Top 20 Lessons Learned in 20 Years of Business
Scaling September 26, 2019 Kristie Holden
This year marks our 20th year in business! To celebrate this milestone, we’re sharing a few of the mistakes we’ve made and lessons we’ve learned along the way. Be prepared, it’s a long one but a good one!
A 20th anniversary is not something that all businesses get to celebrate. 30% of new businesses fail in the first year or two and only 25% of businesses make it to 15 years or more.
Over the last 20 years of running the business, there have been many proud victories, exciting moments, and accomplishments. There have also been many challenges and mistakes made along the way. While the tough times have been challenging (and it’s inevitable there will be more in the future), they’ve presented opportunities to learn and grow. We take these lessons learned into each new year to position ourselves for success and do our best to avoid making the same mistake twice.
As the saying goes, “it’s only a mistake if you didn’t learn from it.”
After picking our founders, AJ and Michael’s, brains on the top mistakes and lessons learned over our 20 years, here are the top lessons that stand out:
1. Establish a business methodology early on
When we started the business, planning and decisions happened in a fairly ad-hoc way. It wasn’t until we started adopting the Rockefeller Habits that we established a framework for the business that built in the discipline around planning and how we make decisions for the long term. The lesson here? Start this early on for a strong foundation of your business.
“Establishing our business methodology in the second or third year would have helped us keep the right perspective when making daily decisions.”
– Michael Clark, COO of Marketcircle
2. Invest in a business coach early on
One of the best decisions we made was to hire a business coach. We just wish we had done it sooner. If you look at any competitive sport or activity, having a coach is an expectation and necessity to improve. You wouldn’t see an olympic medalist without a coach. You wouldn’t see a professional sports team without a coach. Yet, when it comes to running a business, investing in a business coach is not as common as you’d think.
It’s best to bring in a trusted advisor sooner rather than later. For some businesses that’s an investor on the board, but for bootstrapped companies like us, you need a mentor or business coach. It’s well worth the investment. Sure, you may be able to figure it out on your own but it likely will take you years as apposed to six months. Having a business coach helps you avoid major mistakes, establish good habits and practices, and make better decisions.
“After starting to work with our business coach, it took us a while to unlearn bad habits we had developed over years. They became muscle memory. Had we brought in a business coach sooner, it wouldn’t have been as difficult to break those bad habits.”
– AJ, CEO of Marketcircle
3. Focus on the company over the product
One of our many favourite quotes is from Jason Fried, “Your company should be your best product.” Your company is not your products, it’s your people and processes that make your company.
We’ve made the mistake of focusing too much on the product and neglecting the business. We’ve corrected that mistake by implementing the Rockefeller Habits methodology. Every month and quarter we make deliberate time to zoom out and focusing on the company. How are our people and processes doing? What’s working, what’s not working, and what can we improve?
It’s important to invest time in evaluating and constantly improving your people and processes. When the people and processes are working properly, everything else falls into place.
“We often asked ourselves how the next version of the product should look when we should have been asking ourselves how the next version of the company should look.”
– Michael Clark, COO of Marketcircle
4. Don’t slow down your own learning and personal development
One of our core values is Kaizen which means continuous improvement. To grow your business, you and your people need to be constantly learning and growing. If you want to increase your rate of growth, increasing your rate of learning is critical.
“There was a period of time where I significantly slowed down my reading and learning. Looking back, I can see a correlation to when the business started to stagnate. I definitely notice a correlation between the frequency of books I’m reading and the rate of growth in the company. The more we read and apply what we learn, the faster we grow.”
– AJ, CEO of Marketcircle
5. Learn to be comfortable being uncomfortable
Making the commitment to continually learning is half the battle. The other half is applying what you learn. This is where things often get uncomfortable. It can be challenging and even painful to learn and apply new things. Growing is uncomfortable. When we push ourselves out of our comfort zone, we grow but that process can be uncomfortable. We’ve had to learn to be comfortable being uncomfortable.
