Failure Is Not The End

“Haha, an extra $350 is not bad at all,” I was talking to myself. ”All I have to do is change the purchase date.”

I owned a Telco Agency franchise that represented some of the biggest Telco companies in our state in Perth, Australia. Our franchise group was so dominant that customers often received better deals to purchase the latest mobile phones from us than if they dealt directly with the Telco companies. We pretty much ruled the market.

We started with one franchise and moved on to add another two. Life was good. It was even better when I figured out how to get monthly bonuses simply by .. changing the purchase dates.

”Fred, how did you do that?” Anton, another franchise owner, was wondering. “You have been getting the bonus for 3 months in a row now.”

”Well, our sales staffs are very hard working,” I said to him.

”I need to steal a few of them from you,” he said jokingly.

”Yeah, you can try, they are loyal to one person only, me!”

”Haha, we’ll see about that,” he smiled.

Anton was not going to steal anyone from me. His sales staffs were twice as good as mine. He was one of the best franchise owners I knew. He knew the industry well and he was such a good leader. Sometimes I wished I worked for him.

Being a not-so-honest franchise owner, I tried to find other ways to maximise profits. So I learnt the system and every now and then I found loopholes. The latest one being a simple change of dates that would magically improve my monthly sales to ‘earn’ bonuses.

***

’Sorry, your account has been deactivated’ – a message suddenly appeared as I tried to login into the franchise network.

I didn’t immediately make the connection. I thought it was a system error. It was not. My account was disabled. They figured it out. My ‘creativity’ had been found out.

The weeks that followed were full of drama. I was fined and given a warning. They let me off easy because I had a good record as a franchise operator. I learnt my lessons though, no more changing dates for the bonus.

”Well, we got our agency back,” my wife said to me. “Please try not to cheat the system again.”

”Yes dear,” I said, feeling down.

I worked so hard after that incident. I needed to prove my ability to build the franchise without resorting to dirty tactics. I had to redeem myself, reclaim my self-respect and push away any self-doubt.

It was amazing how an embarrassing incident could turn things around so spectacularly. Maybe it was not so bad after all. I found my strength at the bottom of the valley.

***

”Did you hear?” my wife was panicking. “The Telco master franchise has lost all of the major Telco accounts.”

“What do you mean ‘lost’?” I started to panic myself.

”Lost as in the big Telco companies are not selling through us anymore,” she tried her best not to faint. ”We are left with small players.”

”It is barely enough to cover rent,” I said.

”I know!”

”So what are we going to do?”

”I don’t know!”

It did not take long before we started to feel the pressure. Small Telco companies typically tried to dominate certain corners of the market. All of their products were tailored to a very specific slice of the population. A great example is an unbreakable (but ugly) mobile phone designed specifically for the construction workers. It was hard to sell their products to the general public that visited our shop.

Making things worse, those big Telco companies started to open up their own shops competing directly with us. So tell me again how we were supposed to survive? It was impossible. Our sales dropped by more than 70% within a short period of 6 months.

I lost my ability to think clearly. I just wanted to stay in bed all day, staring at the ceiling. I was a zombie.

We were part of a small community group called ‘connect’. There were four to five families in each group. The idea was so that we could support each other. Honestly, I never thought much of it. In fact, I always hated going to this group. “Such a waste of time,” I always thought to myself.

“How are you coping, my friend?” Simon our group leader asked me.

”Not good Simon,” I said quietly.

”Come, let’s have a chat, I’ll make you tea,” he said. “We have a few minutes before the others arrive.”

I have to say, it was such a joy to be able to pour out my heart to someone else without being judged. Simon was such a great listener. He was so genuine. He didn’t say much, he just nodded, smiled, asked questions, and most importantly he was there for me.

That night after talking to Simon I went to bed with a lot in my mind. I knew I had to do something, I couldn’t just wait to be slaughtered by big telcos. I needed to find the strength to move on. You know how some people say it takes courage to start? Sometimes it takes a lot more courage to stop and let go.

I had been a franchise owner for more than ten years. It was a part of me, it was my identity, and I was about to let it all go. My mind could not get into gear. I could not comprehend the situation because I had never been in that situation before. How, what, why?

”We have to make a move,” I said to my wife in the morning.

