Stop! Balance Your Business Portfolio
How one client’s decision shut down my first business & a few of the lessons I learned
Having attended this networking group for years, I knew the troika model very well. After we met monthly, we would break apart into groups of 3 (troika) and learn more about the people and hopefully get them to join our networking group. I sat with another member and a prospective member. After we went around the table giving our well rehearsed elevator speech, the potential member said, “hey, you should meet our owners — they would like what you’re saying”.
We exchanged emails, connected, lost connection and life went on. Eight months later (to the week — I checked), I recieved an email, “they’re ready!”. You know when you know someone’s name but can’t remember how you met them, so you have to look at the detail of their email to attempt to remember? That’s what I did. Remembering our initial coffee, I quickly scheduled a meeting. At that meeting, I earned the single largest contract of my career. They signed over their entire marketing budget to me at $500,000 per year. My small company just doubled it’s size, in one meeting, after about 2 hours of total meeting time (counting the coffee) and I was pumped! My first small business was managing over $1m for multiple clients and all of this was achieved in 15 months.
After quickly onboarding this new client, loading them with additional value, producing a ton of video, a new website, social media strategy, search management, content, re negotiating media, events…you name it, we managed it; we were off to a great start. Although $500k is great, when 65% of that money is in traditional media, my agency’s standard commission was 15%. Sure, I was happy with that top line revenue but I knew we had to take them to next level, #moredigital. With months of strategy, testing, proving, execution — I set a goal to get 30% of those media dollars shifted to more content, video and digital elements. It worked. Short of the 2nd month under our management, we achieved every measureable point we were challenged with and hit numbers that they hadn’t seen in 6 years.
Thursday, 26 months later, we are having lunch in Nashville, pacing to hit $630k in the next 12 months. I’m taking pages of notes, enjoying this new mexican restaurant and one of the two owners invites my family out to his house. This is the lunch meeting that anyone representing clients wants to have. Happy clients, achieving goals, good food, personal talk and strategy for the upcoming year. That following Tuesday, I went into their office to pick up that month’s check, or so I thought. Within 20 minutes, I was unexpectedly fired by that same client.
Having over-leverged my company, based on this great relationship with me and my team — all feelings were removed. The client didn’t hold up the terms of their signed contract and I didn’t have the cash flow to even think about fighting them. 10 months later, my family and I made the decision to shut down the business. Having invested so much time, reputation, money and everything that goes into starting a company and growing to over $1m, so quickly — it all went away in a matter of 10 months.
Lessons I learned:
— No matter how good it “feels”, don’t let one client have too much of your time & resources. Being diversified in case they go away is vital.
— Remove feelings from business. This is not easy but necessary. I’m not saying be an asshole. I’m saying be practical, people make business decisions for a ton of reasons that you can not control. Be prepared for the unexpected.
— The cliche is right, don’t grow too fast.
— Cash flow is your #1 friend. No matter what, make sure your cash in consistently coming in and contractually forecasted or you will lose.
— You can be a good business owner and human, you just have to over communicate to everyone involved — what’s going on. Keep those close to you in the know.
— Partner. Partner & partner. Having 100% equity feels really good. Having another shoulder to carry company’s liabilities, talk out strategy and just being there, truly is needed. You have a higher success rate starting out if you have a partner. You can’t do it all — stop being stupid.
— Protect your family & your name.