How burning $100K turned out to be the best thing for my business
Today I am going to share my nine months startup journey where I lost a stable 6 figure monthly income, invested capital and a lot more but learned the art of business in exchange. The lessons I learned can surely help others who are trying to start their very first business.
I was an independent internet marketer back in 2015 and came from very humble roots. Becoming a millionaire was a result of my hard work and made me rich but losing a lot of money when I started a formal office made me wise.
Well, it all started with the dream of doing something big and beyond my imagination. I have been very fortunate throughout my life as with the rigorous efforts of working I kept achieving new milestones every year; this helped me take new steps and leap from one goal to another, Until it didn’t.
After completing my primary dreams of owning a big house and healthy bank balance, I thought of hitting the next level. This was the time I had my moment of I am CEO, bitch! But things went south.
I came up with an idea and approached some foreign investors, these were happy clients, who paid me thousands of dollars for internet marketing and bought my successful projects from me. They agreed to fund a big amount in a few tranches, and we started SirG Media Private Limited.
I brought a co-founder on board, mainly as a director – a guy who was working on a few projects with me. He was more mature, and I knew that as he had learned the game from me, he will always be the home team. The whole business idea was to build a community of government job seekers online, but we failed! :(
After nine months I have lost a 6 figure income funnel that I was able to sustain for more than two years and almost $100K straight from the bank account. I decided to shut down this whole thing back in July 2016 and analyzed the pitfalls from this apocalypse. The story is full of lessons I as a young and first time entrepreneur I learnt.
Please heed the warnings to avoid finding yourself in the same situation:-
Never compromise your active income sources -
The first and most important lesson I learnt in these nine months was that a bird in the hand is better than two in the bush. When I decided to go big, I decided to stop my other sources of revenue, because I took the funding and wanted to focus solely on making it happen. I did this to keep my focus on one thing as the whole thing was a responsibility and both investors and shareholders were involved.
I sold my projects, put money in the bank and started on a journey with a team in Kolkata. I was quite overconfident that time. I made many foolish decisions too. According to our plan we were supposed to start making our first income in 3 months as forecasted but it took seven months to see the first $300 and that too when we were investing a lot of money.
Someone who has invested so much and with no active cash flow, I started losing confidence especially when things were going adversely; I was disappointed with the whole thing, and I lost the inner spirit by the time.
I took a significant amount of risk by saying no to regular cash flows. The result: even after working for more than 14 hours a day with a team of 7 it became harder for me to digest this whole thing, negativity surrounded me as I accepted it couldn't be undone. The loss was for real and a big one.
Going for A Startup? - Make Strategies for Quick Incomes first!
It is the second learning from the nine months long nightmare.
When I talk to my friends having a start-up dream they all say, I am planned to keep it running in the loss for up to 6 months as it will take the time to hit the equilibrium stage and the profit phase, with all my heart I accept this fact but a better approach can be applied here.
In our business plan, we were supposed to wait for at least three months to see the first income and half year to hit the equilibrium whereas it took more than half year just to show up initial results. So, an income plan you can count on is needed when you are trying something new and risky.
We were working with a big team, as we are in digital marketing and SEO it was easy for us to start selling some services related to the industry like SEO, SMO, Web Development, etc. But we did not and we kept paying rents, salaries and other regular expenses with no income plan for nine months. My sly partner who learnt the tricks of the trade started making his active income and kept me uninformed. I lost it all. Another primary reason I lost this whole thing; it was easy to use our resources to pay our rents, salaries, and other liabilities from that active income but we were using the funding instead.
The Cancer of Partnership-
Other than an online entrepreneur, I am a mentor to many. I have started projects with many newcomers and helped them grow big. Some are even bigger than I am right now. Sharing my years of knowledge to them, helps me to work on more projects than my capabilities as I keep a stake with everyone I teach, so it helps me make more.
I met this partner through the same process of doing new projects with newbies; I was looking for a partner and I thought of taking this guy in the influence of my best friend, but this step turned out to be a disaster.
I made a billion mistakes when it came to partnership; like -
1- To keep him confident I shared the top secret things like sources of income, the art of getting new clients, my client's database and also the investor's database whereas in return he never gave me anything back like this. He was a liability, not an asset.
2- I gave him equal partnership rights, the power of money, bank accounts authority, etc. It was the reason he never cared that everything is coming from my end. He was instead becoming hostile.
3- Moreover, I allowed him to make decisions. I learned that out of two or three partners only one must have the final decision-making ability. In matters of business and money you cannot compromise or delay. His inability to understand that my experience was more than him and this partnership is to help me out in making us bigger – landed us in a pot hole.
My idea of partnership business was to make it amicable first and then go ahead; my decisions were so right in the beginning but by the time I saw him taking undue advantage of decision-making powers by disobeying my plan of action and coming out with the brain sick business ideas and implementing them. Also, I took actions late because I was giving him more chances to get things right.
I found that he was bitching about me to the investors and stealing my clients by offering the same services at a smaller price, and till today I am paying for the mistake of giving him all the insider info.