”Yeah, I have been thinking about it too,” she replied.

”I’m not sure I’m ready for this,” I said.

”I’m not either,” she whispered. “But I feel like there is no other way.”

”I cannot do it,” I said to her.

”We’ll do it together.”

I felt like a failure, I felt defeated. The business that I was so proud of. The success that I built with sweat and tears for more than a decade. It was not fair. I did not have a fighting chance.

***

“Well, we’ve done it,” I said to my wife. I had a million things happening in my mind.

”Yup, no more Telco Agency” my wife replied. “Are you ok?”

”I’m .. I guess, yeah, I’m ok.”

”Are you excited?”

”In a way, I actually am.”

”It’s been a long 7 months,” she whispered.

”Yes, a very long 7 months,” I said quietly. “I thought we would never sell it.”

”But we did,” my wife smiled again.

”Yeah, we finally did.”

”Don’t think about it too much,” she said. “Let’s just leave it all behind.”

”I know, I just feel like an era is over.”

”Yeah, that is true.”

”Well, we can, however, start something new,” I suddenly felt much better.

“Yes we can,” she smiled again. “You can now do what you have been wanting to do in the last 3 years – life coaching.”

”I know …” I started to feel my smile creeping back.

”Come on, we have talked about it.”

”Yes we have, and now I really can, I really really can!”

“You can,” she said. “Remember what you told me 7 months ago?”

”What?”

”Failure is not the end,” she looked at me with her most beautiful eyes.

***

”Failure is not the real end, it can be the beginning of your success story.”

The Cavalry From Above

“So remember son, stick with your business for as long as possible. Because in business, boom and bust come in waves. This is not something you can control. If you stick around long enough, eventually, you will get your golden era. You just need to be ready when it hits you.”

That was what my dad said to me around 12 years ago. He had been in business for more than 30 years, so I thought it was great advice. Until of course I came to my senses and realised being an entrepreneur is all about being able to control my own destiny. I mean who has time to wait for this ‘golden era’? He was in business for decades, and we still lived in a modest 3 bedrooms house. Surely he would have come across his ‘golden era’ already?

***

Back in 2009, we were importing rags from a Canadian company. It was high-quality rags where the raw materials were collected from local charities around the country. They were not the cheapest, but we had been dealing with them for years, and they were always professional and reliable. Other suppliers tried to get our business, albeit we were never interested. We were one of the most prominent rags dealers in our state back then. We were small, but we were fierce.

There was a guy, Paul, who came few times to purchase our rags. He was an importer too, but he never said much about it to us. Mind due, his primary business was not in import. He told us about his plan though, going to Pakistan and India to search for new suppliers.

The Canadian company that we dealt with only worked in US dollars. Which meant being an Australian company we had to be careful with the currency exchange. Few percents off could mean few thousand dollars loss. I even established a foreign exchange account with a local financial institution to improve my overall exchange rate.

The strategy was to purchase US dollar when AUD dollar was stronger and put it into the forex account. At one time we accumulated more US dollar in the forex account than our own business account.

You can see how risky this currency exchange stuff was.

We managed the business pretty well. It started from one container every three months, then every two months, and in 2009 it was one container per month. We had a few of them on order at any one time. All because it took approximately two months from the time we put the order in until we received them in Perth.

I said to my wife that we were selling rags like peanuts. They just flew off the door. Looking at the way we were growing, we would reach our first ever $1 million sales that year, all from rags alone.

But of course, fantastic results did not come without its own risk.

You see, I never thought it would come to that. I prepared everything, trying to control every little area of my business. I had enough US dollar in our forex account to purchase two containers. Never did I know that AUD dollar would decide to plunge itself against US dollar and stayed at the bottom, for a long time.

But it happened. AUD dollar fell from a high 97c to a US dollar to a mere 61c in only a few short weeks.

We used up all of our US dollars to purchase two containers. And then things got worse because AUD dollar dropped even further to 50c. We did not have any choice but to pay the next order based on the weak AUD dollar. We tried to increase our price, but at that rate, unless we raised the price by 80-100%, we were still at a loss. An increase that much would only give our competitors an incredible window of opportunity to steal our customers.

