Lessons Learned: Why My First Business Failed

booksA number of years ago, I was working full-time as a designer and received a lot of requests to design sites on the side. At the time, I knew very little about business ownership, but always felt an entrepreneurial pull and it seemed like a good idea to start a web design company. Needless to say, I learned quite a few things from my initial venture, and thought I’d share a few of them with you.

Lesson #1: All marketing isn’t created equal.

I can’t even tell you how much money I wasted on ineffective marketing. From a massive mailing to local companies that I never qualified, to a decal on my car, to flyers that sat stacked on my desk for two years, I had my marketing focus all wrong. Not to say any of those things won’t work, but they certainly didn’t work for me, at least in the way I was executing them. I thought that by doing something, I was doing the right thing, but all I was doing was wasting time and money by floundering around with no idea of what to do next.

The lesson is not to market your services for the sake of marketing or because an idea sounds good. You need to be focused and intentional in all marketing activities. This is accomplished by defining your business and your goals, and then researching until you uncover the most effective way to market to your target audience. There is a right technique for every business, regardless of marketing budget. Take the time to figure out the right way from the beginning.

Lesson #2: Systems are necessary.

After being scattered, disorganized and stressed with the administration of my business, I learned that you need systems; you need processes; you need standards. Having a set way things are done in your business — from billing, to data management, to your work process — is necessary because it enhances productivity and allows you to take on more. Plus, if you ever want to work with subcontractors, hire employees or otherwise expand personnel, you need documented systems for everything that make your business move.

Lesson #3: Don’t let financial pressure derail you.

Shortly after starting my business, I was laid off from my job (an Internet startup who joined the ranks of failed dotcoms). Then 9/11 happened. I was plunged into full-time business ownership in a matter of weeks. I found myself starting to worry about money, and I took a series of part-time jobs. This was the exact opposite of what I should have done, which was to take my fear of financial shortcoming and turn it into the fight to make my business succeed. I lost precious time at part-time jobs that were completely unrelated to my goals and should have spent that time working on my business.

Financial pressure is tough to deal with when you’re self-employed, but if you’re serious about being successful as an entrepreneur, you can’t let that push you off course. Whether for you that means taking another job, cutting your rates or taking on work that doesn’t support your business goals, it’s a vicious cycle that can hinder your success.

Lesson #4: Be honest with yourself.

In my struggle with my first business, I learned some valuable things about my passions, my skills and my dreams. What I realized was that I wasn’t satisfied with design alone, and my desire to support small businesses in other ways lead me to change my business model. The most successful entrepreneurs regularly check-in to make sure they are staying true to themselves and their business goals as they change over time.

Over the years, I’ve collected a number of resources that have helped me with various aspects of business. Here are some that you might find useful, too:

Image credit: Sanja Gjenero

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  • http://www.disassociated.com/ John Lampard

    “Don’t let financial pressure derail you”. Amen. You really begin to appreciate why some people advise having savings equal to six months worth of expenses put away when starting up a business.

  • John Garrett

    I reposted your blog on our blog. I gave credit to you, referenced your blog with a link.

    You can view the repost at http://www.microfitgroup.com/blog

    If there is an issue with me spreading the blog, simply leave me a note or email me.

    I loved the blog and thought it was something my readers should look at!

    I’d love to link to your work in general, also comment on any of our blogs you find interesting.

    Thanks!

    John G.

  • http://www.davewarfel.com/blog warfman99

    Thanks for the post, but you should double-check those links you provide at the bottom. The SmallBizU site is a dead end. Told me I was using Netscape Navigator (I’m really using Firefox 3). Told me to get IE at a web address that was from the early 90s. Then asked me to install Macromedia Flash player, which I already had installed (well, Adobe flash player, but you get the point). Then I clicked the only navigation I could (tiny arrow in bottom corner) and I got to a blank page… and that’s where it stopped.

    A great example of how NOT to build a website.

    But thanks for the info. Good stuff.

  • http://www.jasonbatten.com NetNerd85

    Some helpful advice, good article.

    The SmallBizU site is a dead end. Told me I was using Netscape Navigator (I’m really using Firefox 3). Told me to get IE at a web address that was from the early 90s. Then asked me to install Macromedia Flash player, which I already had installed (well, Adobe flash player, but you get the point). Then I clicked the only navigation I could (tiny arrow in bottom corner) and I got to a blank page… and that’s where it stopped.

