. I may have interpreted something the wrong way. I could have arrived at the wrong conclusions. I may have not been aware of some key factors. I could have simply had more or less luck in some situations. Certain solutions might have worked well in the past, but today the situation may be different, and now the same behaviors could bring about problems instead of solutions. This is why I present these lessons more as ideas that you might want to think about, rather than as facts or “the truth”.
That said, I believe a text written while including all such disclaimers at the appropriate points would be boring and filled with a great number of compound and complex sentences. Reading it would be a nightmare. Thus, I let myself introduce a bit of dynamics and dramatic tension – remember, however, that this is just a stylistic trick, and the main goal is to give you something to think about, not ready-made solutions.
Now that we have cleared that up, here are some of the most important lessons I have learned from running my own company.
1. Costs will kill you
This lesson seems to be universal and very common in the world of business. What destroys most of the companies are problems with cash flow – in other words, costs that are too high. Sometimes the costs come from too-rapid expansion. More often than not, especially in a high-margin industry such as training and coaching, they are simply a result of reckless spending. Let’s say you spend money on things that you could do yourself, or you could buy something for a lot less money if you just did more research.
Most people don’t. They pay a few thousand dollars for a simple web page built on WordPress, even though they could make it themselves within a couple of hours after watching a few tutorials on YouTube. They pay $250 to $400 a day for a room, even though, with a bit of effort, they could find a similar room for $100 or even $50 a day. They buy expensive licenses for video editing software, although a much cheaper program or an open-license version would be enough for their needs.
Sometimes money is spent on a status, such as gadgets and accessories, which let you feel like “a real businessman,” or let you show off and shine.
Fortunately, I was able to avoid that. Yes, that required more work and commitment. But It’s not like I was building a business in my after-work hours . I didn’t work for a corporation and didn’t have kids. Otherwise, I would really have had an excuse to buy some things. Since the very beginning I was fully committed to building my company, so I had all the time in the world. I could learn to do some things myself. Especially at the beginning of my journey as a business owner, my time was worth much less than now.
I know a lot of people who started the same way, but they believed that their time was more valuable. The majority of them are no longer in business.
You could say that you do not need to save, that you just need to make enough money. Well, that way of thinking is extremely short-sighted – one or two bad months and the company goes bankrupt. A little bird once told me that this is what happened to a certain Polish guru. Apparently he is leaving Poland for good, precisely because he miscalculated costs and, despite large revenues, he went bankrupt.
Even if you’re not in such a situation, the greater the costs, the greater the stress and pressure. Your frustration is even greater if you work for a large part of a month, or even a year, in order to cover your costs, and you start making money only after a long time. You can really get burned out.
2. Money is yours only when it reaches your account
One of the most painful lessons I had to learn running my business was to start counting the money only when I actually got it. There is a huge difference between people interested in buying from you – even if they are already planning the purchase – and those who will actually buy. Especially in a coaching industry, where people often contact you when something bothers them greatly. Then, the pain naturally, but temporarily, wears off and they forget about the whole thing. You also have to consider people who simply don’t pay (in my case, fortunately, it happens very rarely).
Learning not to count your chickens before they hatch can be very, very frustrating. I can’t imagine how hard that would have been if I had not learned lesson number one in the first place and had incurred massive expenditures.
3. Diversification is the basis
I wouldn’t be here if it wasn’t for this simple rule. Not that I should take any credit for it. It happened quite by chance, after I sent a warm letter to a coach based in the U.K., whose website has helped me a lot. It was Andrew Austin. In response he asked me if I knew someone who would like to organize for him a training course in Poland. Well, of course I knew someone 😉 This is how I got the second pillar for my company – by organizing training sessions for coaches from Western Europe. Then came the third pillar – video recordings from trainings. Fourth – books. Fifth – translating workshops. Sixth – my own trainings. Seventh – e-learning products. There are better and worse days in business. If one thing wasn’t going well, another one was. With some “pillars” I made very little money; with others, they became the foundation of my business. I got rid of some, but I can now use what I learned from them. At no point have I had all seven pillars together, but ever since I was able to, I have kept at least three of them active at the same time. It has helped me to survive through leaner periods without the need to spend my rainy-day savings.