The market would react, and the price would correct itself but not until another few months at least. We didn’t have the luxury of time. Our modest price increase was nothing compared to the profit we lost to the weak AUD dollar. We were running out of cash, very very quickly.

We lost at least twenty thousand dollars per container at that time. And we had a few of them on order. At the end of the day, we decided to cancel everything unless they were already on the sea. As a result, unless we started to purchase from our competitor, within one month, we would have nothing to sell. Our $1 million sales target were reduced to $0 within five months of AUD collapse.

***

I was sitting in my office trying to get my head around this dire situation. I could not believe only five months ago we were doing so well. Now we just had a little bit of stock left, maybe enough for few weeks.

I tried to think my way out of this, but my brain just couldn’t get into gear. I called everyone I knew to get advice from. Unfortunately, AUD dollar did not collapse against US dollar very often. In fact, it was one of the rare moments that it happened, and even more unusual because it stayed at the bottom for an extended period of time. It almost like AUD dollar found its happy place at the bottom.

One of the guys that I called said he never saw this happened before and this guy was a furniture importer for ten years before he became a pastor. I felt somewhat unlucky after that conversation.

My closest friend reckoned I should update my resume because the end was near. We didn’t talk much to one another after that.

And then I realised. This was beyond me.

This was out of my control.

OMG, my dad was right. Boom and bust came in waves. I was never in control. All these time I was just lucky.

The time finally came for me to face the worst in my journey as a businessman.

***

“Fred,” Paul suddenly appeared through my office door.
“Hi Paul,” I waved to him.
“How’re things mate?”
“Good,” I said, trying to hide my apparent stress.
“Remember I told you about sourcing rags from Pakistan?”
“Yes.”
“I did. I went there and had dinner with rags suppliers.”
“Wow, that was great.”
“Yes, one of them decided to make me their sole distributor for Perth.”
“Sounds like a great deal.”
“Which is why I am here now,” Paul sounded a bit nervous. “Well, are you interested in getting rags from me?”
“What sort of price are we talking about Paul?”
“Look, I know I am new with all these, but the quality is very high you wouldn’t believe it,” Paul replied.
“Yes, but at what price?” I was getting impatient.

And I swear to you if I could record the next five minutes conversation I would play it every day until such time that it was time for me to meet my creator.

“Fred, the price is excellent,” Paul smiled.

And it was. The price that Paul said was 20% less than the cost of rags we paid to the Canadian company when AUD dollar was strong. I couldn’t believe my luck. Paul appeared just at the right time with the right product, and the right price (better even).

There must be something or someone up there helping me out.

I was screaming in my head: “Look, if there is an intelligent higher being up there, thank you, thank you, thank you. Although next time, please don’t wait until the very last moment before sending the cavalry. A slightly faster help would be great.”

Our business was saved from disaster. Paul had been an excellent supplier. He was always ready to help. His company grew multiple times afterwards. I guess AUD dollar collapse meant he could sweep struggling rags dealers like me within a short few months. Now that I think about it again, it was a brilliant move by him. Well, I couldn’t complain. He did save my company.

And for us, we are back on track.

I am done trying to control everything. I know I have to be ready for incoming boom and bust. But deep inside my heart, I know someone is looking after me.

Somehow, I thought about you, dad.

 

 

What Marketing Budget?

When a business finds itself in financial trouble there is an inherent meaning which most consultants don’t get. The business has ‘financial’ trouble. It needs every dollar to survive. The last thing they need is another marketing budget for that campaign to get more leads which presumably will get them out of trouble.

We need to understand that there is no money left (well maybe a little bit).

We need to fix the cash flow first, cut cost, chase payment, move (not make) some cash into the bank (if there is any), and fix the fundamentals. Then we have a little bit wiggling room. These precious resources are all they have. That’s it, there is nothing else. If it is not enough then that’s it – it’s not enough – start to think about an exit strategy. The more time is wasted the worse it will get.

But don’t lose hope because it might be just enough for us. The challenge is to use these little resources to turnaround the business. And this is when we get a bit ‘creative’. The words ‘free’ and ‘creative’ will be your best friend in the next few months. In order to make all of these to work, we need to be creative in using freely available tools around us. The internet is a great place to find them. But also do some outreach to your friends, families, etc. – not to get free money but free contacts, advice, knowledge, etc.

