Burning Cash, Learning Hard: My Journey Through Business Failure

Imagine pouring your heart, soul, and every penny into a dream, only to watch it crumble - this was my reality.

I had achieved what I set out to do. My company appeared large, professional, stable.

But at what cost?

I started with all the passion and promise of a young entrepreneur.

It spiraled into a storm of financial missteps and mounting debts.

The dream I chased seemed to slip further away with every decision I made.

And then it was gone.

It didn’t start out that way…

It All Started Because I Thought I Could Do It Better

Starting a business can feel like steering a ship into uncharted waters. It's both exciting and scary.

I started my first business after quitting my first computer job. I had been there six months. I was 23 and married a short while. I had no business experience and no college degree.

Start a business? Yes! I can do it.

How hard can it be?

At the time I was doing IT work for a small business. I built computers, set up networks, and fixed issues. Real khaki pants and polo kind of work.

Someone, we'll call him Jack, had taken a chance and hired me.

I got into computers during the dotcom boom. I soon ran into a major issue - I couldn't get a job without experience, and I couldn't get experience without a job. So I went to computer school and got a bunch of certifications.

I was lucky that Jack hired me, and I meant to impress.

After six months I had learned what I thought was quite a bit. And for a long while, I had thought about starting my own business. My wife encouraged it.

One day Jack told me that I needed to stay longer at client sites.

What I heard him say was that I was too fast (e.g. too good).

As I saw it, the problem wasn't that I wasn't too fast, it was that he needed to find more customers.

With this attitude, I decided to start my own business.

Blinded by Ambition

It was the dotcom boom. Everyone and their mother were starting companies. Venture Capital (VC) money was flooding in. If you had a website and a sense of a business plan, it seemed you'd get funded.

Computer school was buzzing with stories of going big or going home.

Looking at all this my ambitions became outsized for where I was.

Having a big dream is important. It's the fuel that keeps you going when things are hard. Every entrepreneur knows this. What I didn't know then, but would come to know, was what it took to get big.

In my eagerness to succeed, I overlooked the importance of a having a plan and watching my finances.

I spent countless thousands of dollars to look like a big company. I hired an incredible design for to design my:

  • Logo

  • Website

  • Business card (two-sided, full bleed)

  • Folder (cause paper things were important back then)

  • Inserts for the folder describing my services

They also wrote all the copy for everything.

Once the designs were complete, I had the business cards and folders printed up. I was savvy enough to print the inserts on demand because those could change.

So smart I was, saving money like that.

But wait, that's not enough!

I need to represent my brand when I'm out and about. I need nice polo shirts with my logo on them! They'll look great too when I have a table at events - gotta promote you know.

Hrm... still not enough. We can look bigger!

What do big companies have that I don't? Big companies have lots of services. I need to offer more than fixing computers and setting up networks. After all, having many revenue streams is smart, right?

So I made a deal with my design firm - I would resell their services for a commission. It seemed easy enough. When I was fixing a business' computer I'd sell them a website.

I wish I could tell you it stopped there, but it didn't.

One "brilliant" move I made was to sign a non-cancellable contract for a credit card machine.

Here's the answers to what you may be thinking:

  • Yes, a non-cancellable contract was legal - I hired a lawyer who told me I had to pay.

  • Yes, it was very stupid - rose colored glasses all the way.

  • Yes, it messed up my credit, for years, when I couldn't pay.

My ambition to go big and not go home got the best of me.

From Loans to Losses

I found myself at 23, married, with tens of thousands of dollars in credit card debt, and very few options.

That's when I took a moment and looked at my situation.

I was in debt and burned out.

Running on very little sleep, low quality food, and caffeine, caused me to get sick every three weeks. I would have to take a week off to recover.

It was completely unsustainable.

Something had to change, and luck would have a hand.

I can't remember how I met him, but I became a subcontractor to a reseller of dental software. He needed someone to set up the computers and network for his clients - dental offices.

This became my main source of income.

Subcontracting allowed me to survive, but I still needed a plan to pay back the huge debt. Without one, my business wouldn't last another day.

I did not have a plan.

Facing the Music

I had to face many hard truths:

  • I was burnt out from lack of focus. My lack of focus created a huge spiral of anxiety, which created yet other issues.

  • I wasn't going to make this business into the huge one of my dreams. I still had a lot to learn.

  • Paying back the debt meant I needed a stable source of income, which meant I needed a job.

I could sit here and blame all sorts of things on my business failing. September 11th happened and the economy tanked.

I won't do that.

Being a leader means taking responsibility. Much of what I did was within my control. My situation was what it was because of what I did.

I took responsibility, and I got a job.

I also called all my creditors and set up payment plans.

And the credit card machine with the non-cancellable contract? I hired a lawyer to help me with that. It didn't help - I had to pay.

Another hard pill to swallow. Another costly lesson learned.

Wisdom from Wreckage

You can read my story and think, "holy shit, he failed so hard." I don't completely disagree.

But, I learned many lessons from this experience. Here are three:

  1. Have a plan: "failing to plan is planning to fail" is a cliche for a reason. A plan keeps you focus on the end goal, and make strategic decisions.

  2. Focus on the fundamentals: having a big dream is important. To get there, become very good at the fundamentals - marketing, sales, operations. Form a solid base and build from there.

  3. Slow down: in my rush to get big I signed a bad contract. That contract ruined my credit for 5 years. I also spent tens of thousands of dollars on stuff I ended up throwing out. Take your time to grow.

I took these lessons and more into the jobs I had as well as my future companies.

Rising from the Ashes: Turning Setbacks into Comebacks

Over time I repaid my debt and repaired my credit. I was able to find jobs that gave me more skills, and I pursued a college degree.

It was during my undergrad that a friend of mine told me about a cool new technology - Ruby on Rails. It was the new hotness in programming.

This led to me starting a second business, running a tech conference, and speaking all over the U.S. and Europe.

But those are stories for another day.

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