Exposing My Business Failures - 10 Lessons Learned

Look, over the course of my professional career, I've started, owned, maintained dozens of businesses. And here's the truth: they've not all worked out. And look, the reality is, like, you don't hear about these failures that much. And for me, I think it's important. I want to talk about them because you look at people and they have their bio filled with all the wins and the things they accomplished, and the media just covers the W's, but the L's don't get talked about enough. The challenge there is there's so much to learn from failures. So in this video, we're going to cover the most important lessons and things I've learned. From owning businesses that, well, just didn't work out, that failed. And if you're new here, my name is Michael Girdley. I've spent 30 years learning everything I can about business. I own a holding company which owns stakes in all kinds of different businesses, over a dozen now. And it's my mission and my passion to share healthy business practices on video, social, all that kind of stuff. So thank you for being here. So the good news is I'm going to be transparent through this video and share stuff that I've gone through personally and talk about principles and lessons learned. So hopefully you don't have to learn them the same way I did. So let's Let's get on to lesson number 1. If you have a business that goes out of business, it's never just one thing that kills it. And here's the idea. Routinely, you'll own a business and you think like, oh well, like they just ran out of money. That's what killed the business. Well, the reason you ran out of money was usually a confluence of factors. It was a bunch of things that all happened. One of the things that I had that failed was an e-commerce store. I was trying to sell at the time, you know, raw metal online. Believe it or not, people were speculating in raw metal and e-commerce was a new frontier for that 15 years ago. So I dabbled into it and started to have fun. But it turned out a couple of things happened. One is like a bunch of people came into it and bid down the prices of all the things I was trying to sell and made it very hard for me to make any kind of money. So I ended up with a bunch of like raw metal. It was super fun and a good learning thing, but like it was never just one thing that, that killed that particular business. It was e-commerce got really popular. The market for this kind of speculation ended and the fad ended and I got tired of working on it because I was busy working on other stuff. Also learning about owning a dyeing business is this thing that I call the skyscraper effect. So the skyscraper effect is basically this idea that in all kind of economic booms, like when a region has an economic boom, you start to build these big skyscrapers, right? And if you look back in history, whenever those biggest, tallest buildings in the world start to get built in a particular market, that always indicated the very peak of that economic cycle. And so if you look at it, it's really interesting. New York City has been part of this. So the Empire State Building was finished right about the time the Great Depression started. The Sears Tower, which is now called something else in Chicago, that was built right at the peak of Chicago being the industrial hub of the United States. There's the Petronas Towers, which are in Indonesia, I believe. They were right before everything kind of turned. You're seeing similar stuff happen in Dubai and places like that as well. So the moment, the moment that skyscraper gets built, that's the idea of, you know, there's a good sign that that's the peak. So the same thing happens with businesses, right? The moment you start to think about, hey, this thing is never going to end, or we're going to keep growing forever, and you make a big investment— I've done this in the past where, for example, you go sign a brand new big lease to have a brand new big facility— it's at that moment that stuff goes horrible. And that's that skyscraper effect. All right. When your company starts going out of business or starts failing, like you take it personally and usually with a ton of shame. And, you know, me going through this process of shutting down companies, especially if it's one that's been established for a while and gets tied to my reputation, if that company fails, I felt like just the biggest jackass. Like in retrospect, I feel like I should have known the things that were gonna cause it to go wrong. I feel a sense of shame, which, you know, we shouldn't 'cause failure is natural in business, but like, personal shame that I should have been smarter and I should have known how to do those things. The feeling that you should have done better for all the people involved, right? You could see all your mistakes even though you're making the best decisions you could have as you were running that business. You should have done better by the employees, the customers, the partners, you know, the creditors, the vendors. For me, that's where I've learned it's important to give yourself some grace, right? And that grace is that idea of, as you take these things personally, it's okay to take it personally, but then to also put it in perspective. When you own a business that's failing, to me, the thing that matters the most is how you behave and how you react during that distressed period. And I think ultimately, like, your job as a business owner is not only a fiduciary duty where you have to do the right thing by the company and the employees and the customers and all that kind of stuff— that's your job by law— like, you also have this moral imperative in terms of how you think about the people that are— have believed in you and have worked at your company, or the customers that bought into your business. Like, they are all part of the folks that you owe something to. And look, there's a point at which you can't do the right thing by them, but there is a point up to that line to where you owe it to those folks. And look, in the end, like, you're going to run out of money perhaps, or you're not going to be able to put more capital into a business. But how you react, and