Sounds strange, but eventually you realise happiness comes from making more and bigger business mistakes.
By the time I quit my comfortable executive job to set up my own place, I’d been flatlining for a few years. It was a great job. I could handle everything adequately. I knew how to deal with all the situations.
I was bored out of my mind.
I needed higher highs and lower lows. Otherwise, life is like a movie where the characters drift along doing not much for two hours, then there’s a happy ending. How much would that movie suck?
Setting up my own businesses gave me that thrilling range of experience. This is not the story of the exhilarating peaks, because I know you really want some disaster stories. Particularly ones that were my own stupid fault.
I could do twenty thousand words on that, so to keep it brief keep it to the $100,000-plus fuck-ups threshold. The total damage was well over a million. Enjoy some tales of things I’d suggest you don’t do.
1. That time we bought a building
We had a windfall profit in our Tasmanian business one year, and we thought, ‘let’s buy our own warehouse like Mr Monopoly would’.
A second warehouse on the right seemed like a good idea at the time. We moved in there feeling like masters of the Hobart universe.
Within two years we’d outgrown it. Every day was a fresh game of warehouse Tetris. It cost us a fortune in labour. So we had to rent a twice-the-size space in that same complex. Right opposite the one we owned for a convenient daily reminder of our stupidity. Nobody wanted to lease or buy it.
It sat empty for two years until we sold it at a loss. If we’d spent the money on the equipment we use for our business, we’d have made heaps of money.
If your business is commercial real estate then buy buildings. If you’re OK with your business staying the same size forever, and you can use the pension fund tax lurks, buy a building.
But generally, the real returns come from doing what you’re good at.
2. Not being paranoid about your tax liabilities
One year we got to #43 on one of those BRW Fast lists. Not a bad achievement for a non-digital, high-CapEx business. My Mum was very proud.
As we grew, we were on top of our tax plans. A couple of the businesses across the country were nearly at a size where they’d have to pay payroll tax. We were ready.
Then I get a call from our accountant. The tax office had called. Turns out, for reasons too boring to describe here, we should have already been paying payroll tax. In fact, we should have started paying it 18 months previous.
We had a tax bill of $120,000. Due in two weeks.
Turns out it all came from some tax office guy reading the BRW list. Steer clear of those lists.
More importantly, stay on top of your tax. I’ve seen the Grim Reaper come for a lot of businesses, and when the end comes it’s almost always the tax office under those black robes. And fair enough, pay your damn tax.
3. Ignoring balance sheets
Sorry, this is boring. If you don’t own a business, skip it. If you do, it’s essential.
Side note, as an ad writer, you really learn your craft on boring products. It’s easy to write a great ad about Porsches or Cristal. Harder to bring out the magic of professional indemnity insurance or tyres. That training comes in handy when you need to convey the upside of bin chickens.
Creative director skills. Don’t try this at home kids.
Now I’m going for the top step of the dull topic podium by talking up my favourite financial statements. So here it goes.
For years I was a profit and loss guy. That’s the sexy statement, with its flashing scores lit-up after the full-time siren, the proof you crave that your rewards are now decoupled from the puny ceiling of your hourly wage.
Some months there are unexpected whuppings, but it just adds to the plot arc and makes the glorious end-of-year victories even sweeter.
I ignored the frumpy old balance sheet, like those periodic blood-screening tests you never quite get round to. They move so slowly, why bother looking? Then, because you weren’t paying attention, some stony-faced professional informs you that you have a potentially terminal condition.
Balance sheets speak the truth you may not want to hear.
I haven’t the space for a balance sheet lesson, so I’ve linked to this handy explanation from a random Kiwi accounting firm. Cheers Bellingham Wallace. You need to be across this stuff.
4. Keeping chronic underperformers
This is the big one, the Moby Dick of business mistakes.
It’s harsh but true. The most expensive thing you can do is keep people who you deep-down know can’t do the job. It’s just that they can seem so … nice.
It’s hard to put a figure on it but I’m confident it’s cost us millions.
We have a pretty supportive environment, although working in our industry can involve some brutal hours and deadline stress. Over the years we’ve assembled a team that makes me glow with pride.
It’s an insult to a team like that to burden them with a few village idiots to make up the numbers. It says, ‘thanks for all your heroic efforts but it’s also OK to be a lazy fool because, hey, it takes all kinds’.
That’s the primary site of demotivation cancer that spreads through your entire business.
There’s a strong mythology that you can’t remove staff due to legislation or whatever, but it’s not true. There are ways. It might cost you money to move people on, but the cost of doing that is always less than the long-term damage they will do to your business in lost clients and irritated co-workers.
Cliche conclusion about the value of business mistakes
I don’t need to tell you this. If you make no mistakes then you aren’t risking enough and you’ll end up unsuccessful and unfulfilled.
If you aren’t prepared to put up with random lightning strikes of extreme bad news, don’t go into business. It’s just going to happen regardless of your skills or experience. You just have to shrug your shoulders and think ‘oh well, move on’.
On the upside, each decade of mistakes gives you one week of blog content. Even if it ends up costing about a thousand bucks a word. So I hope you enjoyed our kind, seven-figure sponsorship of this week’s episode. Buy us a drink some time.
This article was first published on Motivation for Sceptics.