Lessons learned since becoming an entrepreneur

[Kung Fu Steve]

"A smart man learns from his mistakes... a brilliant man learns from others mistakes."

If you read and listen to as many business, entrepreneurial, wealth, and personal development stuff I do, these lessons were already taught in there... Why I still made the mistake - I don't know. Maybe because I thought "I'm too smart for that" ... Maybe it's the same reason when someone tells you not to push the big red button... you just have to push it!

So today I'd like to share some of the major lessons I have learned along my trip to the fast lane. Some simple things the could have led to failure (or possibly still could!). It's my way of venting number one, and number two I sure hope someone like me is out there reading this post saying "Damn, I don't really know if he's right or not but instead of risking it, I'm going to do something else." Ha ha... so here we go.

Goof #1 - Purchasing a Franchise:

I paid a helluva lot of money for nothing much. It goes back to me being the passenger in the fast lane, not the driver... Sure wish I would've read that post a long time ago... ha ha. On top of not getting much for a ridiculous franchise fee and royalties, it has totally confined my creative process. The whole reason being an entrepreneur is to create and expand and grow and find better ways of doing things! But with some of the limited confines of a franchise that certainly isn't possible.

Goof #2 - Buying into some of RK's stuff. (Or at least taking it the wrong way)

What I mean by this is his constant reinforcement of "you don't need good credit to do this, you don't need this to do that." While it is all true - I sure would be in a better position if I had worried about it. Although I am on my way to becoming very successful, the road ahead will be a little bumpy because of not deciding to pay a bill or two that my arrogant teenage brain thought wasn't necessary, hell I don't need good credit anyways!

Goof #3 - Creating a ME centered business.

I ended up creating a business where I am the center of the universe. It's a beautiful architecture where everything has to be done by me. Of course it was my own damn fault but I definitely learned the lesson. While I LOVE what I do and I couldn't imagine myself doing anything else all day I see that I have developed quite the prison for myself. It will be years before the business will allow me to take a week's vacation! (at least I've applied this lesson to business number 2 now!)

Goof #4 - Having a partner that has say in the management of the business.

While the investor was required for me to start at such a young age for this B&M business it certainly isn't the greatest thing. When we have a disagreement he has controlling interest because of the financing. Although this is temporary and there have not been any issues, this could quickly lead to a downfall of the company if my partner decides to shut down the business or leave.

So from what I have learned so far, and althjough it may change some day, I think I will stick to

1. Non-franchise companies
2. Do what I know is best in the long run.
3. Create the systems BEFORE the business opens it's doors.
4. No partners, or if there is a partner or group of partners they would have no say in the management of the company.

I'm sure some of you have run into similar things. Any thoughts?

 

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[555555]

I think you've displayed a very important part of entrepreneurship here today, which is learning and changing from your mistakes. You realized and clearly identified these mistakes and have written them and judging from these actions it would be safe to assume that you will at least make a future effort to avoid repeating these mistakes.

One not however is that a few of your problems appear to be people related. A possible suggestion would be to select your business partners more carefully and with additional scrutiny. If you spot something early on that you believe would not be in the best interest of the business or if your gut feeling is a bad one, you would most likely do well to just walk away.

Hopefully this has been of some help.

Best of luck to you.

 

[Runum]

Steve I have followed along with you as you have matured and learned these things. I know it takes some guts to post things that haven't gone right for you. +++ speed for sharing your lessons learned.

Would it be OK if I moved this to the mistakes and goofs section?

 

[hatterasguy]

In hindsight I paid about $20k-$30k to much for my first deal. Negotiation is tough and hindsight is 20/20. But I should have told him $280k for the whole package and thats it. Next time I will, still I could have lost it and made nothing. Something is better than nothing.

Luckly with these mistakes their will be a next time, so you can correct. They just get expensive though. As I said to someone else in another thread here, "little mistakes" in RE can be worth $100k...or more!

Part of learning is making mistakes where you can afford to, because sometimes you cannot afford to mess up. To much money or whatnot is on the line, if you screw up your ruined.

RK hit the nail on the head with his beef about the school system. It does teach people not to make mistakes. This is wrong, this is how we have learned since humans first walked the earth. The ones that made mistakes and lived to talk about them reproduced and here we sit.

 

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[hatterasguy]

"
Goof #4 - Having a partner that has say in the management of the business.

While the investor was required for me to start at such a young age for this B&M business it certainly isn't the greatest thing. When we have a disagreement he has controlling interest because of the financing. Although this is temporary and there have not been any issues, this could quickly lead to a downfall of the company if my partner decides to shut down the business or leave.

So from what I have learned so far, and althjough it may change some day, I think I will stick to

I'm in the same spot with my business in regards to having partners with controlling interests. At this point their is nothing I can do about it, but I am already turning over in my head ways I can buy them out and gain control, also possible other partners. Its going to take some time, but as you said its a temporary situation. Rome wasn't built in a day.

 

[Kung Fu Steve]

Steve I have followed along with you as you have matured and learned these things. I know it takes some guts to post things that haven't gone right for you. +++ speed for sharing your lessons learned.

Would it be OK if I moved this to the mistakes and goofs section?

Without a doubt Greg!

I'm in the same spot with my business in regards to having partners with controlling interests. At this point their is nothing I can do about it, but I am already turning over in my head ways I can buy them out and gain control, also possible other partners. Its going to take some time, but as you said its a temporary situation. Rome wasn't built in a day.

90% of the time there's no issues. But that 10%... It seems to only happen when there need to be real decisions made and there have been some goofed up ones. Seems sometime out of fear partners will not want to let the business grow. The things people see as "success generating" I find often times are time wasting! I am a stickler for efficiency, let's get it done fast and right! Sometimes partners are held back by those fears of "what if it doesn't work" ... well usually my theory is "Let's DO something... even if it's wrong, at least we'll learn what NOT to do."

