0
0
Gini Dietrich

Mistakes Made In Growing a Business

By: Gini Dietrich | September 21, 2009 | 
0

Charlie BrownThis week’s Crain’s Chicago Business focuses on enterprising women (and yes, I’m featured). But I’m not blogging about it to toot my own horn. I think there is more to the story than Crain’s was allowed to tell and I want to share some of the things I’ve learned.

2008 was the recession year for Arment Dietrich

The communication business, historically, is a key leading indicator for the economy. Having a company not quite three years old  when 2007 ended, I didn’t understand this. I was scared to death, listening to all of the economists speak, but I thought I had some time.  I thought the recession would hit us in 2009 so I spent last year building staff and preparing for the downturn. Boy was I WRONG!

Key learning: Pay attention to economists, to politics, to policy, to new laws and regulations, to community leaders, to business bloggers and reporters. Even though it’s not your core expertise, and it may not affect you directly, it’s important to understand how the world affects your business’s profitability.

Starting a business does not mean you get to do your craft every day

I have a sign on my wall that I wrote two years ago. It says, “I am no longer a kick @ss communication professional. I am a company grower.” My Vistage Chair actually added “kick @ss” between “a” and “company”, which is kind of funny and drives me a little batty at the same time. I’m a bit OCD and he ruined my pretty sign. But I leave it to remind myself that, even though growing  a company is not my craft, I am getting better at it every day.

Key learning: If you start a business, and you decide you want to build something, be prepared to do less of your craft every day. I like to think of it as changing my career so that I feel like I’m really doing my job when I grow the business and less like I’m doing my job when I allow myself to go back into the day-to-day activities of communication.

Have a basic understanding of everything outside your core expertise

Last October, the bank called. Said I was out of covenant on my line of credit and that, because of the economy, they weren’t going to be lending money to professional services firms for the time being. I had no idea what that meant. I didn’t know what a covenant was or how we could be outside of one. I didn’t know what a borrowing base was, but they said I had to complete one immediately. I took it personally. I cried and cried and cried. I fought with my banker. It was a bad day. In fact, it was a bad few weeks.

Key learning: Be as educated as you can be about things outside of your expertise. Even if you have experts (in this case a controller or CFO), understand what your personal guarantee means, understand what you have to do to stay within covenant, understand how to complete the basic financial documents the bank needs monthly, and treat your banker as if he/she is your partner. Turns out, after I decided I’d rather pick myself up than close the business, the bank was very willing to work with us and we’re back in covenant and I understand everything they need to keep our line open.

It’s okay to fail

It should come as no surprise that I’m a perfectionist. I’ve never really failed at anything. So when I do something that is not perfect, I make a big mistake, or I do something I think people will perceive as failure, I’m REALLY hard on myself. I make mistakes every day. Sometimes they’re little. Sometimes they’re huge. And I beat myself up every time.

After the bank situation, and after we had two clients send us “Dear John, the economy sucks” letters right before the holidays last year, I went into a pretty deep depression. I beat myself up. Why didn’t I pay attention to the signs? How did I not know our industry is a key leading indicator? Why did I do some things my gut told me not to do? What were people going to think that I had a good three year run, but I couldn’t grow a business beyond that? How was I going to tell my staff we had to close? How was I going to tell our clients? How was I going to pay our outstanding vendor bills? Why had I built a business only to have nothing to show for it?

And then I happened across a Confucius quote that shook me and brought me out of my self-doubt. “It’s not in that we fail, but in how we pick ourselves up when we do.”

Key learning: It’s okay to fail. It’s how human beings learn. I went back to the office on January 5, 2009, ready to kick butt and take names! We ventured on a new path and shook up our business model. We had to do some lay-offs in January. We had to reorganize the business. I had to make some very hard, personal decisions. But the business is back in the black, every single team member is a rock star, we’re doing the work we love to do, and our culture now embodies everything I’ve envisioned for the past four years. I wouldn’t have done this had I not made some pretty big mistakes last year and everything were status quo.

So yes, Crain’s, this fledgling firm is growing and Global Domination is back on our minds!

What are some of the mistakes and key learnings you can share?

About Gini Dietrich


Gini Dietrich is the founder and CEO of Arment Dietrich, a Chicago-based integrated marketing communications firm. She is the lead blogger here at Spin Sucks and is the founder of Spin Sucks Pro. She is the co-author of Marketing in the Round and co-host of Inside PR. Her second book, Spin Sucks, is available now.

15 comments
tlcolson
tlcolson

Thank you for your transparent input into the business discussion. Many want to say "I did it right the first time" - but this approach doesn't empower others - because we all know we will make mistakes.

Keep building, Gini.
Women Rock!

Greg Pitkoff
Greg Pitkoff

I'd say my biggest awakening was when I realized I'd rested too much on my laurels during my first year in business. I'd set out with two substantial clients that gave me a firm base of revenue each month. When 2008 rolled around and the revenue streams from those two clients started to taper off, I realized I hadn't done enough to keep the pipeline filled with prospects and that I'd been myopically looking at those I did have in my sights only as incremental revenue and not as incidental in the event of lost business. The urgency with which I needed to remedy that set me on an intensive networking campaign that led to greater knowledge of and presence in LinkedIn, Twitter, Facebook and other means of connecting and communicating. I was able to turn the tide on the situation that started it all, but the process would have been much easier and less stressful if I'd been doing it with some moderation all along. Now I make sure to spend as much time meeting new people as I do keeping the ones I know happy.

Kevin
Kevin

These topics are right on and I have learned many of the same lessons during my years running a consulting company.

