Admitting failure can be a difficult thing, yet as these 10 business owners reveal, mistakes have helped to strengthen their business – and others can do the same without taking the hard route.
Looking back on some of our favourite guests on the My Business Podcast, hosts Adam Zuchetti and Andy Scott explore the common mistakes business leaders have made, and what lessons have been taken away from the experience.
Tune in to hear:
- Finance tips from those who have struggled first-hand
- Growing pains and missing the mark with your audience
- The unrealised dark side of doing something innovative
- Avoiding burnout and cutting down on staff management
Plus lots more! Enjoy the show.
Speaker 1: Welcome to the My Business Podcast, insight, inspiration, and wisdom for business owners, wherever they may be. Here are your hosts Adam Zuchetti and Andy Scott.
Adam Zuchetti: Hello and welcome to My Business Podcast. On today's show, we're doing something a bit different. We are looking back at some of our favourite clips and favourite guests, and exploring the issue of common mistakes that business owners make.
Andy Scott: That's just code speak for, "We didn't get any guests in this week." Isn't it, Adam?
Adam Zuchetti: It is not actually. We're taking a bit of a different approach. Mistakes are a common part of business and some people don't like admitting to the mistakes. We've had quite a few guests that have been very open and honest about the mistakes that they've made, and the really cool lessons that they've learned from that. So we wanted to go back and explore some of these issues and exactly how they addressed some of the problems that have come up.
Andy Scott: Yeah, I think that's a great point Adam. We've had some fantastic guests on. Some of you guys will have heard them before, some of you won't. Even so, I think we've extracted some really good points here, with some really good lessons and really good pointers and just really interesting to hear other business owners talk about their trials and challenges that they've had.
Adam Zuchetti: Now, of course, one of the most prominent of all issues in business is money. Anything that relates to finance, getting it, keeping it, tracing it, it's all there. So we're gonna start with Lachy Rowston and Raph Freedman of Crossfit Creature and they had some really good insights into not understanding for finances properly and the risks that are associated with that.
Andy Scott: Roll the clip.
Lachy Rowston: Yeah, I guess we put the wrong person in charge of the finances. So, he didn't ever tell us that we're in a terrible situation, and yeah, I guess we were guilty of doing the front office, especially training. We were athletes from day one that started a gym to have our own gym to train in essentially. So weren't ever really business owners at the start. Raph had a degree in commerce but we had very little business background. So, just slowly over time, as it was like, "Hey, so you can't pay yourself this week," and, "Oh, you have coach all the classes," and "This member leaves and they're not walking through the door anymore." That's when slowly the reality starts to hit. It's like, "Man, I don't know what's happening, but I don't have any money. I don't know why. Everyone else that has a gym has money." So, it's very confusing.
Over that period of time, it happens at different speeds. You might pick up a book and then just have this revelation. In this book, it talks about how you should run a business and then you go and you try and change everything in a month. So, it gets crazy. Then, you maybe go into a stage where things go a little bit better and you can start paying yourselves again. Then, it just starts to flat line again. You don't really do much. Then, disaster strikes again, maybe a massive tax bill. What was our biggest tax bill been like? Way more than we all could afford at the time.
Raph Freedman: The worst case was when the fines were bigger than tax bill.
Andy Scott: Jeez.
Raph Freedman: That was rock bottom.
Lachy Rowston: So that's when reality kicks in and it's like, "Okay, so maybe we should hire someone that knows how to run a business or who can teach us." Then, slowly over time, the pieces start to come together, and I mean, that's where we are today. We're definitely guilty of doing the fun stuff way too much.
I'd say what really kicks you into gear is when you start investing business money into stuff like business coaching or other people that can pull you aside as mentors and be like, "Okay, you need to just not train today and instead you need to pay your taxes," or "Pay your tax fine," or "Pick up the phone and make sales or do some marketing, bring in some leads." That sort of thing or, "Hire a different coach." Something like that.
Over time, just learning those lessons, I think pulls you into perspective. The fun stuffs obviously still a part of it. It's why we had the gyms in the first place but it's really, really important that I think, if you are getting into the gym business, especially now, yeah, you are ready to do the business side of things and not just the fun stuff.
Andy Scott: I really liked when we had Lachy and Raph in for that session and recommend all our listeners to go back in and listen to them. My favourite pick from that was when they were talking about the fine that they had for their tax bill was bigger than the bill itself. That's one of the rude awakenings it has.
I think it leads nicely into another massive common problem that a lot of firms have, and Adam, you'll know this because people talk to you a lot about it, is the challenge with cash flow that small businesses have.
Adam Zuchetti: Right, definitely. It's such a big problem.