“I didn’t fully grasp this concept until a few years ago. I should always feel a little uncomfortable because that means I’m pushing and growing.”
– Michael Clark, COO of Marketcircle
6. Be proactive about avoiding burnout
A killer for productivity is burnout. You may feel fine putting in 12 or 15 hour days but there’s only so long you can do that before it catches up to you. You have to slow down once in a while and give your body and mind time to recharge. Most people don’t appreciate this until they experience it. Most entrepreneurs think that they won’t burnout, or burnout doesn’t exist. It’s not until they go through it that they prioritize never going through it again. It’s just one of those things, but being aware can help if it happens. This was a topic brought up many times at Business of Software Conference that we recently attended in Boston.
To avoid burnout and make sure you’re in a healthy physical and mental state to run your business, it’s important to find out what things help you recharge. There’s lots of different things that work for people such as:
- Reading a book
- Watching a movie
- Playing soccer
- Taking a vacation
- Taking a nap
- Take a half day or full day off
“Over the years I’ve learned to identify the signs that I’m not as optimal and possibly headed for burnout. The signs may be different for everyone. It could be fatigue, low motivation, forgetfulness, difficulty getting out of bed, or feelings of being overwhelmed. Once you identify what those are, you can take the cue to rest and recharge as needed.”
– Michael Clark, COO of Marketcircle
7. Fire bullets, then cannonballs
One of the mistakes we’ve made that have been painful things to learn is allowing projects to bloat into these massive things that take a long time to execute and sometimes end up not having the impact we’d hoped. Examples of this were features we added to Daylite that ended up bloating into 6 month or multiple year long projects that should have been scoped into 6 week projects to test if they were the right thing to solve customers problems. Other examples were marketing campaigns or strategies that took way longer than they should have and had minimal impact.
To avoid investing too much time in something that doesn’t work, and to keep the scope of projects tight, we’ve applied the concept of “firing bullets before cannonballs” – a concept from Jim Collin’s book Great By Choice. It’s similar to the idea of doing a pilot before filming an entire series. We’ve also started applying Basecamp’s Shape Up process for product improvements and new features.
We’ve learned that it’s much more effective to start small then test and adjust, test and adjust, and keep tweaking until we get it right before going full force. Whether it’s a new idea, a new process, or a new strategy, ask yourself how you can test it out on a small scale first and what time and resources you’re willing to invest to test it out. How can you take a year-long investment and test it in one month? Or how can you take an idea for a new project or process that’ll require a whole department and test it with just one person first?
Another tip to help you identify if your bullet is small enough is to scope it until there are no dependancies. If there are no dependancies on other projects or teams, you’ve gotten your experiment focused enough.
8. Don’t make reactive decisions based on cashflow problems
One of the challenges in any business is managing cashflow. With our previous licensed-based model, cashflow was difficult to predict because revenue fluctuated so drastically from month to month. These cashflow problems led to us making short-sighted decisions in the past that then caused bigger problems in the long run.
An example of this was releasing Daylite 4 too early. We made a reactive decision to rush the release of Daylite 4 in order to generate more cashflow. While it worked to generate cashflow for the short-term, we paid for it in the long-term. Daylite 4 had a lot of bugs which was a nightmare for our support team. On top of that, it hurt our reputation and caused a lot of customers to abandon Daylite. While some came back with the release of Daylite 5, it was a painful lesson that took a long time to recover from.
We’ve learned from this mistake and a big part of helping us avoid making it again was transitioning to a recurring revenue model. While the transition was challenging (no surprise most businesses don’t make that transition), the result now is more predictable revenue which allows us to slow down and think through decisions instead of reacting to cashflow problems. An example of this is while we felt immense pressure from customers to release Daylite Mail for iPhone & iPad as soon as humanly possible, we knew the best decision was to slow down and do it right. This decision was difficult to make, but the result was a smooth roll out with positive feedback from customers so we know it was the right call.
