7 ways I’ve Almost Killed My Business

Gretchen Glasscock — Thu, 02 Oct 2008 18:35:35 +0000

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7 ways I’ve almost killed FreshBooks.
Mike McDerment is CEO and Co-Founder of FreshBooks , an online invoicing and time tracking service that helps professionals in over 100 countries save time, get paid faster, look professional and focus on what they love to do — their work.

As AdvancingWomen.com‘s President/CEO, and a serial entrepreneur with a long string of businesses behind me, I’ve had the opportunity to kill a whole list of businesses and, believe me, it’s not as hard as you might think. Here are a couple of points that Mike makes that reverberated most with me:

Thinking we had to spend more than we did. It is always tempting to think there are “silver bullets” that will create instant success, but that is totally discredited by reality. If there is any kind of very slow motion “silver bullet” , it is the opposite: it’ hanging on to your money so you can keep slowly and painstaking building your business based on the value you provide. ( And I speak as one who survived the dot com crash and a whole host of others in various industries, each thought to be a catastrophic devastation and they were, for those who had no cash left as the dust settled.)

You may find it hard to believe but there are individuals with $100,000 a month income who find, at the end of each month, they’re spent more than that. There are businesses in the same position. No matter how much cash comes in, it’s always possible to spend more. Master your cash flow if you want to survive in business, because without cash, no one cares if you’re worth a million dollars on paper or in widgets, the doors will shut and you will be out of the game. If you get a handle on the dynamics of your cash flow, that act alone will both improve your business and improve you as a manager, the beginning of a very positive and powerful cycle.

Here’s an excerpt from a list of ways that Mike McDerment says he almost killed FreshBooks over the years:

1. Thinking we had to move faster than we did
I remember back in 2005 feeling that if we did not blow our lights out and spend every penny we had on marketing “right now!” someone would obliterate us. … Turns out I was wrong.

2. Placing my faith in a spreadsheet
Rocking a spreadsheet is important in my books – it gets you thinking about your business. But trust me, whatever numbers come out of your Excel jockeying, they’re wrong. If you saw our business plan from 5 years ago you’d see what I mean…

It’s really easy to stare at a spreadsheet and say, “that’s it! I totally get this business…I understand how it all works and look at that year 5 revenue!”, when the reality is it will take 10 years to get there, cost you twice as much as you thought, and you’ll probably be running a totally different business by the time you get there. All of that is okay in my books, just so long as you don’t actually delude yourself into believing what the spreadsheet tells you.

3. Thinking we had to spend more than we did
There is something about the act of spending money that breeds confidence – don’t ask me why. Just because you are spending money does not mean things will work out like you modeled them…There are no silver bullets, so don’t kid yourself into thinking there are.

4. Placing my faith in consultants
Nobody cares about your business as much as you do, and frankly people who are smart – consultant/MBA smart – don’t know your business as well as you do despite the fancy words and references to past success. Don’t kid yourself into thinking a consultant knows your business better than you.

5. Underestimating word of mouth
This one is sort of tied to number one. It takes *years* to generate word of mouth – it’s a slow build, but slow burning fires burn the hottest. So be patient and do your best to take care of your customers/users even if you can’t find a way to measure the ROI.

6. Believing we could not get this far without doing “x”
I remember talking with people back in 2004. Many believed we could not get anywhere without signing a “deal” with a “partner” or taking “VC money” or “whatever”. Here’s my advice: sign the right deals with the right partners at the right time for the right reasons. You can build a business without being forced to work with the wrong people at the wrong time for the wrong reasons. The choice is yours – don’t forget it. Opportunities will present themselves if you keep your feet moving and you string together a series of small successes…

7. Doubting ourselves too much
Over the years I’ve met a lot of smart people and I’ve invited them to tell me what they think. For years people did not “see it” and that exacted a toll on my confidence. Doubt is born out of fatigue and loneliness, and there is a lot of both when you are running a start up. Hang in there and keep your feet moving – there’s still a lot of time for you to change the world. “

AdvancingWomen.com seconds that motion about not doubting and keeping the faith. Building a business is a long haul, sometimes exhausting but also exhilarating. If you had the drive and determination to start your own business, and you’re showing any traction at all, just hang in; be vigilant about the downside and the upside will take care of itself; do all the little things right and the big success will come.

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7 ways I’ve Almost Killed My Business