The Desperate Entrepreneur
“Desperation is the raw material of drastic change. Only those who can leave behind everything they have ever believed in can hope to escape.” – William S. Burroughs
“I have to make this business work.”
That’s what Ryan, a desperate entrepreneur with a serious problem, said to me the other night. He had been referred to me by a close friend, and wanted some advice.
But Ryan’s business isn’t just in trouble… it’s gasping for its last breath of air. What he needs is business “triage” not “advice.”
As he was describing his predicament to me over the phone, his kids were screaming in the background. And I thought to myself, “The first thing you need to do is find a quiet place to work – one that’s separate from your family’s activities.” (For me, it was the local library – and, eventually, a small back bedroom… with a bolt lock.)
My heart sank for Ryan – because I know what it’s like to be desperate for answers to business problems when you’re just starting out. My problems may not have been as severe as his, but I’ve been there.
His main problem is that he is in no shape right now to receive my (or anyone’s) counsel. Not because I’m so wise and business savvy, but because he is so overwhelmed.
It would be great if Ryan could step back from and unemotionally contemplate his situation, handling the most critical problems first. But he can’t. He’s too upset.
What’s more, his wife is probably asking a lot of questions, his kids want all his attention when he’s home, and creditors are pounding on his door for money. On top of that (from what I could tell from our short conversation), his problems are much deeper than a temporary “setback.”
Business failures are like heart attacks, usually a symptom of something that’s been going wrong over a prolonged period of time.
Anyway, Ryan asked if we could meet for “two or three hours” to discuss “everything.”
I’ll help almost anyone when it comes to launching, running, buying, or selling a business. But I am convinced that the root of Ryan’s problem can be discovered in a matter of minutes – not hours. Determining the solution or course of action for him to take may take a little longer… but I wouldn’t be addressing solutions in our first meeting anyway.
I told him that though I wouldn’t be able to meet with him face to face, I’d be happy to assess his situation and recommend a course of action that should resolve some of his problems. But I said that before I could do that, he needed to send me an e-mail with three very specific things in it:
- A brief overview of his business (target market, competition, sales, etc.)
- An explanation of why he thinks his business is failing
- Specific suggestions for what he thinks I can do to help him
I’m still waiting for that e-mail. Maybe Ryan will be in a better frame of mind to receive my advice when he hits rock bottom.
Had he taken me up on my offer, I would have looked at his expenses and studied how his sales are generated. In my 25 years of experience, I have found that the number one problem most desperate entrepreneurs have is a misunderstanding of the “first sale” principle (which you’ve probably read about in ETR many times).
Their second problem is usually that they are under water – with massive debt, expenses, payroll, collapsing trends, or a combination of all four.
One of the best ways I’ve found to control debt and expenses is to stop using credit cards for business expenses. There’s nothing inherently wrong with credit. But when we’re talking about a business that’s gasping for air… that calls for drastic action.
Most entrepreneurs don’t need nearly as much junk for their businesses as they think they do. Therefore, if your business is on its last legs, I’d suggest that you do without anything that’s not absolutely necessary… like fancy couches for the waiting room or engraved stationary or an espresso machine in the break room or mugs with your company logo on them.
The good news is that you can avoid ever getting to the point of desperation. Sure, businesses fail. That’s a fact of life. Changes beyond your control can occur overnight. But it’s what you do “between fortunes” that matters most.
You can hit two proverbial birds with one stone by understanding the wisdom of the “first sale” principle. It simply means that the first thing a new business must focus on is “making the first sale.” Once you’ve made that sale, you can ascertain how it was done. And then you can put more effort into doing it over and over.
That’s why I’m such a big fan of direct marketing. It enables you to accurately track and analyze your sales.
As I said, the number one problem of most desperate entrepreneurs is that they have skipped over the “first sale” principle. Even if they initially generated impressive sales, they failed to figure out HOW those sales were made. So when the competition showed up offering better products or services at a lower price, they started losing sales.
Losing sales is not a big deal if you know how to generate more of them. You simply retool your marketing message and put it into the hands of qualified prospects. But if you’re losing sales AND you’ve got massive debt, overhead, bills, and a payroll to meet… that’s a recipe for becoming a desperate entrepreneur.
And when you’re desperate, it’s almost impossible to make wise, calculated decisions that will enable your business (and sales) to take off again.
I have a passion for helping entrepreneurs succeed. I’m convinced that there is hope for almost any situation – even if it means you have to throw in the towel and start from scratch.
By understanding the importance of that “first sale”… by understanding how and why certain products or services sell better than others… and – most important – by being open and ready to receive good advice, you can pull yourself up from even the most desperate position.
[Ed. Note: If you’re looking to start a business but just can’t come up with the right idea, consider subscribing to Marc Charles’ weekly Profit Center Dispatch service. Marc’s reports tell you how to get started and who to market to. He also includes insider tips to accelerate your success.]