9. It’s okay to say no to some customers in order to say yes to more
In the early days of the company we had a tendency to make promises to new customers in order to make a sale. We’d add a new feature that only one customer needed so that we could win that customer. We ended up adding a bunch of features that only 20% of customers needed as apposed to saying NO to those potential customers and focusing on things that impacted the 80% of customers.
The lesson learned here is to look at things strategically and decide whether or not things are a good idea for majority of customers. Don’t make promises in order to make a sale.
“We had to learn how to be comfortable with saying NO to small piles of money in order to say yes to the bigger ones on the table.”
– Michael Clark, COO of Marketcircle
10. Don’t announce things too early to customers
Another trap we’ve fallen into was announcing news too early. When there were a lot of customers asking about something, we were afraid they’d walk away before we were able to build or release it. So we’d announce things that we were planning on doing or things we were working on before we had them in beta. Prime examples of this were that we announcing that we were working on Daylite Cloud and Daylite Mail for iOS way before we were ready.
The funny thing about life is that it usually doesn’t quite go according to plan. Problems arise that force you to prioritize. What we start working on doesn’t always end up making it’s way to the customer because problems come up and other priorities become more important. This is why we don’t have a public roadmap for our products. Until we have something in beta, mums the word.
11. Focus means saying NO
We used to have a really difficult time with focus. We had too many projects and priorities going on at once. The result was feeling constantly busy but not seeing the results we wanted and things took forever to complete. We were moving 50 things a tiny bit forward when we should have been focused on moving one or two very important and strategic things over the finish line that would have had a bigger impact.
One of the lessons we constantly repeat to remind ourselves is that focus means saying NO. It’s extremely difficult to say no to customers, no to good ideas, and no to good opportunities – but it’s crucial in order to execute on your plans and strategy. No doesn’t always mean no forever, it often means no, not right now.
We wrote about how saying NO is a superpower in this post How we’re overcoming the problem of not executing on plans.
12. Don’t be the bottleneck, get comfortable delegating
When you start a business, you have to do everything yourself. The interesting thing is that what makes you successful in the beginning by being able to be a jack-of-all-trades is what can hurt your business in the long run and prevent you from scaling. To scale, you have to be able to delegate. You can’t do it all yourself.
It’s hard because your business is your baby and it’s difficult to let go and trust someone else to take the ball and run with it. But if you don’t let go, you’ll be the bottleneck that prevents your company from growing. This is why it’s so important to set clear expectations and outcomes you want your team to achieve. We achieved this through implementing Scorecards, which I’ll explain more down this list. Scorecards are a great tool to help overcome that fear of letting go and delegating, because often that fear is rooted in worrying others won’t deliver. Having scorecards for your employees with clearly defined outcomes and responsibilities can help ensure there is a clarity on the expectations and helps measure whether things are on track. Without this it can feel like you’re delegating into a black hole.
“If you’re constantly doing the day-to-day activities and not delegating, you’re not leaving yourself time to zoom out and think strategically. By delegating more, you give yourself time to focus on the important things.”
– Michael Clark, COO of Marketcircle
13. Be deliberate about communication with your team
When we were a business of around five people, communication happened organically. It was effortless. We all talked regularly, were aligned on the goals and were aware of problems that keep bubbling up. Decisions were made and people are aware of them and the reason behind them which made taking action easier and faster.
The problem was as we grow to ten people and beyond, communication started to break down. People didn’t talk as regularly so they became further away from the vision and reason behind decisions and our vision of what success looked like for the goals and plans laid out. To overcome this problem, we had to be deliberate about communication. For us as a remote company, this became even more critical as we grew. A few years ago we wrote about what we did to improve communication in a post How We’re Overcoming The Challenges of Working Remotely. We’ve made a lot of tweaks since then, but the broad strokes are the same.