do you do that with class, grace and help to people is really what matters. So a business failure is a rollercoaster. There's just no doubt about that. You know, what happens is as things start to fail, uh, or you get bad news, we all go through really the stages of grief and those stages of grief, put 'em up on the screen here. It's, you know, denial, anger, uh, depression, bargaining, and acceptance, right? And so you think that you're just able, just like if a, a key relative passes away or something like that, you're able to go through those stages one at a time in terms of those stages of grief. But the reality is what happens when you're trying to save a distressed business is actually you go through those 6 stages of grief over and over again, because as you try things and you try different things to try to save the business, you have hope that that particular thing will truly save the business. And the reality is every week you'll come back into those meetings where you're trying to save the business and change it, and you're like, okay, well, did we manage to find an investor? Well, somebody, so-and-so said they're very interested, and then they tell you later on they're not interested. That happens every single week. It is perfectly normal that business failure, especially when you own that business, will impact your health and life. And that's going to keep you up at night. You're not going to eat well. You're not going to deal with stress. I've done this before where, you know, I can remember for weeks at a time when I was running or owning a failing business, waking up at 2 or 3 in the morning, and then you just don't go back to sleep. And eventually what happens to you when you're through that level of stress is 4, 5, 3 hours of sleep a night, day after day, week after week. Eventually that starts to weigh on your health and your life, and that becomes a negative cycle also, which is your mindset changes negatively based on what happens with your body. It becomes a very like self-fulfilling prophecy, like a cycle that just keeps growing and growing because you're going through this negative health and life affects your brain and then makes your life you know, even more stressful because you're not reacting well to stuff and potentially not making good decisions. So when you own a failing business, the Stockdale Paradox applies to you. And so the way I explain the Stockdale Paradox is it's from this guy who turned into an admiral eventually. He was captured during, during the Vietnam War, and he was part of the pilots that were kept there in the prisons. And he noticed something very interesting. He noticed that the other pilots who would expect to be released by a certain date. They'd be like, oh, we're going to be— definitely we'll be out by Christmas. Those people that went through that, they ended up being the people that failed the most. There were a different group of people that said two things, and they were paradoxical statements. They said, number one is, I am optimistic, I will get out of here someday. But they knew also that they didn't know when that would happen, and they just needed to grind it out day after day and expect to be there basically forever. So they knew they would get out, or they knew they would succeed at some point. They just didn't know when it was going to be, and they knew they just they just had to live one day at a time until they got there. And those people who had that type of approach to it, this optimism plus a realism melded together paradoxically almost. And Stockdale saw this and articulated it. It also happens in stressful situations outside of, you know, some of the stuff that Stockdale saw, which is business failure is one of those, right? So this paradox applies to you as well. If you ever see yourself get into a place where your business is failing, is to say like Stockdale is right and this is how I'm gonna approach it. And it's just one day at a time trying to get through it. Okay, so you go through the Stockdale Paradox for a period of time and you're running a distressed business. And the reality is everybody eventually gets exhausted. And I've seen this where I've been on teams, for example, we spend 4 or 6 months trying to save a business and eventually you just get to a point where even if there's hope, everybody is just so mentally exhausted that they're beaten and expecting ourselves to continue on forever. Fighting a hard fight, especially one where we're going through all this health and life stuff that I've talked about, the roller coaster of emotions that you're going through. You're in denial that you don't want the things that are going to happen of loss of money or reputation or, or commitments to people to happen. You eventually get so tired that you just accept those things, right? And you move on. And the only way to keep going, if logically there's an opportunity when you're that tired and you're that burnt out, is to have new blood in there. But you should understand, everybody just eventually exhausts themselves when they're dealing with a distressed business and and, you know, shut it down when you need to. And look, here's the last thing: business failures, they always have a silver lining. And it, it will be something where you lose a lot of money, you lose a lot of prestige, you let people down. And even in all of that, there will always be things that are, you know, are good that come out of it. At the very least, you'll learn something. And even if the negatives outweigh the positives, it's worth slowing down and thinking about the silver lining and thinking about the things that were positive along the way. And the more you think about those things, well, the sooner you'll get through the grief of shutting down a business and feeling like a failure. That's all perfectly normal and things that we just need to do for ourselves as human beings. So there you have it. Those are 10 things I've learned from owning failing businesses. So if you enjoyed this, I tried to be really real about what's going on when you own a business that fails. Subscribe with me for more content centered around healthy business, and I'll see you next time.