As I mentioned on Monday, this month marks my 10th anniversary in business for myself. On Monday I gave you a list of my top ten secrets of success. Today I’m going to open up and get all vulnerable with you. Here are the top ten mistakes I’ve made in my business.
I want to set the parameters for “mistake.” These are big, over-arching decisions or judgments I made that had a profound impact on the business (obviously in a negative way.) Most of these are one-timers that I’ll never let happen again. One or two are things I must admit I’m still guilty of committing (although getting better every day). My hope in sharing these with you is that
- If you’re recently new in starting a business, you’ll avoid these mistakes, and
- To know that no one is perfect. Despite the fact that I’m a coach, have a relatively high-profile, and a level of perceived success by some people, I’m human just like everyone else. I should not be put on any kind of pedestal (not that you have, but just in case. 😉 In fact, in my experience I’ve learned, no one should be put on a pedestal. “The grass is always greener” is so true.
Okay. Here goes nothin.
Many of you may know that one of my “soap boxes” is not taking on debt to buy equipment, software, or any other aspect of your business. There’s a reason I’m so passionate about it. I’m paying for my use of it: literally.
When I started this business, I had no debt. I justified the use of debt to grow the business because I knew that if the return on investment was higher than the interest rate, it would be okay. This was a sound business choice based on what I learned in business school.
I wish I hadn’t. We racked up a LOT of credit card and line of credit debt growing the business. To this day it causes a huge drain on cash flow. In 2007 and 2008 we drank the “Dave Ramsey” Kool-Aid and decided to get rid of all debt and credit cards. My wife was a huge help and supporter in this effort when she worked at Apple. The supplemental income helped tremendously in knocking out a huge chunk. Since making that decision to get rid of debt, we’ve knocked out 75% of the debt we accrued.
I hate the fact that we’re still paying off equipment I no longer use, food that “passed through” my body years ago, or hotels at conferences I stayed at years ago. Being in debt is like being a slave. It really is.
Now, we don’t buy anything unless we can pay cash. We drive a modest mini-van that needs “some work,” but it’s paid off and 100% ours. It’s not worth it to me to put on a show for clients with a fancy ride if it means taking on debt or a lease (or a “Fleece” as Dave Ramsey puts it.)
We’re on track to be debt free in a couple of years (give or take). I look forward to the day I can call up Dave on his show and give my mighty “Braveheart” yelp, “FREEEEEEDOMMMMM!”
2. Too many eggs in one employee’s basket
By far one of the most devastating occurrences in my business was when a trusted employee left unexpectedly (and took some clients). It rocked me to the core in more ways than just business. To this day I am still dealing with “forgiveness” issues, but it’s a work in progress (or should I say “I’m a work in progress. 🙂 ). I questioned whether I should even put this on this list, but I would be remiss not to. I think there are decisions that could have been made by me that would have minimized the damage.
I tried to think what the “mistake” was. Was it giving this employee too much exposure to high-profile clients? I don’t think so. You need to be able to trust your team, especially if they are extremely talented. Even if that trust is broken, you can’t let that keep you from trusting again.
No, I think my mistake was putting too many proverbial eggs in this employee’s basket. Simply put, I didn’t have any other top-notch employees to help the burden when this person left. Much of my company’s style was invested in this one employee’s talents. I was moving more towards being just a “CEO”. So when this person left, I had to scramble and take up the extra work shooting and editing work again. I had no one else besides me able to fill the hole that was made. That was very poor planning on my part. It’s like when a team loses a star athlete and everyone else on the team just doesn’t live up.
Surround yourself with top talent. Invest in them. Trust them. But listen to your gut. Look for and listen to signs about their relative happiness or contentment. And make sure no one employee comprises too much “power” (for lack of a better word).
3. Assigning important jobs to subcontractors not prepared or qualified
This is another big one. Working with contractors is a must in this business. But you need to be wise about which jobs are assigned based on the contractor’s experience, skill and dependability. There have been times when I’ve assigned shooting and/or editing jobs for high-profile and/or critical clients to subcontractors who were untested and/or not qualified to deliver the quality those top-level clients required. This mistake was the most devastating when I landed my dream client about five years ago. A client I had to pinch myself every time I thought about the fact I could now have them on my “List of Clients.” I mean, this was HUGE.
Here’s where it hurt. I was already personally booked for a job during the same time this client needed shooting done. In fact, they would be flying us around to various cities throughout the U.S. I assigned the aforementioned employee in #2 to part of this deal. No, that was not the problem. Having that person available for the shoot was a God-send. However, for a number of the other shoots I had to assign someone with whom I had not done too much work. I really wanted the job, so I was willing to hire an untested contractor.
