Entrepreneurial Tips: Separating Wants From Needs – or – How to Learn Hard Business Lessons

Monday, November 26, 2007 at 3:15pm by Site Administrator

Between 1993 and 2002, I’ve started and run at least five businesses of my own, sometimes by accident or even by request: monthly print magazine, band management, band bookings, concert promoter, and mobile recording studio owner, in that order. That doesn’t include my web consulting nor what I’m doing now, as an online publisher since 2005, which has been more fruitful than all the other businesses combined.

None of the early businesses succeeded financially, but for all primarily different reasons. Though there was one factor that helped sink them all: not being able to separate wants from needs. This violates a major principle of bootstrapping cashflow: getting overwhelmingly into debt when there’s little or no revenue. Keep this in mind as you read this brief history of my business startups.

1. The Magazine
The magazine was a critical success, though it was hard to sell advertising while simultaneously trying to do a Master’s degree. When my degree supervisor came to me and said I had to choose to focus on the degree (research was already completed) or the part-time, poorly paid job he’d given me, I choose to take a full-time job as a technical writer – a job I landed in part because of my magazine publishing efforts. But having to work long hours over the next two years led to my magazine folding – since I still couldn’t find committed ad sales reps who also wouldn’t lie about what they’d been up to. Also because I wanted to compete with a magazine I used to work for that published biweekly. A big mistake.

2. Band Management and Concert Booking
After the magazine folded, I somehow ended up managing the bands of some of my writing staff – by request. That turned into booking shows at local nightclubs, including up and coming Canadian acts. Before I knew it, I was fully or partly involved in managing something like 40 bands, plus jointly helping another manager with another 20 bands.

All of that resulted in additional money down the drain, primarily because the town I booked most of the shows in was in a recession. Clubgoers would rather fork over $5-10 to hear a DJ play recorded music than $3 to see an act they never heard of. That’s a very important economic detail that I wasn’t aware of as affecting the entertainment industry. But I’d want to seem like a big shot and had bought six months worth of advertising in the local college newspaper, as well as booking increasingly more expensive acts. A big mistake.

3. Web Consulting
Both the band management and the local concert booking efforts went down the drain, not to mention making my co-workers jealous, despite my financial losses. This contributed partly to losing my job – but not before I’d become a webmaster and not only gone back to my computer programming routes but seeded my love for working online.

I took a couple of salaried jobs in Toronto and area after that, but eventually struck out on my own as a consultant again – this time for web development. I got in in 1989, before the 2001 bubble burst, and did relatively well, ending up in Atlanta, Georgia, in 2000. Except I didn’t study the North American Free Trade Act properly before proceeding.

4. First Attempt at Moviemaking
I was doing so well in Atlanta and loving the work at the Weather Channel, that I wanted explore my old desire of making movies. I found a young aspiring actor who resembled James Dean. I had a screenplay from a friend back in Canada, and I purchased a low-end Sony camcorder to add to my collection of four still cameras. I also purchased cheap video editing software for my then high-end laptops, eight TV sets, VCRs, and other equipment.

This moviemaking venture was nipped in the bud when I returned to Canada in early September 2000 to visit my mother and was refused entry back into the U.S. Not only did I lose an incredible contract working with great people and a fascinating opportunity (heavy weather phenomena), all of my belongings were left behind in Atlanta. My landlord and his wife – who was once one of my workmates – never returned my phone calls or email.

So that was the end of not only $30,000 worth of equipment but the loss of about 100 music compositions on my laptops. Once again, my wants overtook my needs. I didn’t need ALL of that equipment (however, I’d already had some of it when I went to Atlanta). This business was over really before it started.

5. Music Composing and the Mobile Studio
By this point you’re probably wondering how many times one entrepreneur can make the same mistake. Wait, there’s more.

I licked my financial wounds back in Canada and managed to land some interesting web consulting contracts, but nothing as exciting as the work I did for the Weather Channel, nor as lucrative. (Canadian companies never want to pay me as well as I can get in the U.S.)

Still, my long-term interest in music, as well as my original desire to be involved in movies led to my laying down five figures – mostly on credit – to buying a couple of racks of home studio recording gear, nine guitars and basses, and five synthesizers – including reputedly the only copy in Canada of an Alesis synth that was digital replica of old analog style synths. Cost: about $5000.

Result: almost none of my musician friends and acquaintances thought much of the idea of my going to their homes/ practice lofts and recording a few of their songs for free. They wondered what my motivation was.

6. Digital Entrepreneur
After 9/11 and the burst of the online bubble, I lost my “sure” contract and subsequently had trouble getting computer consulting work, even with my skills and having authored a book. Once again, my business wants seemed to overrule my business needs and cost me dearly. I had to sell off my recording equipment at maybe thirty cents on the dollar (not including the cost of the various loans).

Jaded about consulting, I eventually found my way into digital entrepreneuring and online publishing. While I’m not making anywhere close to what I did as a web consultant in Atlanta, I’m enjoying this “startup”, have some freedom of projects, and opportunities that if successful will earn me beyond what I’ve made in the past.

What am I doing differently? Two things. Firstly, I’m doing mostly partnered projects – beyond my freelancing. Secondly and most importantly, I’m not allowing my business “wants” overtake my business needs. In other words, I’m bootstrapping my cash flow the right way.

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