Notice that I left room for 999 entries regarding my failures/mistakes in business. A big part of this blog is going to be about my own business failures. I think it is important to “own” things and to write about failure without writing about my own is disingenuous. So as I mentioned in one of my first posts, part of this blog will be about my own failures, part will be case studies of the business failures of others and part will be a “How To” guide to failure in the event that any of my readers would prefer to fail and live with the misery that ensues.
In the 1930s my Uncle Ludwig, A.K.A., Pup, took over the family candy company that his brother started. Pup was a mechanic by trade turned candy maker. Many of the family children worked there after school instead of playing outside with their friends and were not paid until after the holiday when Pup would hand out dollar bills to them over dinner. It was called Caiazza Candy and he made candy in the basement of an old mansion that he then sold to retailers around town. In 1960, he sold the company to a customer and our family always wished that he had never done so. I can still remember eating chocolate easter bunnies that he made.
In 1989 the family he sold it to wanted to sell it back to us. I can still remember my father calling to tell me about it and the feeling of excitement I had about potentially being able to carry on my family’s name in the candy business and take it to new heights.
My sister and I bought the company in 1990 at the ripe old ages of 23 and 21 respectively with VC backing from our father. I remember thinking early on that no one should be given the keys to a business at 23 years old. That was a fleeting feeling because we were going to build that company into a national brand and go from a 2,400 sf plant to one the size of a Russel Stover facility. My sister was running our two stores and I ran our plant and wholesale. From 1990 until 2004 when a fire destroyed our 10,000 sf plant, we were able to go from selling local drug stores to selling the likes of Starbucks and Nordstrom. What an amazing accomplishment. Although we were great at developing product and selling it, I, as the president had no idea how to make money and figured more sales would eventually put us in the black. Even if we did not have the fire, we would have gone out of business anyway.
Takeaway: Looking back, the seeds of that failure were planted in the very beginning because we (I) wanted to grow fast, and be a big shot businessman instead of committing to spend the first five years just running the business and strengthening our balance sheet. Of course, at that age, I had no use for a balance sheet, just the top line of the income statement. It is a common trap that many entrepreneurs fall into: growth for growth’s sake. That ends up creating a business with an insatiable appetite for cash. Would we have succeeded if we had taken those five years to strengthen our balance sheet? Not based on all of the other mistakes I made over the years which we will explore, but we certainly would have had a balance sheet that allowed me to learn from those mistakes instead of react to them.
Takeaway: Come out of the gate fast and hard with no plan other than to get big and be the best. Chances are, you won’t make it.