We Had 3 Months Left. Here’s What Entrepreneurial Leadership Looks Like.

I’d like to tell you a little story.

It’s actually a very personal one… and it’s about one of my early failures as a founder.

You see, back in 2012, I was running a ‘successful’ marketing agency.

I was making some good money, feeling good, and enjoying the process. Everything felt easy, fun, and cool. Like in one of those Hollywood movies.

It was, really, everything you would want in a new business…

Well… I know what cliche you’re expecting now.

And you’re right, haha. It went totally downhill.

There were very few clients, and month after month, our debit and credit didn’t match. I couldn’t pay my employees, and, well… chaos ensued.

I want to take you through the process of how this catastrophe happened, show you some tough decisions I had to make to manage it – the kind that define real entrepreneurial leadership……

… And I’ll keep you curious until the end of the article so you can find out how it turned out 😀

What? Was I not supposed to say that? My bad…

But don’t you even THINK about scrolling all the way down! Cheater…

Why Did My Business Start Failing?

As I already hinted, the business started going downhill.

We were simply running out of money in our accounts and had to start eating our own financial reserves.

I mean, that’s what you have to do when you look at your company’s bank account and see a big, fat ZERO.

So what the hell happened?

We weren’t so sure ourselves either.

It actually took us not one, but THREE crises, to realize that maybe…

Just maybe…

We had hired too many people and relied too much on rapid growth. Whoopsie daisy!

See, rapid growth is amazing, especially in startups. But that growth has to be supported with strong fundamentals.

Overused metaphor in 3… 2… 1…

If you keep adding floors without strengthening the foundation and the lower levels, eventually the whole thing becomes unstable and starts looking like the Tower of Pisa.

The more you grow, the more opportunities you’ll have. That’s undeniable.

But you MUST learn to say ‘no’ to certain initiatives, ideas, and opportunities that don’t align with your business stage.

Since we’re talking about an agency, let me give you an example of this (unrelated to my story):

If a client comes to you with a request that’s ‘outside of your zone of genius’, you don’t have to accept it.

If you must, to pay rent, I understand, and I encourage you. But if you’re already doing well, such an opportunity can end up taking more time and energy than you have.

Back to my fun story… 

How Difficult Is It To Fire People?

Spoiler alert: very.

If you’re an entrepreneur, it’s something you’ll most likely have to do… and oh boy, it’s not nice.

As a leader, I hired my employees. Promised them a salary.

I felt like I was responsible for their life. Partially because their lives depended on that job.

They had rent to pay, food to eat, and some even had children.

That’s why firing is so difficult, especially because it’s not their fault. It definitely didn’t feel that way. They weren’t the ones who decided to scale the company too fast for its own good, you know?

So, some people were let go. Others took salary cuts. All of it was brutally hard.

But here’s what happened next…

The Turning Point: Becoming an Investor In Your Own Company

I sat down with my co-founder and said:

“Let’s pretend we’re investors. Would we put money into this business?”

The room got so silent you could hear a fly buzz. The answer to this question was clear.

“No, no I wouldn’t”, said my co-founder.

That was the moment when we distanced ourselves and really looked at our company objectively.

So we thought, brainstormed, counted financial tables… and understood that we had money left for just about another 2 or 3 months.

When you’re in this ‘investor mode’, you abstract yourself and forget everything that is happening in the company…

… and sadly, (or happily, because that’s how you fix it) inside your own mind.

You stop looking at people as people. You forget that they are people at all.

You just look at them, at everyone, and yourself too – from the point of view of function for the business.

You ask, “Will they bring us the necessary specific function or not?”

And you take the necessary steps to flip the situation.

Here are three “Investor mode” things you need to look at:

#1: If you have dug yourself a hole, the first thing you need to do is stop digging further.

A tough question for any startup is, “Are we more likely alive or more likely dead?” If “more likely dead,” stop doing what you were doing – do not increase staff, do not take more money, stop pouring money into advertising.

Get out of the situation with minimal losses and start doing what you haven’t done before.

#2: Startups don’t die because ‘we ran out of money,’ but because the founders did not address key problems while they still had money.

The difference between success and failure lies only in the speed of problem detection and finding solutions.

#3: A startup with a promising product can become bankrupt if you ignore these three disciplines…

Financial planning, organizational structure, and operational management.

Injecting money does not solve these problems, but only exacerbates them. Treat the disease, not the symptoms.

If you want to AVOID a potential crisis and overcome business challenges before they even happen (so as not to do what I did), you’ll have to measure metrics and base decisions on them.

If you don’t, you run the very real risk of violating the “do financial planning correctly, you dummy” rule.

I have a course on this, called Unit Economics. It will help you look at your business objectively, turn the math in your favor, and avoid catastrophes like the one I’m in the middle of describing…

… Which I’ll be back to telling now that this commercial break is over.

Is This The Part Where You Say That You Hit a 3 Billion Dollar Exit Because Of Your ‘Entrepreneurial Leadership’?

Pff, that’s pocket change for me.

Just kidding – and no, your prediction is incorrect.

So where were we?

Ah, yes, cutting people’s salaries and firing them. Beautiful.

We told them, “Look, guys, either we go home right now and completely end this business… Or we take the toughest possible steps right now, and we hope the situation improves.”

People in our startup saw that we were on the verge of survival. We were all on the same boat.

Suddenly, the resources of the whole team sharply activated.

Everyone worked faster, smarter, and better. It was like we were a completely different company.

And in 2-3 months, things started getting better. We actually started growing again! (so much for the 3 billion dollar exit…)

Now, am I telling you to get into a crisis and put families at risk to unlock your inner beast?

YES!

No, I’m not – but you can still learn something from this.

If you already have a job and a source of income, and everything is going well at work or in your business… Your conditions usually won’t allow you to do something truly outstanding and new.

In most cases, truly successful and amazing things happen when you are in a situation of inevitability, when there is no other option but to succeed.

When you have no other choice but to create a successful business or product.

It’s in these situations of hunger – when you’re under pressure – that the biggest breakthroughs happen to your business and product.

So sometimes, you need to deliberately put yourself in uncomfortable conditions.

That’s when you’ll be motivated to give your 100%, 120%… F*ck it, 200%.

The end 🙂

Except for if you want to take a look at our Unit Economics course, or download our 8D Framework To Launch Your Business, which you can get right here:

Takeaways

I just told you a very personal story… which you can read literally above here. So I won’t repeat, but I’ll give you a good summary of the insights that I tried to sprinkle into the story:

• The more you grow, the more opportunities you’ll have. That’s undeniable.
• But you MUST learn to say ‘no’ to certain initiatives, ideas, and opportunities that don’t align with your business stage.
• When you’re in a crisis (and also when you’re not), it’s very useful to ask yourself: “If I were an investor, would I put money into this business?”
• If you have dug yourself a hole, the first thing you need to do is stop digging further.
• Startups don’t die because ‘we ran out of money,’ but because the founders did not address key problems while they still had money.
• A startup with a promising product can become bankrupt if you ignore these three disciplines…
• Financial planning, organizational structure, and operational management.
• In most cases, truly successful and amazing things happen when you are in a situation of inevitability, when there is no other option but to succeed.