Keep It Coming
This story appears in the April 2002 issue of Entrepreneur. Subscribe »
On his first try, Edmund Hillary failed at climbing Mount Everest. But he lived to share his story with an enthusiastic audience in England, shouting, "Mount Everest, you beat me the first time, but I'll beat you the next time, because you've grown all you are going to grow, but I'm still growing!" Hillary's boast was a bit off: His second attempt was a failure as well. But he persisted, and on May 29, 1953, Hillary and his porter, Tenzing Norgay, were the first humans to climb the world's tallest mountain. Or at least the first to live to tell the tale. If Hillary, now 82, had given up after his first try, he might still be an anonymous beekeeper living in New Zealand.
"We went from the New Economy to the New Reality before anybody had a chance to enjoy it." |
Running a business is a little like climbing Mount Everest: There's a great chance you're going to fail. The most current figures from the SBA show that 550,000 businesses closed in 2000. And an SBA study shows that only 39.5 percent of companies make it past their sixth year. And it's getting tougher-especially to find funding. "We went from the New Economy to the New Reality before anybody had a chance to enjoy it," says Emory Winship, managing director for Conversus Group LLC, a New York City consulting firm that assesses and turns around venture-backed start-ups that are in trouble. "Entrepreneurs went from millionaires on paper to paupers."
So if you've ever attempted a business before and failed, you have nothing to be ashamed of.
You're Not Alone
For a while, Matt Coffin's last name seemed appropriate. A death knell seemed to ring at his first two businesses. Well, the first, a storage facility that he started running in college in 1988, wasn't truly a failure. He wanted to earn money to put himself through school, and he did; making $20,000 over two years only working part time. But that was a veritable hit compared to his second enterprise, Fashion Reporter, a magazine he launched in 1997 and proudly described as "Entertainment Weekly meets Women's Wear Daily." It lasted nine issues.
"The last six months were an emotional roller coaster," says Coffin, 33, who had spent more than a year in preparation for the first issue. "I kept wondering: Should I shut it down? Should I not? And it put a lot of stress on my relationship with my wife."
Coffin couldn't find interested buyers, so he shut down the magazine, let his employees go and surveyed the mess. His last issue had broken even, but Coffin was just plain broke. He had lost $50,000 on the venture. And so he went to work for a publishing firm and tried to pay off his debts. It was 1998, and, for now, he was through with owning a business. For now.
Not Alone, Part
II
"I am quite familiar with the flavor of dirt in my mouth,
having landed face-first in the small-business arena on several
occasions," Lisa Johnson, 34, says matter-of-factly. "One
of the things I've learned is to just dust myself off and keep
going."
In the mid-'90s, Johnson's first business-a computer parts retailer that made more than $2 million per year-had been successful, except that her colleagues were running a dishonest operation. Reticent about the details, Johnson says she was "fearing jail time," so she bargained her way out of the business and struck out on her own. The Harvard graduate went from a business that paid her $120,000 per year to working for $8 an hour as a personal trainer at a gym.
Later, Johnson started a second business as a personal trainer, visiting clients throughout Massachusetts, sometimes traveling more than 200 miles in a day. Says Johnson, "I wasn't very successful, but I was in fabulous shape."
And Part III
Coffin and Johnson, of course, were paying their dues-just as
Patrick Brandt did in the aftermath of his 1996 creation, Cyberpix,
an e-commerce service photographers could use to catalog and
distribute images.
But soon after he started the company with a business partner, it was in enough trouble that Brandt couldn't draw a salary. Meanwhile, the business had put him deep in debt. Brandt had 10 credit cards-with an average balance of $5,000 to $7,000 on them. So he left the company; his wife, Natalie, went to law school; and they traded in their condo by the lake for a 600-square-foot apartment.
|
Another Helping?
"Perseverance is even more important than intelligence," says Stan Katz, a clinical and forensic psychologist in Beverly Hills, California, who notes that many graduate students pass wretchedly difficult courses not because of their brain power, but because of their desire to succeed.
