Screwing Up & What you Learn From It

Growth. It’s the one constant we’re all chasing. More revenue. More Income. Higher valuation. Etc, etc,etc.

However, it doesn’t always go according to plan.

2023 saw a new high for my company as we increased revenues and income by almost 50% over the previous year. It was an exciting time that I – in my infinite wisdom – thought would go on. Because of course it would. Right?

2024 was a cold dose of reality.

Interest rate increases made financial services firms leery of capital projects. The election uncertainty in the USA further destabilized the economy around the world. Any company with exposure to the USA was in the same boat – adopting a ‘wait-and-see’ approach.  Any while our sales pipeline had never been larger (by 6x to be precise), deals slipped from a month away, to two months, to 6 months and so on. By June we were in trouble and needed to make some changes. Everything that had gone well in the 14 previous years of the business was no reassurance that we’d be ok this time. We had to let go come staff (even through Covid we’d never had to do layoffs of salary cutbacks) and undergo the proverbial belt tightening. By the end of the year we’d only signed one new client and, thankfully had enough business from existing accounts that it didn’t end in total disaster.  

Through a lot of hard work and a bit of good luck, 2025 is looking great. We’re working with a very strong rebound that should set the stage for us over the next few years. 2024, mercifully, should be a blip on an otherwise spotless financial record. We learned hard lessons and made dramatic changes to the company in order to survive 2024.

In the interests of maybe helping some folks who may be too embarrassed, scared, or panicked to ask for help, I’d like to share some of those with you here. Hopefully my mistakes will help you avoid a few of your own.

What did we learn?

1. Complacency is a bitch: However, the nasty part of complacency is that it’s very hard to spot until it bites you on the ass. We were not rigorous enough in examining our faults and weaknesses – specifically in our sales forecasting and resource planning. Are you being complacent? I don’t mean from a marketing, sales, or product standpoint (Yeah, yeah, yeah, we’re all brilliant market leaders right?).  Are you accurately recognizing potential risks to your business? Are you preparing for them?

2. Have a plan to retreat: We scaled significantly in 2023 to meet business demand which we assumed was just going to keep on coming. For no real reason other than it always had (hubris…). We were too comfortable and left ourselves with no mechanism for retreat or ‘de-scale’. FTEs we’d hired were left without projects and ended up as empty overhead. We had to make those adjustments. Systems we’d purchased in anticipation of growth ended up being financial burdens at a time we really didn’t need them. Those big accounts and contracts? You better have a plan for when they end. We didn’t. We paid for it.

3. Cash is king: We’ve always been very conservative financially, and I have never been more grateful for that than I was last year. We had stockpiled cash and it was more than enough to get us through that year-long ‘rainy-day’. A million financial gurus will tell you to never let your cash sit quietly (we keep ours in money market for ease of liquidity), but it helped.

4. Until it’s spent on beer…: Sales forecasting. How sure of your forecasts are you? Through the first 2 quarters of 2024 I would have told you we were going to have a record year and we just needed to ‘hang in there’. The sales pipeline was magnificent by our historical standards. Blue chip stuff! However, there is a balance between planning and resourcing for anticipated work and for contracted work. As a wise man once told me, ‘Don’t count your money til it’s spent on beer’. Forecasts are not revenue – never forget that.

5. There is no such thing as SOP: We needed to be relentless in hunting down areas that were exposing us. We re-examined every aspect of our business including vendors, processes and people. The primary vendor we’d been working with for so many years turned out to be leeching away profit on engagements. They were engaged in a full-on race to the bottom and ‘partners be damned’ attitude that had snuck up on us over time. We had to pivot and find new partners that could complement our increasingly sophisticated IP and approaches with our clients. We also had to embrace AI on the fly. This has fundamentally changed how we work. There have been a dozen or more C54 articles about using AI and I’m not going to revamp any of that. All I can say is that if you aren’t onboard already you are rapidly losing your chance to do so. This is business-changing tech and we ‘AIed’ almost every process in the company.

6. Not all clients are created equal: We found some of our clients were absorbing an inordinate amount of resources. We have corrected that. However, it took some very serious calls where we were willing to let that client go. A client that doesn’t make you money is not one worth keeping.

So, what next? Our failing in 2024 paved the way for us to re-examine how we did business and who we did it with. It exposed complacency and called for a fundamental rethink of everything we thought we knew. We were optimistic about growth to the point of naivety and it led to a bloating of the company that could not be easily reconciled when that growth did not materialize. We had a plan. And to quote Mr Tyson “Everyone has a plan til they get punched in the face”.

We’re a much leaner and efficient company than we were a year ago. We have a much better grasp of forecasting and what’s ‘real’ in a sales pipeline. We’re using new technology to ensure we’re ready to scale rather than hiring excess people. We now have a razor focus on what makes us good, and how to build on it. We are ready for the future of our company. Hopefully this cautionary tale can help you get there as well.