Andy Scott: We all know, look, it's something that can make or break a business. We had Mikel Lindsaar in who runs a digital development company called, Reinteractive. He had some fascinating insights into what he'd done with his business to really mitigate the amount of challenges that the cash flow was gonna give him.
Mikel Lindsaar: One of the biggest problems that small business have is cash flow and large companies don't seem to care. I remember the first discussion we had with a very large customer of ours and they said, "Well, our payment terms are 45 days after the end of month that you issue the invoice." I went, "Hang on, so if I issue the invoice on the first of January, you're gonna pay me on 15th of March?", and they went, "Yep, that's our payment terms." I said, "Well, we actually can't start working until payments received," and they went, "Oh well, okay. Well, then we can't do business."
I went, "Yeah, well we can," and they said, "Oh, how?" I said, "Well look, we'll invoice you today and then we'll start working 45 days after the end of the month that the invoice was issued." They just paused and they went, "What?" I said, "Look, we're not a bank. We can't afford this. We need better payment terms." They actually went, "Oh, okay," and they changed the payment terms for us. We actually for a long time with that customer got prepaid for our work in full. So we would say, "We're gonna do four weeks of work," and they would pay us four weeks upfront before we started.
One of the ways you can do that with cash flow is one, be in a good position. Be a known high quality organisation.
Andy Scott: Be needed.
Mikel Lindsaar: Be needed.
Andy Scott: Yep.
Mikel Lindsaar: But the other thing you can do to encourage it. Another very large customer of ours, whose fantastic with payment terms. One the things they mentioned, is said, "Look, we'd pay you in advance because you give us a discount for it." So one of the things we do is we offer a 10% prepayment discount. So if the full payment of the invoice is received before work begins, we give them a 10% credit note. Now when you're talking a large-
Andy Scott: Chunk.
Mikel Lindsaar: ... chunk of money, that becomes a large chunk of money. If you can get that communicated to the finance people, they love it, because the product owners, they're a little bit disconnected from the finance. We encourage that and that's how we handle our cash flow 'cause a lot of these large organisation are two months after invoice, three months after invoice, then they forget and then it has to go on the next payment run, which is next month.
Another really good tip on cash flow, and this costs you nothing and doesn't take anything, is become friends with the accounts payable person at company that you're dealing with. Give them a call and get to know them and say, "Look, is there anything we can give you to make the payment process smoother? I'm just calling up to make sure you've got all our account details correct 'cause I wouldn't want it to create double work for you. When I send you invoices, is there anything you need on the invoice? Would you prefer the purchase order number to be more highlighted or bolder?," or "Is there anything we can do to make your life easier?"
Andy Scott: So you need to be proactive.
Adam Zuchetti: I think Mikel's comments there are really very much about owning your cash flow, and making sure that those bad debts, they don't control you but you control them. You find different ways of dealing with them that work for you and make sure that money is actually coming in and that your suppliers and your customers, you're actually partners. You're not really dictating to them.
Andy Scott: Yeah, I really love how he took a problem there with those 45 day terms and actually turn the situation on its head to give it something that he could be proactive about. I think there's a really go lesson to be learned there.
Adam Zuchetti: Yeah, definitely, definitely. Now, something else that we wanna go into, in terms of taking control, is really knowing who you're selling to. This can be another issue that is I suppose less obvious than cash flow because you don't have it rubbed in your face day in, day out. It can be quite abstract, but if you don't actually know who you're selling to, and really get your pitch and your market very precise, it can actually cause some big problems down the line.
So John Sammut of Sydney garden centre chain, Flower Power, he had some really interesting comments about this and how growth for the sake of growth is not necessarily a good thing in all instances.
John Sammut: Well, we actually expanded to, we had 16 stores at one stage. We had three stores in Melbourne, where we took over the Kmart Super Garden Centre brand down in Melbourne, which was a completely different to what we had up here in Sydney. We also took over another Kmart store at Casula, and then also, we had another smaller type operation running at St. Ives. We found that the smaller model didn't work for us. We were more of a destination shop, which had a full range of product, which included home wares, gift ware, of course, plants, a huge range of plants, anything associated with plants. We also have a drive through landscape centre where you can pick up bulk product and heavy items.
That was the model that worked for us. The smaller type garden centre didn't work for us at all, so we decided about five years ago to close the smaller ones down and just focus on the larger sites. So now we're operating from 10 sites in Sydney only. We did find, that once we did close the smaller sites down, they were actually cannibalising some of our larger stores. So the business went back to our larger stores, where we were getting more average sale from those customers. There were more to offer and it just worked so much better for us.