Entrepreneurs, Katz says, need to have the same thirst for success that actors draw on to make it: "Think of your failure as an audition. You have to learn something from it."
That echoes Coffin's point of view. "I could start 10 businesses tomorrow that are related to my business," he says, "and I would probably beat any competitors if they didn't have the experience I did."
In 1999, Coffin realized he had a lot of experience-like being broke, which led to his inspiration for LowerMyBills.Com, a Web site that lets customers find better rates for necessities like telephone service and health insurance. Coffin's Los Angeles company now brings in more than $1 million a month.
"There are a ton of lessons that I got out of the Fashion Reporter experience," Coffin says. "One, you've got to raise a reasonable amount of capital to run your business for at least 12 or 18 months. Second, don't just chase money. Don't just start a business [in order] to have a business. You need passion for what you're doing. Otherwise, you'll end up failing with the financial end, or you'll fail emotionally."
Johnson discovered she had a passion for Pilates, an exercise first developed in the 1920s and recently made fashionable by stars like Julia Roberts. That's right, we have another happy ending. Johnson opened Studio Elle Inc., a Brookline, Massachusetts, Pilates studio, in 1999, with $3,000 in credit cards, a $7,000 bank loan and $10,000 from her mother.
In 2001, Johnson's five-employee enterprise earned $170,000. She's projecting $215,000 this year. And, yes, she has paid back her mother.
"It's scary to think that when you start a business, you won't have a weekly paycheck," says Johnson. "But it's scary to work for somebody else, too. Then they're your only paycheck, and if they go, you're S.O.L."
A paycheck was exactly what Brandt was relying on. In the wake of Cyberpix, he became an employee. But you can't keep an entrepreneur down for long. After a while, Brandt was able to sell the stake he still held in Cyberpix and pay off his debts. With a lifetime of entrepreneurial businesses-from a lemonade stand as a kid to a lawn service in college-paving the way, he was ready to begin again.
Brandt was still working for Network Services Now in 1999, when he created Dallas-based Skywire Ventures within the company. He spun off Skywire in 2001 to become the parent company of Skywire Technology, which invests in new technology businesses. Brandt, now 29, expects his company to make up to $5 million this year.
No Pain, Yes Gain
If you've never started your own business, you might start thinking "OK, first I need to lose all my money. Maybe I can even develop a drinking problem. And then, when things really look bleak . . . "
Ah, but you'd be wrong. Failure may be a frequent part of business, but you can lessen your risks. "Try to contain your failures," suggests Kevin Donlin, 37, of Minneapolis. "Think of your business as a ship and failure as an ocean. If a fire breaks out, you want a fire door on that ship to contain the flames."
In 1994, the mail-order business Donlin was running made a laughable five bucks. In 1995, his e-publishing business netted $95 in sales. Sure, those two businesses may sound like colossal failures, but they were part-time gigs, amateurish efforts that cost him nothing but time-many weekends over many months.
But you know what? "It's only failure if you haven't learned something from it," says Donlin, and, indeed, he launched a resume-writing company in 1996 and, in 1998, was able to quit his day job. "And I haven't bought a tie since," says Donlin, whose one-man operations, Guaranteed Resumes LLC and Guaranteed Marketing LLC, brought in more than $100,000 in 2001.
However you start your second business-or your 22nd-you can't become a success by moping about your past failures or predicting your future failings. Comedian Jonathan Winters once concluded: "I couldn't wait for success, so I went ahead without it." The future of your business is your call. Do you want to be a Sir Edmund Hillary or an anonymous beekeeper?
|
After numerous setbacks, Geoff Williams has written for LIFE, Ladies' Home Journal and other publications.
Contact Sources
- Conversus Group LLC
(415) 789-0509, www.conversusgroup.com - Guaranteed Marketing LLC
(877) 702-3487, www.guaranteedmarketing.com