    Maybe you travelled back in time! =O

  • http://www.webindustry.co.uk webindustry

    RE: lession #3
    We started with nothing, but we would have got there faster with some backing, but we did not in reality have much choice. We knew I could do it, but when a steady income wasn’t forthcoming immediately we had plenty of friends and family telling us to re-think – We persevered and we are now prospering!

    RE: lession #4
    When things were not going so well we stopped and said how can we make this better and what needs to change – this really helped us. We found being picky with the work we accepted proved to be the making of the company.

  • theGreenJAR

    Well, nice article and thanks for reminding me why I have 2 nice businesses pretty much on a halt due to financial commitments. And now I got laid off from my job, the investment I made so far will be put on hold. I can’t be adventurous! I hear you loud and clear.

    thegreenjar[dot]wordpress[dot]com

  • WebMachine

    Your third point seemed to be directly perfectly towards my situation. I retired from my full-time job (with a pension) and registered my freelance web design and development business last summer. Since then I have been so busy teaching online courses part-time, and assessing visa students to help pay the bills that I still haven’t had time to get my business off the ground. A very frustrating situation where I am being prevented from doing what I really want to do. Well said.

  • akstar

    very good post. Thanks for sharing

  • http://www.faridhadi.com FaridHadi

    I’m just starting out as an Internet Entrepreneur and it’s not easy. For some reason it’s so easy to loose focus end up in a case of information overload and not have any direction.
    I guess the trick is to step back for a second and plan what you are going to do and how you are going to do it, and then make sure you do it.

    Thanks for a nice article!

  • seanscc

    Great article!!! I started a Portland carpet cleaning business last year and your words of wisdom ring true for me.

    I found Rule #1 to be very true, only after wasting a bunch of money. When someone starts a business it is important to really watch where marketing dollars are spent. There are so many companies that promise to promote your business via expensive clients lists, SEO management, or whatever else. The best thing I have found is to work with companies that offer some kind of risk free guarantee to try their service.

    I also thought Rule #3 was really true, but seems counter intuitive to most people. I have realized that having a 100% focus on my business has yielded great results.

    Thanks for the great article and help!

  • wildscribe

    Great post. I just want to add a few more items.

    Lesson 5: Informal business relationships usually do not work. Put together a contract and get all everything in writing before you start a project. Have the client sign the agreement. This contract should also have a payment schedule. Always get some money upfront.

    Lesson 6: Keep your business plan flexible. You will find that some ideas will work, but many will not. Don’t be afraid to change.

    Lesson 7: Have a group of friends and/or a mentor who you can talk to if you run into problems. It’s always good to get other opinions.

    Lesson 8: If you are a one-person shop, don’t try to do everything yourself. When I started my business I did everything, from sales and marketing to coding. I was working 80 to 100 hour weeks. I later found that it was better to outsource projects or parts of projects to others and concentrate on marketing.

    Lesson 9: If the business isn’t working out, don’t quit. Look for ways to improve your business. Ask others for advice.

    I know that I can think of more, but this is a start.

  • seanscc

    Yaa, I agree with wildscribe, especially on lesson 8. Know your weaknesses. Know when to hire expert people to do things for you that bring in results.

    Also, think offensively and not defensively with your business decisions.

    On lesson 5: Be careful about giving up free work or cheaper work on the promise of tons of work later on, unless you get a contract signed upfront.

    Just 2 more cents!

    Sean

  • kcik

    Nice tips and infos, thanks for sharing

  • Muhamad Abdul Hay

    I want to add one more:-

    Stay Focus and keep your service niche
    Don’t do many things in business. Pick one and be the best of it.

    I have developed a simple & small Facebook application (MySms88http://apps.facebook.com/my_status_sms/) where Malaysian can update their Facebook status via SMS. The result? Collaboration with telcos in Malaysia. Alhamdulillah. Amen.

    If i can do it, you can too. Happy business to all.

  • Armando

    Very nice article, is interesting when people post they real true when they failed. We all do failed at some point and everything that happen to you it happen to me in different ways but same thing. Keep going, it make us better in general as a business owner and as a person