During one of the shoots, the talent was goofing off and made some inappropriate gestures with this client’s product; and my hired contractor FILMED IT! When I asked why this person filmed it, or even let the talent do it in the first place, the contractor said they felt intimated and that they had to listen to the talent. I know for a fact that had I been there, I would have had the situation under control and not let the talent be so unprofessional on my company’s shoot.
One of my client’s customers saw the action and reported it back. My client hadn’t known the extent of the actions, so they asked for the footage (which they contractually owned). When they saw it, they weren’t amused. It was worse than they had thought. They loved the work we had done for them up to that point, but decided it would be best not to continue the relationship. I was devastated. (Ironically, they continued to work with that talent. To this day I don’t understand why. Well, I kind of do. “Video guys” are a dime a dozen. Talent isn’t.)
When I spoke to this client, I did not blame it on the contractor. I took full responsibility. It was my company. In retrospect, it would have been better to have NOT taken the gig rather than assign such an important job to an untested contractor. Luckily, this company is big enough where we could possibly do work for them again. Maybe one day.
4. Not ensuring media backed up before being shipped from subcontractor
Only once in my ten years of business have I ever lost a tape for a client. Unfortunately, the tape I lost was for one of the biggest wedding clients I had ever had.
It was a very expensive wedding in Napa Valley. I was the main shooter and I had a contractor as the second shooter. I was due to judge a big video competition in another state, and I was leaving on a red-eye the night of the wedding. So it was already planned for me to leave the job early. I left the contractor to film the reception.
This particular client actually had two weddings: one traditional and one cultural. We already made a marvelous edit of the cultural wedding. When I went to edit this traditional wedding (the one in Napa Valley) I noticed the toasts were missing. I contacted the contractor and asked about them. He said he shipped me the tapes. But I didn’t have them. I had him turn his house upside down to no avail. I turned my office inside out. I called the post office. The tapes could not be found. Again, I was devastated.
I can’t even begin to tell you how painful it was making that call to that bride to tell her we didn’t have her toasts. I felt just awful. I offered everything under the sun to make it up. A free love story video interviewing the reception guests. A free concept video. Anything. But nothing would do. She wanted the full fee back (and it was really, really big). I tried to argue that we delivered most of what we were contracted to do, but when it comes to something like a wedding, that’s not good enough.
For a year I dealt with this issue. Talking to lawyers, getting advice from others, talking to the groom. Having to pay this whole fee back would be financially impossible for us at the time. By God’s grace our insurance company agreed to take care of it. I should probably be happy the bride didn’t sue for emotional damage.
The moral of this story, and one I abide by every time: make sure all media is double backed up on a contractor’s hard drive before having him/her ship you footage. Period.
I should also mention this all happened in the same two-year period I lost that aforementioned employee from #2 and the snafu with the dream client in #3. That was a very dark time in the business to say the least.
5. Not going all out on marketing when getting to Atlanta
In December of 2008 we moved from Silicon Valley to the “Hollywood of the South” – Atlanta. Many people asked if I was worried about losing business by moving to a new city. I wasn’t because I had (and have) a nationwide network of filmmakers I can tap to do shoots for me. I ostensibly could move anywhere and still do jobs. (And now with a rock-solid media plan and workflow in place, it didn’t matter where the contractor lived).
Because I had that mindset, I did not spend as much time marketing and networking in the local region when I arrived. I rested on the laurels of having my California clients. That really hurt us. Many of my Silicon Valley clients did not re-hire us. In essence, I started from scratch. Not to mention the fact that this happened right at the start of the economic downturn.
I also had a somewhat egotistical viewpoint. I thought I was this big hot-shot, award-winning videographer from Silicon Valley coming to “the south” and I was going to show these southerners a thing or three. Boy. Did I eat crow. The filmmaking talent here was off the freaking charts. In fact (and I mean no disrespect to my friends and colleagues back in Cali), many of the commercial filmmakers I met here were significantly more sophisticated by an order of magnitude than me and my colleagues back in northern California (at least the ones I knew anyway). Not only was I starting from scratch, but I was doing so in an area where the talent and competition was sky-high.
I’ve since learned my lesson. The competition here has driven me to push my service and quality to a whole new level. I’ve also significantly stepped up marketing efforts. No more laurel resting.
David McKnight says
Hey Ron, glad to hear you are a fan / follower of Dave Ramsey! We’ve been on his plan since Oct 2007 and have paid off probably 85% of our debt and will travel to Nashville to give our scream. When I tell you the exact numbers your head will most definitely explode. I listen to his podcast daily, and it drives Christie nuts; she thinks I’m an old man for listening to “talk radio” but she is the nerd when it comes to spreadsheets, debt payments, etc. It’s a great plan and lifestyle for any husband / wife team. We should talk about it one day.
