Living on the Edge
The last few months have been just unbelievable. We fired David, had to let go of Jason. One day I might blog about those, but I want to quickly jot the more serious part of the business:
This week we hit near bankruptcy — $1,000 left in our bank account. Granted we wouldn’t have gone under, but it would have meant 5-6 people losing their jobs next week + the majority of personal savings going into the company to build a way out.
The bottom line is we grew too fast. We hired 9 more people between December and January and bet heavily on a sales strategy that should have “worked on paper”. At the end of the day, I should have known better and made a bigger stink about numbers not tying out.
E.g. our plan was to increase our sale price to justify the extra commissions we’d be paying. The problem was that we paid our salespeople a flat commission (e.g. 15%) regardless of the discount amount applied to the deal. Thus a 30% discount would still pay out 15% of the newly discounted price. The problem was that even discounting 30% pushed us at or below the edge of profitability. Multiply this out and we have one problem.
A second problem came with people crowding out each other’s work. For example our newly hired 4 lead gens:
– 1 is a success
– 1 was fired
– The other two are pillaging each other’s leads and also taking leads that should have come in from our website by messaging them on live chat just before they fill out the forms.
In my view we were paying 4 salaries to get the results that probably 1-1.5 people would be producing.
Finally we hired fully fledged sales people and underestimated the training time needed.
Tim agrees, the future plan would be incremental growth. We pushed really hard to be on track for a $2.5MM number this year that we pressed ourselves hard.
At the end of the day we trusted too many people to work their asses off with a no excuses attitude. It was naive and we fortunately got a fresh loan to tide us over for a few months, albeit at a 15.9% interest rate.
Coming so close to the edge though even had me look at other job opportunities to see if I could work 40h/week + run the company to offset my salary. Going through this process, I realized how I really would not want to contribute somewhere other than to myself.
So I’m back and stronger than ever before. I plan to finish the Abstracts part of our software package . Website, marketing materials, sales materials, demos and development. I plan to be a one man show for the next 9 months to build a second product wing. I’m challenging myself to produce $150,000 in revenue and get about 20-25 customers in the process.
The best thing that can happen is the kinks in our Award Sales get fixed and they end up knocking it out of the park. But I don’t want to be pushed to the limit with no backup plan again.
Maybe we choose to abandon abstracts again, but doing so I’ll go in knowing 100% that we have a strong plan to succeed.
We’ll get there eventually.