fail2A girlfriend was recently telling me about how her entrepreneur brother joined a ‘failure club’. The idea being that mistakes are part of the process of building a business and that we can all learn from each others’ errors. This takes the shame out of failing, acknowledges the lessons and helps everyone keep on keepin’ on.

I recoiled at first. ‘Yuck, who wants to hang around with a bunch of failures!?’ However, as I thought more about it, it made sense. As C.S. Lewis said “Failures are finger posts on the road to achievement”. And let’s face it, it is instructive to learn from the mistakes of others.

So in this spirit, I’m sharing some of the ways I really blew it last year. Like, seriously bit it. Had my ass handed to me. How I just ate it. Got totally schooled. You get the idea…

Fail #1 – Got overconfident. The first quarter of 2012 was my best ever. I broke revenue barriers left and right, orders were pouring in. ‘This is it! it’s happening!‘ I thought. What I didn’t understand is just how cyclical my business is. My big sellers, printable wedding stationery kits, fly off the shelves from January to April. Then, everyone gets married and stops buying wedding invitations. Sales drop off a very steep cliff. This over confidence led to…

Fail #2 – Bad cash flow projection. No cash flow projection, really. Since money was rolling in, I decided to invest in a major overhaul of my eCommerce platform. I, along with my developer, severely underestimated the amount of  time and money it would take. We thought it would cost €2-3000 and a few weeks. It ended up taking €10,000 and 3 months. I also didn’t do enough research on the new version of the software, and it turns out it was a dog. I ended up having to pull the plug and go back to the previous version of the cart. It was an expensive, time-consuming nightmare. I should have been using that time to create and market new product lines for 2013, so there was an opportunity cost as well.

Fail #3 – Not focusing on my target customer. Fail #1 led to untimely investments like the new shopping cart fiasco and signing up for a big bridal fair. Although the wedding market in Germany has gotten much more sophisticated in the last 36 months, it’s nowhere as near as segmented and niche as in the States. Bridal fairs here tend to be big ‘cattle call’ events as opposed to fairs targeted towards specific markets: luxury weddings, indie weddings, gay weddings, etc. I spent €3-4000 on a booth at a fair where maybe 4% of the attendees were my target market. I doubt I will ever recoup the investment, in both time and money. Total debacle.

The good news is, I had a ‘Plan B’ to deal with these disasters. I sat down with my husband and looked over our finances.

We lent the business from our savings, and instituted a ‘monthly business review’ (more on that later). This review focuses a LOT more on profit, cash projections and actions to reduce expenses and increase future revenues. Not fun and sexy, but a very healthy business habit, which I’ve come to enjoy.

Then, I activated the real plan b, which was always part of the discussion when I quit my day job.  I freelanced  to make up for the financial loss. I’ve mentioned this in a few posts. I really hated having to do this, I mean really hated it. But, within two weeks of putting the word out to my network I was back in the old game. Three months of that put me back on sound financial footing. I hope I never have to do that again, but it’s good to know that I can if I have to.

So there you have it folks! My 2012 train wreck extravaganza. Any brave souls out there willing to share their big blow ups?

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