10 Lessons I Learned After Failing at My First Business

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Entrepreneurship through acquisition (ETA) is quickly becoming a household term among aspiring entrepreneurs who do not wish to start a business but prefer to purchase an existing business (not a franchise) from someone looking to exit their own business. I was attracted to this option because you already have revenue, customers, employees, and a system to grow the company after the acquisition.

In 2019, I purchased a company that managed and operated cemeteries. Pretty unique, right? This business generated seven-figure revenues and served a market that would be there regardless of recessions or economic downturns. What I didn’t expect was COVID-19. The COVID-19 pandemic has created numerous unanticipated obstacles that have impacted our revenue growth, labor costs and overall growth strategy. We went from planning to double the business within 12 months to liquidating the assets, removing myself from the payroll, taking on a second job, and scaling the business to survive.

Unfortunately, we struggled to overcome the consequences of the pandemic and ultimately had to close our operations in 2023. Despite the failure of my business, I learned ten key lessons applicable to entrepreneurs, franchise owners, and small business owners.

Here are the ten lessons failure taught me after buying my first business.

1. Explore non-traditional financing options

To finance my first acquisition I used the usual options: bank debt, seller financing and equity. Next time I will spend more time exploring more creative, non-traditional financing options that would limit the use of personal credit and out-of-pocket cash. These options include a supplier loan, integrator capital, exclusions, deferred down payments, revenue-based factoring and earnings.

2. Maintain healthy relationships with business partners and stakeholders with clear boundaries

When I changed my role from business manager to company president after the acquisition, I immediately noticed how my relationships with my team changed. There were times when it was difficult to converse with someone who is your advisor and landlord. Next time I will set clearer boundaries and expectations in the working relationships I have with my team.

Related: You have to fail if you want to succeed

3. No day-to-day operations for me = find the right talent to mentor and grow in this role

When I ran the cemetery business, I also wore multiple roles: sales, marketing, finance, operations, human resources and accounting. Due to the pandemic, I didn’t have enough resources to hire at least one chief of staff or an executive assistant to help me divide up all the tasks. I also recognized that my strength lies in sales, marketing and business development. My weakness is everything else, especially operations. Next time I will find the right person to sit in the right seat to run our business and have the freedom to do what I am most knowledgeable, talented and passionate about to grow the business.

Related: Employers Complain About Can’t Find Qualified Talent: Sounds like they might be the problem.

4. Diversify

With this activity I breathed, ate and slept all things related to cemeteries. While this is helpful initially, I can see the benefit of being more of a generalist who focuses on growth companies. With the next business I acquire, I will focus more on considering what other businesses can complement the one I purchased, whether by partnering with them, owning shares in them, or buying them outright.

5. Be flexible with your timing

Ideally I wanted to grow this cemetery business long term and retire. After this experience, I may be open to a period of acquiring a company, scaling it, and then selling it within three to five years and repeating the cycle. The key here is to have an open mind about what is the best path to choose and be open to change as you pursue it.

6. Make sure you take care of yourself and your family too

When our business was struggling, I too fought and took myself off the payroll numerous times to ensure my employees and their families were taken care of first. In retrospect, I should have done a better job running the company where my family and the employees’ families were taken care of even in difficult times. Whether that meant scaling back a project or changing priorities, I must recognize that the purpose of a company is to support the needs (and wants) of your customers, your employees, and your shareholders, including me.

7. Success doesn’t depend on me: it all depends on the team

Coming from corporate America as an individual contributor, I depended a lot on myself to make things happen. However, when my business felt the pressure to grow or die, I made a mistake by thinking that if you want something done well, do it yourself. This is a bad idea and not even sustainable. Many times I burned myself out, trying to do everything to keep the business alive. I should have asked for help earlier and recruited people who worked to their strengths to cover my weaknesses so we could save the company together.

Related: 6 Steps to Building a Strong Team

8. Align your company’s success with the success of your team members

I’ve learned that money isn’t always the primary motivator for all employees. Take the time to learn more about each employee’s professional, financial and personal goals. This is a great way to retain talent in a competitive environment because employees see that you care beyond just getting the job done. They can also see how their work is connected to the overall success of the company, which benefits everyone, including employees and their families.

9. Transition from individual to leader and advisor

Through this experience I realized that I am much better as a leader, investor and advisor than I am as a manager. In my next business, I want to find passionate and excellent managers so I can do more of what I’m passionate about: growing people and companies.

10. Be conservative with money

After purchasing my business, I expected a few potential clients to work with us before the pandemic hit. I prepared faithfully by investing in people, vehicles and equipment in advance. Next time, I should take a “trust and verify” approach and keep a more conservative, lean, scrappy mindset. I would make the necessary investments after signing the contracts.

Related: 7 Crucial Financial Tips to Fail-Proof Your New Business

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