Here’s the TDLR (too long didn’t read) on the blog post about the main things we’ve implemented to improve communication within the company:
- Monthly All Hands (in person or remote) to discuss main goal & priorities for the year, quarter, and updates each month. Usually about an hour.
- Monthly internal newsletter with updates from each department and/or project with highlights, lowlights, and learnings. This forces us to think about what worked and what didn’t and what can be improved for the upcoming month.
- Weekly update email on our quarterly priority. The repetition of this helps us stay focused and keep everyone aligned and in the loop on progress & challenges.
- Weekly (or bi-weekly for some teams) meetings for each department and/or team project. These help us make sure we’re on track, keep communication flowing, and identify bottlenecks. Usually 30 mins to an hour.
- Bi-weekly company-wide remote sprint demos to share product improvements, internal process improvements, and customer insights. The main thing here is to start by giving context on WHY we did this and what problem we’re trying to solve. Usually 15-30 mins.
- Bi-weekly one-on-ones with each employee to ensure everyone’s aligned and focused on key priorities. This gives us opportunities to identify bottlenecks that need to be removed. Usually 15-30 mins.
- Monthly executive and strategy planning meetings to share customer & employee feedback. Usually half a day or full day. Then the loop with customers and/or employees gets closed in the following weekly meeting or one-on-ones.
14. Set clear expectations and metrics for employees
When we were a small company, expectations and results for early hires were clear. Anyone joining a small startup that’s comfortable with that risk is usually very driven and self-motivated. It’s easy to tell if your first few hires are meeting expectation or not because you’re very close to them. As our company grew in employees, expectations and results became unclear. It became much more difficult to know if people were meeting expectations and driving the right results.
To overcome this problem, we introduced Scorecards. By having a scorecard for each role with key KPIs and outcomes, core competencies required to perform the job with excellence, and clear definitions of what our core values are, it made expectations much clearer. These scorecards are tools to measure employee performance, coach people when they’re under performing, as well as tools for hiring and identifying whether or not a candidate will be a good fit for a new role needed in the company.
15. Be deliberate about employee growth plans
For the first few hires in the company, they tended to be very “hungry” people. They’re hired to figure things out and tend to create their own growth path within the company.
As we grew, we realized that was not the case for all employees. We had to be more deliberate about expectations and growing employees. We had to identify their strengths and create growth paths for them to leverage their strengths as the company grows and new positions become available. By having scorecards as mentioned above, they make it much easier to develop people up to an A Performer, then identify additional areas of opportunities for A Performers looking for advancement.
“When you’re around ten plus employees, you need someone with the mindset and experience of growing people and putting in that discipline. You need someone to own driving that initiative.”
– AJ, CEO of Marketcircle
16. Always be recruiting, don’t wait until you need to hire
In the past we used to wait until we needed to fill a role to start the recruiting process. We were growing and needed to hire more, needed a new role, or someone left and we needed to replace them. That was our trigger to get a job posting up and start recruiting.
The problem is that by that point, it’s too late. We ended up hiring in a rush. The result of hiring in a rush is you don’t always get the best candidate, you end up hiring some less than ideal for more than they’re worth, or you hire someone who’s the wrong fit because you’re in an emergency. It doesn’t always end up bad, but it’s not the ideal.
A better and more proactive approach is to adopt an Always Be Recruiting mindset. Always be looking for talented people through your network and the network of your star performers on your team because often times A Players are not looking for a job, you need to recruit them. A Players hang out with other A Players. Ask your best, brightest employees who they know who’s super talented. Don’t rely on just people looking for a job that will see your job posting. And get job postings up for positions before you need to fill them. If you’re trying to grow, be proactive about recruiting and build a virtual bench of candidates that you can recruit when you need.
17. Put deliberate work into your recruiting process
Most business owners aren’t experienced recruiters. We weren’t either when we started. It wasn’t until we read the book Who and adopted the Top-grading methodology that we realized we were not very good an interviewing or recruiting.