Andy Scott: I thought that was really interesting insight from John that, he identified where the money was coming from, from their sales, and really looked to maximise where sales were coming from, rather than to just get sales carte blanche across the board. I think there's a lot that you can take from that.
Adam Zuchetti: John's experience leads in to a very nice segway to another of our guests, that we had one recently, Sean Ashby of aussieBum, and he had a fantastic story to tell about getting your pitch wrong.
Sean Ashby: I can visualise exactly one instance where I was like, "That's it, end of story," and it was, I had flown to Melbourne, hired the car rental, gonna drive down the Great Ocean Road because there's all these surf shops and, "They'll all buy my product, all my swimwear!" So I got in my car and I literally gone door knocking at the retailer. I got to this one major retailer and I was talking to the salesman. He goes, "Let me just get all the staff together," and there was about like a dozen staff. He said, "Okay, now start."
So, I'm in a surf wear store that sells board shorts and here I am with my nylon Speedos and I'm talking to them about the qualities of this. "It's quick drying. You can run around. It's fantastic!", and at first, they're all smiling. I thought, "Isn't this just, I'm killing it!" Little did I realise, they were pissing themselves laughing because I am anti of what they represent. I was trying to sell them something that's the last thing on earth they wanted. When I realised what the manager had done for his own amusement, and also for the staff's amusement, walking out the door I thought, "That's it, I'm gonna prove 'em wrong."
The second instance, was with a major department store and they too had, "Yes! Sounds so interesting. So interesting." I call them back and always this buyer wasn't available, like, "Oh no, he's in a meeting," or "No, no, no, no." I'm thinking he's truly in a meeting and weeks went by. In the end, I called but I didn't say it was me. He said, "Look, didn't you get the point of the meeting and why I haven't spoken to you? It'll never sell. It's a ridiculous idea. Look, just stop annoying me."
It was those two instances that had me go, "Game on, buddy! Game on!"
Adam Zuchetti: Yeah, Sean's got some fantastic comments there.
Andy Scott: It reminds me of a similar tale to when we had Paul Cave in. Paul Cave, of course, who set up BridgeClimb. I guess the thing that really I liked about his story was that he had a fantastic plan but sometimes the plan doesn't go to plan.
Paul Cave: I had a two year business plan and that took 10 years so it was a long time. I think during that period when the concept of climbing the bridge ... I actually thought we'd find something else somewhere else in the world that we could replicate but we didn't find something else, so that was a big part of the journey.
We were pioneering a lot of things and there wasn't any such thing as climbing a bridge for tourists anywhere in the world. A lot of what we had to come up with firstly was the research about the bridge, and its history, and its heritage, and the environmental issues, and safety issues, and the fact that the bridge has got to be maintained. Lots of unions on that bridge, 16 of them back then, 120 bridge workers, so sharing that space with them, the tow truck drivers and all those sort of issues all became part of that journey.
You're right, I didn't understand. Even though we did a lot of work, we didn't really realise just how complex this was gonna be. If I had known this was gonna take me 10 years, I never would have started. Simple. Really simple. I allocated an amount of money, I spent four times that amount of money and spent five times as long as I thought I would but I think also you get so far along a journey that if you think you're succeeding, and if you think you're heading in the right direction, you want to pursue that to the end.
Of course, I borrowed some money. Then, I borrowed some more, and of course, if I'd turned around, I was dead and buried. So far along that tunnel that there really wasn't an alternative. I didn't ever see an alternative other than pursuing it and needing to keep going.
Andy Scott: Look, fantastic comments from Paul there. I guess about just the real courage and drive of will to keep going when you're that far down the rabbit hole.
Adam Zuchetti: I thought it was really interesting when he confirms that the 10 years that he talks about was actually longer than the bridge itself to be built. That just absolutely floors me.
Another really good example of not understanding, I suppose, the risks and the impacts of bringing something new to market was Natasha Chadwick of age care providers, Synovum Care. She's doing something quite innovative in that space and some of the reactions that she was getting wasn't quite planned for.
Natasha C.: Probably more resistance. There's a lot of people that are looking at us, and watching us. Some of them, I think want to see us succeed and are really interested in the model itself. We're being asked to partner with a lot of people but there's also just as many that I think are waiting to see us fail because it's easier to say, “Nothing can be done. We have to continue to operate the way we've always operated because we know that that means that we've got a financially viable business.”
Adam Zuchetti: What's been the biggest challenge overall, would you say?
Natasha C.: Funnily enough, it's not accreditation, and it's not government, and it's not all of those things that most people would think it is. It has been, more often than not as I said, the staff not receiving the support that you would think from your industry. To actually have the support to go out there and do it, so that's been a challenge. There are some people in our industry who are incredibly supportive but many others, as I said, that would rather we don't do this because it demonstrates that it can be done. Therefor says, that we do need to make changes as an industry and not continue to operate the way we've always operated.