 

[MJ DeMarco]

Wow, how'd I miss this awesome thread? Great post and I agree with everything you've said. Speed+++++, probably should be a legendary post, maybe, thread.

 

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[Kung Fu Steve]

Wow, how'd I miss this awesome thread? Great post and I agree with everything you've said. Speed+++++, probably should be a legendary post, maybe, thread.

Ha, well I do appreciate the kind words, I don't think I'm as "legendary" as these other guys. I'm still stumbling and fumbling around. There are others more deserving - the put out better information then I do!

 

[WestCoast]

The nice thing about starting young, is making the worst gaffs when the stakes are relatively low.

Imagine the insight, knowledge and prowess you will have 10 years down the road when you are doing huge deals!

Roll with punches, and never stop moving! Speed ++

 

[MattThomas]

Wow, great post. Very useful I will keep these points in mind!

I'm sure many would probably agree with this lesson, but would you say that another important lesson is to get started on an idea right away, before you lose interest or motivation?

 

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[Kung Fu Steve]

Wow, great post. Very useful I will keep these points in mind!

I'm sure many would probably agree with this lesson, but would you say that another important lesson is to get started on an idea right away, before you lose interest or motivation?

Oh without a doubt. While there is part of me that regrets how I set up the business, there are no regrets in starting the business. Yes I would do things differently, but, no matter how many books or seminars you go to on business, some things you can only learn from experience.

Like touching the stove when you're a child. "Don't touch it... Don't touch it... OUCH! I told you not to touch it!!"

 

[Jill]

...Goof #4 - Having a partner that has say in the management of the business.

While the investor was required for me to start at such a young age for this B&M business it certainly isn't the greatest thing. When we have a disagreement he has controlling interest because of the financing. Although this is temporary and there have not been any issues, this could quickly lead to a downfall of the company if my partner decides to shut down the business or leave.

So how do you mitigate that? Before you take on a financial partner, you could set up as a loan, rather than equity. Even if it's an equity deal (which I'm NOT a fan of for small businesses), then make it clear that they do NOT have common voting stock. I don't recall exactly how that's handled for private placements (as opposed to publicly traded companies), but I think it's an important distinction.

Now that you're in the situation, how do you mitigate the rist of his bailing on you? Do you have any other financing lined up? Any other place you could use for a studio? Could you lease a spot (armory? warehouse? etc) until you could buy your own gym? Do you have any kind of non-compete with your backer? Any reason you couldn't just pay him off and start off anew, now that you have a solid client base? Just a few thots to ponder, although I have Zero knowledge of how your kind of business operates.

 

[Kung Fu Steve]

So how do you mitigate that? Before you take on a financial partner, you could set up as a loan, rather than equity. Even if it's an equity deal (which I'm NOT a fan of for small businesses), then make it clear that they do NOT have common voting stock. I don't recall exactly how that's handled for private placements (as opposed to publicly traded companies), but I think it's an important distinction.

Now that you're in the situation, how do you mitigate the rist of his bailing on you? Do you have any other financing lined up? Any other place you could use for a studio? Could you lease a spot (armory? warehouse? etc) until you could buy your own gym? Do you have any kind of non-compete with your backer? Any reason you couldn't just pay him off and start off anew, now that you have a solid client base? Just a few thots to ponder, although I have Zero knowledge of how your kind of business operates.

The way I handled it was the quickest and easiest way to do it. There is a buy-out plan in progress, so, after time this business will be 100% mine. The business is solid, I guess just the one thing is I would like to have more control over the start. Which in my 2 new businesses I have recently started I have squashed that bug right away. I am 100% owner. Period. No other controlling interests and *I* make the decisions. While I make the decisions for most of things, if my partner disagrees there is an issue. Which holds up progress and the opportunity to expand quickly.

 

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[TaxGuy]

Interesting point, what kind of franchise was it?

I ask b/c one of the plans that fell through was a few college buddies and I were going to invest in a Coldstone franchise when we graduated, but it fell through b/c the margins weren't favorable. Looking back it was a good idea, although now all of my buddies have since gotten stuck in the slowlane and if it wasn't for my best friend's stepdad I probably would've walked into the same trap instead of getting my feet wet running an offshoot of his business b4 I decided to walk away and end up where I didn't want to be: the slowlane

While I did get some business ownership experience in that endeavor, despite all the b.s. of being a franchisee, I feel I would've learned more about startup and finding someone(manager) to run the opps of my business if I would've gone the franchise route.

 

[hatterasguy]

I agree with you on the franchise thing. My grandparents are good friends with the owner of a very larger company that does international franchising. They were told by the owner when they asked him if it would be a good idea to invest in a franchise of his company, flat out no. He said he wouldn't because they extract to many fee's from the owners of the franchise! This guy was the freaken owner and founder of the company and a multi billionare himself! lol!

 

[TaxGuy]

So true, I also have some experience as the temp job I worked in Sep dealt with health/safety evaluations at most of the major fast food chains and I worked specifically with BK and saw that the franchisees were just low men on the totem pole who despite being "owners" still answered to a huge corporate structure and to top it off the only one who made any real profit were the ones who owned 10+ locations.

 

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[CarpetJocky]

Franchise

Your talking about a franchise being a bad thing, I would think it would be great if you set it up and you get one to work for you. I know there is probably a lot of downside to this but If its a name brand like Stanley Steemer. Then It could work out right? I mean what if you did get in the door whats the worst that could happen you could actually make 60,000 your first year in business. may not be 250 m.p.h. fastlane thinking but It can get you there if you play your cards right, I am trying to be optimistic about this franchise thing because I would like to know more about one

-CarpetJocky.