Three Things I Learnt From Failing At Business
- Hire slow; fire fast.
- KPIs are king.
- Cash is (also) king.
Hire Slow; Fire Fast
There’s a lot of talk out there about this policy. You can get a gist of the argument here. A simple Google search on that phrase will bring up 100s of other discussion points.
But the key with this statement is this is something I know realise is what is best for me, and is categorically something I failed to do throughout the time I owned a business.
“Hire character. Train skill.” — Peter Schutz
I’m beating myself up to say I got it wrong 100% of the time but Schutz’s quote is pretty much where I went wrong with some of the people I hired and the partner’s I worked with.
When I got it right, it was fantastic. I had long-term staff who worked hard, were dedicated to the company and grew in the roles that they were given. Many times I could hand them over to a client and ‘set-and-forget’.
But the downside of getting a rushed hiring decision wrong is much worse than the upside of getting a rushed hiring decision right. You end up finding yourself with people with some of the following traits.
- People who aren’t commercially aware of their time — this is a major issue in an agency. When people want to be paid top dollar but yet don’t understand that part of their role is either generating that dollar from new clients, or maximising their billable time, there’s a severe disconnect. Realising that we’re billing $3,000 a month and someone is doing 100 hours to achieve that is one of the most painful moments you’ll ever experience. Especially when your standard rate is over $150 an hour. That’s $12,000 in lost revenue right there.
- People who believe your agency should do one thing when it actually does something else. I share the blame on this one as clearly I didn’t make the mission clear enough internally, but when you have team members who are only pulling in one specific direction — even if that is still a direction you’re going in — things can become strained.
- Personality clashes. Having team members work well together is vital; they don’t have to like each other or spend evenings drinking with each other — they just have to have respect for each other.
- When it’s a means to an end. Those staff are terrible to have. They have no real desire to help you succeed are already plotting their next move even before they’ve settled in. They have a CV full of 9-month roles. If you see one of those, avoid them like the plague.
Due to the size of my agency, many of my hires were knee-jerk reactions to having someone give me two weeks notice and not have anyone else immediately available to take on the work — I should have taken the work on myself whilst looking for the right person. More often or not, I regretted those knee-jerks.
And sometimes, even when I did go through a longer process, I found myself in a position I didn’t anticipate. This was due to me not focusing on point number 2.
KPIs Are King
Hiring someone without explaining what they’re supposed to do, what you expect of them and what targets they’re supposed to achieve whilst they work for you is lunacy. And I probably spent six years doing exactly that.
Looking back it’s obvious; but hindsight is the only exact science. But anyone who works for you — and even yourself — should have clear goals as to what they’re supposed to achieve on a day to day basis. Processes, targets, goals. Even if they have to write them themselves, they should know what they’re supposed to achieve — and they’re then judged accordingly.
Too many people who worked for me and with me had no clear boundaries. The creatives were better with this as their roles were much more defined — a graphic designer designs graphics. And they had a set amount of hours with which to draw a logo. But as soon as any ambiguity appeared with the account staff, everything went to shit.
I’ll never forget one account executive telling me how busy she was and that we needed to hire more staff. She told me she had 20 clients that were keeping her ridiculously busy. Turned out 12 of those were prospects, 4 were creative clients and 4 were actually real clients that needed her time. Somehow she believed that managing four clients was using up 160 hours a month.
A rigid set of KPIs and some clear processes would have solved her problems very quickly. And remember that number — 160 — do your staff really have enough to keep them busy for 160 hours?
And KPIs for yourself are just as important. Recently I sketched down my personal goals — something I’ve done many times before. But this time I really thought about what makes me HAPPY. Not indeterminate business goals that take me one step forward but a Key PERSONAL Indicator.
Which then brings me to my final learning.
Cash is (also) King
I never understood this at the outset of starting a business. I know it now.
“Revenue is vanity; profit is sanity; cash is reality.”
You absolutely have to focus on making sure your business is making cash. And cash that is in your bank account. Not cash owed to you. No jobs for free (unless you can afford to do it by having the cash flow available). No long payment terms. No letting invoices go unpaid for months on end.
Make sure there is a buffer of cash for every sort of reason — downturns in business, unexpected expenses, paying the tax man. Sit it in a bank account and DO NOT TOUCH IT.
It’s so, so tempting when you start out to grab any job you can. God knows we did logo jobs that took weeks and probably made $500 on them. But you have to stand firm and have a rigid focus on what you’re worth.
I was at another new-ish agency the other week and I was listening to the owner on a phone call to a prospect client. And from the tone of the call (obviously I could only hear one side of it, but still…), you just new that the person on the other end was entirely going to buy design work on price. I was half-tempted to grab the phone and either put it down for him, or talk to the person on the other end and tell them this agency was going to be more expensive than anyone else and to let them show them why that’s the case.
Get people paying you. Get them paying you upfront. Get them paying you by direct debit. Whatever you do get them paying you. Retainers are the dream.
And then, don’t waste the money on stupid shit you don’t need and can’t afford. You don’t need a nice shiny office. You don’t need anymore team members. And you sure as shit don’t need a retro 80s arcade console in your reception area. Although in my defence, it was a contra deal.
Oh, and don’t do fucking contra deals.
I know these things now. And life as a digital marketing consultant is significantly better, more controlled and more enjoyable than when I was tackling a pay roll, suppliers and unpaid invoices.
The challenge is a being a consultant might not make you rich. But it has given a better opportunity to focus on what can make me happy. And maybe those two things might just converge.