Adam Zuchetti: Yeah, so Natasha's comments there are really interesting. Innovation itself is thrown around a lot and everyone thinks that it's such a great thing but there are catches, I suppose, that you need to be aware of if you are going to do something innovative.
Andy Scott: We had Sasha Moore on a while ago. Sascha Moore's from Create Design & Marketing. She had, I suppose, a real good story that everyone can relate to, that all business owners need to do and that's focus on what you're good at doing and find other people to do the rest for you.
Sascha Moore: For me, a really critical component of that, having worked at both the corporate side of things and an agency side of things, was my strength, which really the work I do. It's the clients and it's the art direction and the marketing and so on and so forth. I don't do HR well but I've had to spend a lot of time with people and managing people, managing teams, and managing their issues. I worked out, when I was at an advertising agency actually in this building, that about 80% of my time at that point was managing people and about 20% of my time was on the work. For me to feel fulfilled and driven and optimistic, I need to be doing that 100% of the time.
The challenge for me was, how do I get a team and foster the culture that's going to support my strengths and also enable the team's strengths. To me a lot of that was autonomy and independence. I wanna be around people who are smart, who are really switched on, who can produce high quality work but are also highly independent. So, from the outset, I said to the team, "Look, where I want you to work, is wherever you want to be. When I want you to work, is whenever that suits you. How I'm going to plug in to you is to give you advice and direction and be a sounding board at critical points. I'm not gonna be here to hold your hand," because what that does is disempower them and stifles the creative or strategic process.
Andy Scott: Yeah, I think great insight from Sascha there on, I suppose, how to get yourself doing more.
Adam Zuchetti: But the risk, of course, on the flip side of doing more is burn out. That's something that a lot of business owners potentially face. Lauren Chang Sommer of Moi Moi Fine Jewellery, she had some interesting points to say about burn out and how she controls her time.
Right through your story, you were saying that you got married in November and then business was launching the month later. You've had children in the mix as well. Now you're trying to juggle running a store, running a facility in China, doing trade shows and being a national expert on the product, how the hell do you actually manage all that?
Lauren Chang S.: Such a good question. I don't know the answer to that. I do feel at the moment that I ... Earlier on in this year, things were pretty intense and I did have to really say to myself, "I have to actually balance this properly because I can easily work of every second of every day." So I did make a decision to really switch off on my days off and that actually helps me to be more productive. If I'm constantly working all the time, I start to get a little bit intense. I guess a little bit of anxiety, and maybe, just not so focused.
If I do take the time to exercise, eat well, sleep well ... I have actually set a time to go to sleep at night because otherwise I can just keep working. What I do, I know that I'm more efficient in the morning, so I get up at 5:30. I start answering all the emails from America and deal with more of those international crowd, get the house ready before the kids get up. Then, I deal with the kids for an hour or two, get their lunch and get them off to school, and then, it's Moi Moi for a while.
Yeah, I guess it's messing all into one but it's working at the moment. We've got a really good team even though we're small, we have a really great team. We have an international sales guy whose based in America and he's really amazing. I'm lucky that my sister Alana, and mom and dad, we have a good work ethic and hopefully my kids will see that and take it on as well. Don't know.
Adam Zuchetti: So Lauren's obviously got some great insights there about managing your time but also keeping family and yourself and your health first and foremost, because of course, we work to live, not live to work.
Andy Scott: Yeah, you're absolutely right, Adam. I love this last story at the end. This is from Sean Garlick from Garlo's Pies. Look, I guess it's really supported what Kermit has told us all along that, "It ain't easy being green."
Sean Garlick: That stuff happens all the time. The time that he thought we'd try a new thickener. It was a powder and he goes, "Oh, this is gonna be great. We could put this in right at the start rather than at the end," when you thicken the meat. He goes, "This is gonna save us a lot of time. It's just easier." We put all of it in and made all these pies. It was great. Then, we even sent them out, but we didn't realise something happened and it sent them green. It was like a fluro green inside and people bit into it and it looked like ... It tasted fine, but it just looked terrible.
Phil Tarrant: It's St. Pat's Day's pies, right?
Sean Garlick: Terrible!
Adam Zuchetti: It's all in your marketing, yeah? Wow!
Sean Garlick: No, that had happened.
Adam Zuchetti: Well, that's about all we've got time for today.
Andy Scott: Guys, if you have enjoyed today's show, please leave us a five star review on iTunes. It is the best way for new listeners to find us and for them to hear the great content we're putting out.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.