Fix the fundamentals, hang on to every resource, and be creative to get and use more resources (free is preferable). Then we will have a good shot to turnaround the business.

Now one more thing. While it is great to have a strategy, the real impact will happen during execution. And things will change, the great strategy will be rewritten, and execution will stall.

So persevere, be flexible, focus, and take it one step at a time. We might not have the big budget enjoyed by larger companies. But our mind and mental strength will make up for it.

 

 

Breaking Point

Have you ever heard the story about a frog that gets boiled alive?

Well, there’s this little frog. It somehow ended up inside a big pot of water which was conveniently put on a stove. The stove was on by the way (but only with low fire) which means water got slightly warmer, then slowly got a bit hotter, and a bit hotter. Interestingly the frog didn’t try to jump out of the pot. Instead, it just sat there not moving a single muscle. So the water got even hotter until it finally reached boiling point. The frog didn’t move at all (you wonder why).

It eventually died, boiled alive.

This didn’t happen, of course, no frog was harmed during the writing of this story.

It could happen though. The science behind this is simple. The frog adjusted itself to the increasing heat of the water because it got hotter slowly. The poor frog would have jumped out of the pot if water got hotter quickly. But it didn’t, so it decided to stay and try to overcome (and persevere) in the midst of hot water. It got used to the new heat and when the heat went up it adjusted itself again. Then the time came when it was too late. It got to the boiling point and the frog realized it lost the battle – it was boiled alive.

Let’s use the same principles in overcoming tough times in business. The question we need to ask ourselves is similar to the frog. “Am I being boiled alive and I don’t even realize it?”

We also tend to adjust ourselves to difficult times. We become stronger so we could face adversity. There’s nothing wrong with that because it’s us (the person). What doesn’t kill us makes us stronger. It is very true indeed.

However, when we go through tough times in business it’s not only us that gets pummeled. It is the business itself also. So let’s rephrase the question a little bit now focusing on the business. “Is our business getting boiled alive and I don’t even realize it?”

Business is made up of different substances. Its blood vessel is filled (as you have probably guessed) with “cash”. While its infrastructure is made up of a complex relationship between owners, staffs, customers, suppliers, and other stakeholders the whole thing is run with cash.

Now, with tough times this complex infrastructure is damaged. Unlike the human race, a business does not get stronger after getting damaged. For example, a brand does not get stronger after it got bad publicity. A business does not lose customers and gets stronger as a result.

The people inside the business got stronger though. However, these experiences, skills, and everything else that the people learn during difficult times – they don’t always stay with the business. They move around following the footsteps of their owners.

The business itself would suffer. Its complex infrastructure split, its ability to earn and keep cash broke down. It would do that until such time that it would completely break. That is the breaking point.

So what’s the point of all these you might ask?

It is crucial to know the breaking point of your business.

As much as we want to persevere during tough times our business is separate from us. It does not have our brain, heart, and soul. We are the brain, heart, and soul. Just like the frog, we cannot control the heat around the business. On the other hand, we can control whether we want to make the jump or not.

Do you know your business’ breaking point?

 

 

Know Your Numbers

People ask me what the first thing to do when a business is in trouble. The obvious answer is “Cash Flow”. Cash is king – everyone knows that (almost everyone). So unless cash position is healthy everything else will fall apart. Fix the cash, stop the bleeding, then panic disappears and calmness ensues.

What the not so obvious answer is this: “know your numbers”

Before we try to fix cash flow it is imperative that we know the numbers. Everything from sales figure, profit & loss, cost of goods, cost of operations, hidden expenses, and so on. If we are to have a chance to get to the bottom of the pit we need to keep digging .. and keep digging.

Some people are happy enough to get “an idea” of where things are – trusting their gut feeling and intuition. There is nothing wrong with gut feeling and intuition. Those are important to make a quick decision. But when the time comes to make a more involved and analytical decision such as “where to cut cost that does not affect the core business” – intuition can be misleading.

Knowing your numbers can be heart-breaking. Most business owners in trouble might avoid this because they know the numbers are bad. They couldn’t face reality. Some convince themselves into denial – hoping and praying that everything will turn around tomorrow, or the next day, or the next day.