Ron Dawson says
Dave is great. I would say I ascribe to 90 to 95% of what he teaches. There are a few things we don’t follow to a tee and there are some “gotchas” to be aware of (e.g. many hotels take money out of your account when you use a debit card vs a credit card; and some car rental places won’t let you rent a car with just a debit card.) But in general, I think he’s spot on.
Based on #5, what has been your strategy for networking/marketing in the Atlanta area?
Oh, and GREAT post! We should all be thankful to have someone who is so open about themselves in this industry!
Ron Dawson says
Thanks for the kind words Cody. I am always appreciative when leaders are open and honest about their biz, so I strive to do the same.
In answer to your question regarding #5, the things I’m doing now that I wish I did the day after I stepped onto GA soil, is networking, networking, networking. Now that commercial work is my company’s focus, it’s much more challenging finding new clients. When I shot weddings, there were dozens of wedding magazines and websites where I could advertise. As well as a plethora of networking events.
For commercial work you have to be really industrious. In addition to networking events, I’m reaching out and connecting with the creative community, particularly designers, brand and marketing agencies, PR firms, etc. The work we do for Creative Mornings – Atlanta (http://twitter.com/atlanta_cm) is an investment in time to connect with that community. In fact, the work we’ve done for CM-ATL has led to us being able to work with another company that has been my latest “dream” client. (More on that in a later blog post. 🙂 And in everything we do, we look to raise the bar and break the mold. I think we’ve been pretty successful at doing that with the CM videos we’ve produced.
Lastly, I strongly believe in the power of personal work. I hope to do more of it to show what we’re capable of doing and have projects on our reel that will attract the kind of clients I want.
Great post. One thing I learned is to make sure your client knows EXACTLY what they’re paying for. I shot an amazing wedding down in San Juan Capistrano a few years back. While talking with the bride before the wedding I told her what type of wedding films we do and even sent her a demo reel of my work so she knew what to expect. I told her we do modern, cinematic wedding films that are around 20 minutes or so and that the entire, un-cut ceremony is also included. Well I guess that wasn’t clear enough. When I sent her their final film, they asked “Where’s the rest?” They we’re expecting a 6 hour traditional film because they hired me for 6 hours of coverage. Yikes. We went back and forth for months. I even extended their film to over an hour. They still weren’t happy. For some reason they thought that since I was there 6 hours, the finished film would be 6 hours. I tried to tell that’s not how it works, but they wouldn’t listen. So the moral of the story. Tell your clients exactly what they’re paying for, MULTIPLE times and also included that in the contract.
Ron Dawson says
Amen to that Tim. I’ve been in similar situations where you tell the client one thing, even have it in the contract they sign, then they’re surprised at something they signed. Because of that, I’ve made certain paragraphs the client has to initial.
Jody Wickersham (@jodywick) says
It’s really hard not to get caught up in the equipment rat race. You see other videographers with the latest/greatest gear, and it doesn’t even make sense when you look at the size of their business and revenue, they have to be going into massive debt. I’ve been working toward weening myself from credit and saving up for purchases. Some habits die hard!
I’ve just recently graduated from the mindset of “oooooh shiny” into “you know what, the gear I have is definitely good enough for the work that I know I can do”. I am fortunate to not have any debt (other than a mortgage, which is challenging enough when you transition from a day job to starting your own commercial/corporate media production company… yeah) and based on this article, I’m staying the heck away from it as much as possible.
Ron, excellent first 5 mistakes. I would hope that “gear envy” is one of the second 5.
Finally, I would suggest that for short-term cash flow management (read: I don’t have the reputation or relationships to pay above net 30 but can only invoice net 45 or 60), nothing beats a line of credit at a local bank. It needs to be a business line of credit, and you’re really best served by a local bank, rather than one of the top ten.
Randy Hall says
Wow, I love my catchy user name…
Ron Dawson says
Has anyone ever told you you’re a spitting image of Zack Arias? (http://www.creativelive.com/sites/default/files/pictures/picture-14.png)
Ron Dawson says
Glad you liked the post. No, “gear envy” is not part of the second 5. That’s one ailment I’ve never had. 🙂
And based on my #1, I would disagree with you about the line of credit. Yes, it is designed to help small businesses with short term cash flow needs. That’s the kind of LOC we had. And while it did help us through some tough times when we first arrived to Atlanta, I would argue that if I never accrued so much debt up to that point, and if I hadn’t done mistake #5, I wouldn’t have had to get a LOC.
Paying off that LOC was a bear. We actually maxed it out and paid it off twice.
I can only speak from experience. For many, managing an LOC might probably be not a problem at all. If you’re cash flow is high, your revenue consistent, and you’re disciplined, it could work for you. Based on our experience though, I wouldn’t do it again.