Many questions asked during an interview are things that anyone good an interviewing can answer. People are great at giving the right answer for how they’d handle a certain situation or what they’d do to improve your business But people aren’t great predictors. They may be able to give you the right answer, but that doesn’t mean they have a proven track record of having the skills and experience necessary to be successful in the role you’re hiring for.
Better leading indicators are how people have handled various situations in the past. To identify these things, it requires building a skill of asking the right questions and reading between the lines. We used to rely heavily on our gut when hiring, now we rely more on data points.
18. Balancing hiring experienced and entry level talent
When you’re a small business with minimal budget for new hires, an easy way to overcome that is through interns and entry level hires. The benefits are that these new hires are affordable up front, eager to learn, and great for moulding to fit your business. But the downside is they require a lot of coaching which can be expensive in the long-run and they also don’t have the experience to make importance decisions that can have many implications on the business.
The benefit of bringing on an experienced A Player is that their contributions are felt immediately and it can be more cost effective in the long run. Bringing on an experienced A Player can make a huge impact on the business that’s well worth the investment of their salary. They can hit the ground running with minimal coaching and make smart bets that free you and other managers from having to get pulled into the weeds to make decisions. Having an experienced A Player can also increase your confidence in delegating.
We made the mistake of not appreciating and realizing the impact of investing in experienced A Players. We leaned too much in hiring mostly entry level people which disrupted the balance of talent in the teams. Too many entry level people can be a major drain on hiring managers and other team members which slows down production and poor decisions made by people that don’t have the depth of knowledge can have major negative impacts on the business that we’ve later had to pay for.
The lesson learned here is to maintain a balance and to appreciate the immediate and long-term impact that experienced A Player talent can bring to your business.
19. Be disciplined in your on-boarding process
When we were small and brought on a new employee, the on-boarding process was pretty ad hoc. Because we were small and communicated regularly with each other, it was easy to tell early on if it was working out with a new hire or not. It was also easy for them to tell if we had the right corporate culture that jived with them.
As we got bigger, we realized the importance of having a disciplined on-boarding process for new hires so we could make the most out of their first 3 months with us. It became important to make sure we were sharing our core values and core purpose with new hires and our vision so they were setup for success. It became important to share with them a bit about our history, key challenges, and our priorities at a high level that we’re working on as a company. It became important to make sure new hires meet with each department head to get context around how each department fits in our business and who to go to for various questions, feedback, and ideas.
We have an on-boarding checklist for each new hire that we’ve created in Daylite using an Activity Set which helps streamline this process. We ask for feedback from each new hire which we then use to tweak and improve the process and that process is also documented and regularly updated on Confluence.
20. Hire slow, fire fast
A common mistake businesses make that we’ve also made is holding onto employees for too long. You’ve probably worked with someone who’s under performing, not aligned with the company direction or mission, or just doesn’t jive with the team. It may seem fine to keep them because they’ve worked there for a long time and know your business or because you genuinely really like them. But if they’re underperforming or not the right culture fit, it has negative impacts on the rest of the team and long-term negative impacts on your business. This is a very costly mistake that flies under the radar.
One of the things I’ve heard repeated by various speakers every year at the SaaStr Annual conference is “hire slow, fire fast.” An employee’s first 90 days looks a lot like their first 900 days.
By having scorecards and a disciplined on-boarding process in place, we have the tools and processes in place to make the right call on new hires within the first few months instead of waiting years to realize we shouldn’t have kept them past their probation period.
“You have to be careful to not let your emotions get in the way. Those decisions should be logical and rational. If you have the proper KPIs in place, it makes the decision much easier.”
– AJ, CEO of Marketcircle
There isn’t a playbook for starting and running your business. What works for some businesses may not work for others. If you start a business, you will make mistakes, it’s part of life. The important thing is that you learn from those mistakes and use those lessons to push forward and keep going! For all those business owners out there feeling like you’re failing and making mistakes, keep going! Make more mistakes, fail fast, and keep learning and growing!