Of course, diversification does not necessarily mean different types of business. You can also diversify customers. I know many people who found themselves in trouble – which often ended in a closure – when, for example, a client from whom they received 80% of orders went bankrupt or changed a provider.
4. Network of contacts
Speaking of warm letters, it was helpful to keep in touch with a lot of different people, even if that was just casual. In this respect, I am very open to meetings, such as going out several times for a coffee or beer with people who simply contact me and ask if we can talk. (Of course, I first make sure they don’t want to sell me insurance or some MLM product ;))
About 98% of such meetings are useless – some are dull, some are interesting – but most of them simply bring in nothing. However, some of them lead to fruitful relationships or even friendships for years to come. Others provide a beginning to interesting projects; sometimes directly, sometimes through recommendations.
It’s really hard to overestimate the potential of such contacts.
5. Taking risks can cost you money, but so can taking no risks at all
For a long time I worked with an interpreter I know when organizing training courses for trainers from Western Europe. My English was good enough to take on such projects, but I believed that it wouldn’t seem professional. That meant I had to pay 1,200 PLN of unnecessary costs for each day of training. Anyway, there came the time when I had to try my hand. Once, when we had a very tight budget and we simply couldn’t afford an interpreter, I had to do it myself. It turned out I was pretty good. I wasn’t as good linguistically as the professional translator, but I understood the topic and context much better, which made up for my shortcomings. Since then, not only have I never hired an interpreter, but I have also interpreted for others. And so, for a couple of years, before I decided to take that risk, I had to spend more and earn less.
What would have happen if I hadn’t been able to manage? Well, training attendees wouldn’t have understood the training sufficiently. This wouldv’e been bad, but it would have been a one-off chance, easy to fix in the future. Therefore, it is definitely worth analyzing consequences of both taking a risk or not taking it, and we often tend to forget about the latter one.
6. If you made a decision, it probably makes some sense
I have a grey list of customers. More specifically, I have two lists – black and gray. Those on the black list can be counted on the fingers of one hand – they are people who didn’t pay or whom other participants complained about. But my grey list is much longer. The list is titled “don’t bother”, that is, don’t waste your time. There is no point in sending offers to these people or arranging meetings with them, because they may show great interest at first, but some problems always seem to arise at the last moment. They disappear, don’t reply to emails, etc.
I care about people. Paradoxically, many conflicts arise because I care too much and try to help out people, even though I should have given up already.
For this reason, I often feel tempted to take someone off the gray list. I have done that. But they always seem to get back on the list, showing exactly the same behavior.
Certain information and memories influence your decisions. If you are later tempted to change them, you may not even remember the original information. When analyzing your decisions, make sure you remember everything that influenced them in the first place. This will help you stick to your decisions – unless circumstances have changed, in which case you should probably change your mind.
7. Planes never crash as a result of a single mistake
Problems with aircrafts happen regularly. At the same time, tragic accidents are very rare. This is because there is a huge number of independent safety procedures involved. One mistake, failure or negligence is not enough for a plane to crash. A whole series of mistakes must take place at the same time. Disasters are unlikely, but they do happen.
Why am I mentioning this? When you run a company, failures and problems will pop up on a regular basis. And if you’re resourceful and knowledgeable enough, you will deal with them as they occur. The question is whether you will draw an immediate lesson from that and make changes in your system to avoid the same problems in the future. Because if you don’t do this, there will come a time when you face a whole series of failures at once. Pure statistics. No matter how resourceful you are, you won’t be able to deal with them all at once.
In the second or third year of running my business, when I started organizing trainings with coaches from Western Europe, I forgot to send details of a training to one participant. He simply signed up so early that I overlooked him when checking registration emails. He too forgot about the training. Eventually, I remembered him on the first day of the training, during the lunch break. Fortunately, I was able to fix the situation – the customer received a refund and free recordings from the training as a way of an apology. For many years since, he has been happy to use our services. Nevertheless, it was a clear sign for me to start using some kind of system to manage reservations, which in subsequent years developed into a full CRM. If I hadn’t reacted properly at that time, it would have led to a lot more problems over years.