When I started my business, I continued to perform my craft everyday. In fact, I billed 40 hours/week for most of the 8 years I was in business. This was OK at first, because I was a one-man shop, but as took on a partner and started to grow the business, I probably should have changed my ways. My thought at the time was to provide first-rate service to my largest and most loyal customer. I succeeded in that goal, but I was left to run the business only on nights and weekends, which was not the right thing to do. My lesson wasn't that I wouldn't get to do my craft everyday, it was that I shouldn't do my craft everyday.

Having a basic understanding of those business aspects outside of your core expertise is huge. This is related to the first point in that you have to do, and understand, more than your craft in order to run a successful business. I was a software developer, but soon after starting a business, I realized I had to be a CFO, salesman, recruiter, benefits representative, payroll manager, banker, baker and candlestick maker. As Gini, says, even if you have experts hired in one or more of those areas, as owner, you should still understand what's going on and what could potentially cause problems. I learned a valuable and very painful lesson in this area. I won't go into the gory details, but not understanding the basics nor the risks associated with this lack of understanding certainly put me on the fast track to enlightenment.

Not being afraid to make mistakes was one of things I had down. Maybe it was due to my high school sports experience or because I was coaching youth soccer and football at the time, but I was not afraid to goof up. In fact, I never looked at making mistakes as failing. Failure, to me, is not in making the mistake, it is not learning from that mistake. If we are doing anything worthwhile, we are going to make some mistakes. Those of us who learn from, and don't repeat, those mistakes never fail. I say we should ALL be afraid to fail, but do not be afraid to make mistakes and learn from them.

Wow, thanks for the therapy session. It's all my Mother's fault isn't it? I thought so.

Great post, Gini!

Teresa Basich
Teresa Basich

These key learnings are not so foreign even in our careers working for other people. It's so important to pay attention to the ebb and flow of business -- I didn't, and look where it landed me (job searching, instead of intelligently moving on to a less volatile environment before getting cut)!

But, like you said, we must fail to succeed, and I had to fail in that regard to find what I really wanted out of my career. That's success, isn't it?

Your other tips, about not being able to perform your craft every day and having a basic understanding of business outside of your core of expertise -- also just as applicable. Especially for those in my age group (younger, really), just out of school and expecting great things from their work. We have to work hard, and there are times when that work won't be what we love or are best at, but it has to be done to move us forward. In that same regard, those things that we'll do will help us gain a better understanding of the business we're in, which will make us more strategic thinkers who are able to look at the bigger picture, not just at the niche of our expertise.

Long comment, but wanted to add my piece about this relating to growing a career as well as a business. Great post, Gini. :)

Jay Benfield
Jay Benfield

I enjoyed your post, thank you. I often say that I am "failing my way to success". Although it's sourced in sarcasm, there is a lot of truth to it.

Trial and error, particularly the error, is a great instructor. So much so in fact, that I have a hard time saying that a particular decision that resulted in difficulty was actually a "bad decision."

I think it's okay if we do our very best to make the right decision and end up blowing it. As hard as it may be to crash and burn, there's a lot to be learned. The next time we face a similar decision we'll have those scars, and possibly that lingering pain, to remind us. And over the long term, I believe that a person who is consistently taking action and trying to make good decisions will go a great distance.

I've learned some tough lessons this way - and you couldn't beat them out of me!

Blair Minton
Blair Minton

The hardest thing for me was figuring out what to do with employees. Once I discovered that you hire the best and brightest, then allow them to do their jobs, your business grows. Turning over decisions making to others is very hard. Learning you are not he most important person, that you can take time off, that you're employees want the opportunity to fail are so important. Oh, yes your employees will fail...and learn...and grow..just like you did. Only by giving yourself up can you grow a business...Christ learned that too and look what happened!

Gini Dietrich
Gini Dietrich

Andy - you are SO RIGHT! I never look at client's businesses, from just a communication standpoint anymore. I think, especially in our industry, running a business makes us so much better at our jobs. We understand how a non-tangible thing can really affect the bottom line.

Trish Baker
Trish Baker

I'm gonna have to retweet this one, great post! I try to live by that old business cliche "It is better to try and fail than to fail to try." Or put another way, "Imperfect action is far superior to perfect inaction."

Andy Abend
Andy Abend

Great post. When running my own ad agency, the learnings gained from mistakes have made me a better business person because I have a greater understanding of the business challenges my clients face, not just the marketing challenges.

Gini Dietrich
Gini Dietrich

Pretty amazing what happens that no one tells you when you start a business, huh? Maybe our generation of business leaders will be trusted more than our predecessors because we're bold, we're transparent, we're honest, and we tell it like it is!

Deb Dobson
Deb Dobson

A earnest and excellent post. Very important lessons you learned. Sorry you had to go through them, but the fact that you learned them will make you the wonderful CEO and leader that you are. And, person.

Nathan Mathews
Nathan Mathews

I have followed from foundation, to wear we are now with Kuru Footwear as the founder was my roommate and it has amazed me how many issues he has had to deal with that you would have never even known was an issue unless you had gone down that road before. Just like you realizing that you didn't have basic understanding of bank procedures. That is true, I have realized multiple times in life that you just can't know everything, but you have to have the ability to roll a bit with the punches, and take a step back and say, I don't know the answer, but I know that I am smart and I have smart people working for me, lets figure it out.

Meghan Wilker
Meghan Wilker

Gini - great post. Your honesty about the challenges of running your own business is inspiring and so necessary!

Trackbacks

  1. [...] I should also mention that through my little obsession, I learned a lot. With each failed attempt to hit my unreachable mark, I improved. This is one area in which I have been failing my way to success. [...]

  2. [...] she admitted to crying, she discussed her self-doubt, until she began to see it was ok to fail http://spinsucks.com/leadership/mistakes-made-in-growing-a-business .  I was amazed at her candor.  More importantly, I was amazed at how she addressed the failure [...]