The problem is of course, the longer they wait the worse it will get. If you cannot do anything with the business then at least do something else. The point is, you have to do something. And all of these start with knowing your numbers.

Knowing your numbers will not kill you, not knowing your numbers will.

A lot of things in a business are out of our control. We can only do so much, try to anticipate, be pro-active, and response to the best of our ability. Everything else is not our problems because we couldn’t control them anyway.

So don’t feel bad or afraid, we are only humans. In other words, don’t be too hard on yourselves. Know your numbers and improve, or exit and do something new.

 

The Luck Factor?

“It’s an overnight success.”

“He’s done it again with his billion dollars ventures.”

“One in a million success story right in our city.”

We have heard it all. There are those ‘elite’ business people who just keep getting it right. These are the people that fill the headlines of business magazines. They are the ones everyone else listens to. People want to learn the ‘secrets’.

If only such secrets exist.

In reality every (well, unless it’s inherited) successful business people work hard during their business life. Not only that but most of them have no idea if their ventures would succeed or not. They just keep doing it, keep improving it, and keep innovating.

Then one day, they got it. They became an overnight success.

How does that happen?

I would like to present: “The Luck Factor”

It does have a lot to do with luck but more to do with preparation, speed, and hard work.

See, opportunities are everywhere. There is never a lack of opportunity around us. The only problem is not everyone can grab the opportunity and makes something out of it.

When someone see an opportunity, grab it, do it better and faster than his competitor, he is ‘in luck’, or is he?

He/she has:

  1. Ability to see the opportunity. While opportunity is everywhere, not everyone is able to see it. Most people just focus on what they want to see. Some people argue it is because we are supposed to focus on market niche. It is true that we are to focus on market niche – in our effort to market ourselves. However, that doesn’t mean we close our eyes on everything else. Remember, market niche moves around. They don’t stay still. Focusing on market niche requires speed and flexibility because they don’t stay still.
  2. Ability to do it better and faster. Now that opportunity is discovered, I bet you there are other people out there who see the same thing. So, it is now speed and quality. Can you turn this from discovered opportunity into real business opportunity? Faster and better – that’s the game now, and it is not an easy game.

So, when someone is ‘in luck’ – he/she needs to work hard to turn that luck into something tangible, something real.

Or like a wise man said:

“I find that the harder I work, the more luck I seem to have” –Thomas Jefferson

Breaking Strategy Limited

Many business managers and leaders are working long hours, and if they don’t, the intensity of their work is enough to send them to intensive care by the end of the week. These often result in their incapability to take a step back, to rewire their heads, into a more holistic, external view. A view which is important in devising a business strategy.

There are three things which can potentially limit business managers and leaders from creating good business strategies:

Time limit

As mentioned briefly above, busy people don’t normally have the time to take a step back. Time is the main ingredient in creating good strategy, it is finite, hence it must be utilized to the max. Spending dedicated time for business strategy is the only way to create one. Outside consultants can help tremendously in developing strategic plans. However, CEOs, business owners, and business leaders alike are the real master strategists of their respective companies.

Inside View

Working in the business, putting out fire on a daily basis, can affect vantage views. A good strategy must be developed taking into account external forces such as market, competitions, etc. When we are inside, our mind is filled with what’s happening inside the business. The customers who complain, the suppliers who send wrong goods, and so on. Filling our head with the proper information is important to create a good strategy. Take a step outside the business to get a better vantage view.

Simplifying Complexity

Business can be a nightmare to navigate through. Different parts, interconnecting, reacting, talking, affecting one another. From sales, marketing, administration, logistics, and so on. It just seems impossible to put everything together to develop a business strategy comprising all the complex components of a business. Maybe it is impossible. Creating a good strategy requires simplified version that human minds can comprehend. It is important though that the simplified version does not loose important parts of the business itself. Simplifying business complexity without loosing its essence – that’s what we need.

So there it is, some points which can limit the creation of business strategy.

Last but not least – what about small business? Do they need business strategy?

We believe small businesses need business strategy even more than the bigger corporations. The reason is simple: limited resources. Small businesses only have so much resources, every dollar counts. A good strategy will help to make sure that every little bit of resources is capitalized to the max.

Happy Strategizing!