I gave him this share considering that together by reporting to each other we can do wonders, but he one day said I feel that I am working for you if I am telling you something before executing. The ego issues are common but being on the same page matters more than anything.
I was a fool as I did not ask him to exit in the very beginning when our arguments took place and waited for so long. This turned out be my biggest mistake. One bad fish and you know the rest.
Not all partnerships were like that, but you should know with whom it is going to work.
So especially in regard of business never make an emotional choice while looking for a partner. Create norms, never-ever give the power of money and decision making until or unless you have a reason. Discover that they are not trying to take advantage or are fair-weather friends, who go away when it starts to rain. Never start a business with friends, find friends in business instead.
Never share the most secret resources, especially the major pillars of income, make things confidential and don't be so open.
Above tips will help a partnership work, if you still find it difficult to continue, do not argue with your partner for the same things again and again as screaming out loud isn't the solution, talk to your legal advisor and make him/her EXIT legally.
The art of Employee Management-
Today most businesses are in the race of having the best workplace but many a time we misunderstand the definition, so we did make the best workplace but not the most productive one.
There is a fundamental principle in business if you have an employee pay him the 10% of what you get from him. If you can get best out of your resources, then you can unlock the N number of opportunities.
I made a grave mistake here too; I thought the key to making an employee work with his all heart is to love him, give them an atmosphere where they don't find a gap between a boss and an employee, we believed in the family of great minds, but it did not work.
To make the above statement work we first removed the respect for the boss and it happened when they found us so close and friendly, we also gave them liberal targets to achieve, and when we tried to increase the monthly targets, the whole team was ready to decline them by saying - it's impossible.
They never agreed to do overtime or work on Sundays even when we offered additional payout or incentives.
Whereas my friends are running companies in the same industry were able to get 4X work done of what they paid to each employee in comparison to ours, and it was a huge disappointment.
Other than this we kept paying to many employees just because they had a poor background ever after knowing they are not adding value. This led to loss of productivity and money.
Some suggestions for wonderful employee management-
1- I restarted my business 26 days back, and today we hire employees on a probation period. Perform well, and we take the deserving in our umbrella.
2- We do daily audits and performance check, warn them and advise them. My SEO managers and partners are on their toes to help out and guide the interns.
3- I have left the corporate culture, and today we sit by their side keep an eye on everyone. This is paramount when you hire young students out of college. You get to nurture them and make it a win-win for both.
4- We have organized different award and reward programs to boost up their efficiency. This keeps them happy even when they are hustling with us.
5- The employee appointment letter has a law of compliance mentioned so that they never go against what we say.
6- Performance evaluation helps us decide who should continue working and who should not.
7- For strict rules and regulation I have a hired a very senior person, he gets the work done, he does all the warnings and instructions, and it also helps me to keep my aura maintained as an MD because they know if I am warning about something’s it's severe.
8- We are able to achieve all the targets we set for every day or every week so easily just by doing above practices.
9- And Yes! We have not stopped showing the love that we used to; I still love every member of the team as my family. I know what it is like to be on the other side of the table. I have made perks a lot more results oriented, and everyone has an equal chance.
10- I am trying to make my team members a replica of myself and they will be assets to the team. We have done it in less than a month, what we were unable to achieve in our previous startup in over nine months. More than showing off on social platforms we need to put in the real effort to keep things afloat. I tell my employees that in less than a half year we will move into a location they can brag about. But until then it’s a Hard Knock life, and we hustle.
Money is the Key Element:
A well-funded startup hardly thinks before spending money. But in 9 months I did not waste the funding for a lavish living, but I bought many useless services, tools, and other things just to make our business model work. My actions were for a reason; I wanted to make it work. But it all ended as a big fat failure. I should have stopped the projects when my partner became hostile, but I wanted to make it work so badly. Alas!
Instead, I could have adapted better ways. Thinking through and taking advice from mentors, but I became so sure and unsure of myself at times that it was like pulling the trigger with a single bullet and you don’t know when it is going to get hurt.
We are working on a lean approach where burning money is not an option; we find tricks to save money and spend time with the team to make them smarter.
Find time for yourself!
It is the most important learning from the last nine months of starting up, today when I sit alone and think about why I did not find the reasons for bad results before is because I never found time for myself.
When you are in solitude, you can talk to yourself and who else would understand you more than you yourself?
Before restarting this whole thing again, I did not do anything other than giving myself enough time to figure out why it happened?
I realized and restarted the same thing again with a subtle capital. I made this partner exit and started hiring a new team to work with a new spirit.
In just 26 days I am earning $150+ a day from services I never tried selling, we see positive results in our new projects, and it's a whole new energy. The team is motivated, and the hustling will not stop until I am a billionaire with a great company to write about.
I try to learn new things every day, and it is helping me to start new services and reap profits. We have also started a special rewards program for employees where the winners will get Macbook Pro. This has X charged them up more than any perk and incentive we have provided to the team in the previous office.
All businesses are full of challenges, but its you who can decide how to make the winning easy. 🙂