Owning a business is no small feat. The managerial maneuvering alone can often be daunting to even the most-seasoned entrepreneur. The challenges are even greater for those who stumble into a business with no experience, training or background in running a company.
Here are the stories of two such “accidental” entrepreneurs who learned some valuable lessons the hard way. Take their advice and save yourself from some unnecessary headaches and potential business breakers.
It's Not About Friends - It's Business
When Anne-Marie Faiola started her soap-making supply company a dozen years ago, she thought it would just make a little money until she found a "real" job. She was 20.
"So, I hired people I wanted to hang out with," said Faiola, CEO of Bellingham, Wash.-based Bramble Berry. As the business grew, Faiola worked around the clock, while her employees often strolled in late, sometimes not at all, dragging all their drama in with them.
"They took advantage of me because I was letting them," Faiola said.
After four years of cowering to her employees (aka "friends") she had enough. It was time for new rules. No excuses.
"Every single person had a measure of productivity now and I would grade them," said Faiola, who began requiring every employee to report all e-mail, phone calls, and shipments that passed through the company. It was a painstaking process, but the discipline was long overdue. "It took an hour of my day, every day, just to manage the system," she said. Over two years, nearly every employee either quit or was fired.
"I felt stressed out, alone and like a failure for most of that time," said Faiola, who now has 27 employees, more than $4 million in revenues—and no drama. "But I realized you don't need your employees to like you, just respect you."
Lead or Lose
In his early startup years, entrepreneur Jeff Morin liked to promote from within his Stafford, Va.-based custom coin company.
"When you're starting a company with few people to select from, you're too nervous to bring someone from the outside," said Morin, who founded Coins for Anything in 2004. "I took people who were at the company from the beginning and promoted them, but those people did not have the skills to be managers or supervisors."
Morin started the company as a hobby at age 22, while serving as an active-duty Marine. He had no business experience, no MBA, and instead was armed with only street smarts and the discipline he learned from the military. So he started small (first operating from his barracks, then his mother's basement) selling challenge coins, which serve as reminders of military service. Sales took off, he expanded to all types of customized coins, and before he knew it the discount-store chain Target was calling.
But the learning curve was steep. As Morin's business expanded, so did his staff, and he soon was suffering a costly people problem. He was losing clients because of a supervisor — one he promoted, mainly based on loyalty. Marin realized that he hadn’t carefully considered whether the employee had the people skills to work with customers, or manage other employees. He did not, and was fired.
Today, Morin said he still first looks inside the company when looking to fill positions, but now he won't hesitate to look elsewhere when none of his employees is an exact fit for what the particular job demands.
"I'm putting the right people in the right seat," he said.
Losing Financial Focus
Meanwhile, once Faiola thought she had the right team in place, Bramble Berry continued to grow. And in 2005, she opened a retail store, Otion, where customers were abuzz about buying customized soap they could make right in the store.
These were exciting, yet exhausting times. Faiola hired a store manager to ease the workload, but there was still too much to do. On top of running Bramble Berry and opening the new store, Faiola was also back in school, earning her MBA. Something had to give.
"I should have been paying more attention to the books. The easiest thing to give up [is oversight of] the tedious financials," Faiola said.
That is, until she learned one of her employees was embezzling money from the company. It happened during the chief operating officer's paternity leave, and harried Faiola was checking company numbers only once a month. The loss was about $7,000, it was indeed a crushing blow.
"I had not felt betrayed that way ever in my life," she said.
Today, Faiola looks at her company's financial reports every week, while her accountant scans them daily.
"I'm debt free right now, with no outside investors at all, and I have 100-percent ownership in my company," she said. "Life is good."