Christopher V. Flett

I’ve made a lot of mistakes in life and in business. I’ve stumbled, tripped, fallen flat on my face, and stepped in the ‘dodo’. I used to get really pissed when I’d make a mistake because I think stupidity should have a price, but over the years, I’ve gotten a bit softer. I realize (finally) that making mistakes is part of the process. You don’t learn if you don’t stretch and sometimes when you stretch, you fall on your bean. That’s the way that it works. I think any success that I’ve enjoyed has been directly related to a previous mistake I made. Too often, business owners are so worried that they are going to make a mistake, they don’t do anything and that inaction, in effect, is the mistake that is costly. Inaction is the greatest mistake any of us can make. It’s been the cause of World War 2, and even the current recession. Everyone stops and looks at what is happening, but no one steps in for fear of doing the ‘wrong’ thing.

I had bad business partners (mistake) and now I have good partners (learning from my mistakes)

I used to ’save’ clients from themselves (mistake), and now I suggest the path, but empower them to make the right decisions (learning from my mistakes)

I used to pass over business deals that I was unsure how to build (mistake) and now I take on the challenge knowing that I can learn and do very quickly (learning from my mistakes)

I used to destroy competitors to get them out of my market (mistake) and now I partner with them to build more together than we can alone (learning from my mistakes)

The only reason I am where I am is because of the mistakes that I’ve made in the past. Now I know from learning (sometimes very costly and brutally) what ‘not’ to do. Where I get pissed now is when I make the same mistake twice. I still get the odd partner that sneaks in with a good pitch only to lie on their belly when the going gets tough. I get disappointed when this happens, but now quickly weed them out of the family. Fortunately now, I have champions in the circle and things are good. But as more people come in, there is always the ‘chance’ someone will sneak in.  I’m not going to be perfect every time, but by making mistakes time and time again, I get stronger with my resolve not to duplicate them. This is a good thing and something you can only learn from falling down.

Take a risk. Take a chance. Calculate the upside and the downside and jump. Don’t over think your decisions. Use your gut and choose to explore the unknown opportunities for you. My best business experiences and knowledge have come from the worst business deals and partners. The best way to learn how to be careful around the stove is not to bake a cake. It’s to touch the element when it’s on high. That sends an immediate lesson to you. Same goes from the missteps. Fear is an acquired habit. So too is being curious about potential and knowing that even if it doesn’t work out the way you thought it would, there are going to be some very valuable lessons in there IF you choose to learn from them.

I’m doing some big expansion this year and although I hope everything is unicorns and rainbows, I know there are going to be some hiccups. Having ridden this horse before, I know that any mistake I make, I will (because I always have) figure out a way to fix it and keep moving forward.

Now get off this blog and go take some risks!

C/

My dad always said, “You can play now and pay later or pay now and play later. If you play now, it will always be more expensive down the road.” What he was teaching us is that you need to put the work in BEFORE you reap the rewards. With the credit/housing crisis here in the US, it shows that many people tried to ‘live the lives they wanted’ before they had earned them. Buying houses they can’t afford, cars they can’t service, and vacations that they pay on their credit cards. People are being wiped out because they didn’t do the work first. They wanted to ‘pretend’ that they had arrived before ever paying the piper.

I’m spending a month in the tropics which feels both relaxing, but more important, gratifying. While my friends were all getting the big homes, the big cars, and taking the big vacations with the impressive pictures…I was building. I didn’t vacation, I didn’t buy the big house, I didn’t buy the new cars, and I didn’t jaunt all over the map to party. Instead…I worked. I know that paying now, would allow me to play later without worry. Here I am. The stuff in your life will not make you happy just by having it. You can go run up your credit cards and live like a rock star and that will bring you momentary happiness. Then the dread will set in when you realize the Visa bill is coming tomorrow and you are paying 19% interest on a balance you can’t possibly cover.  A friend emailed me bitching that I get to take “all this time off” and he gets two weeks of a year. I told him that it isn’t unfair, it is that we have made different decisions. He chose the ’security of a job’ and I chose to build an asset that created revenue. Remember that security that you crave may keep things out (unemployment, no money, etc.) but it also keeps you in (doesn’t allow you time to explore things you are passionate about, spending time with people you enjoy, having the freedom to choose.

Building a business is the single most important time investment you can make in your long term ability to ‘play’. It will generate revenues that allow you to sneak away without financial hardship. You may work very hard for 1,2,3,5 years, but in the end, that investment will return to you over and over again. When you see people enjoying the spoils of their hardwork, don’t feel sorry for yourself. Instead, find the inspiration to model what they have done so that you can enjoy what the enjoy. It isn’t about taking risks, it’s about getting past instant gratification (which we are all to focused on). Stay your course, build your model in a sustainable model, and enjoy all that being a business owner has to offer. We all start with the same options. How will you leverage yours?

For me…I’m needed back at the pool. There’s a drink waiting…

The last couple of years, I’ve been building up a portfolio of companies that:

• Have a distinct offering within three niche markets
• Have the potential of being cash flow positive in a short amount of time
• Have little or no substantial debt
• Target professional women or do something to support women in the economy
• Are run by someone who understands their markets and has the horsepower to get the job done
• Can the overall idea, or any of the components, be licenced?

In exchange for an equity stake and preferred position on dividend payout, I leverage capital. Financial capital, intellectual capital, human capital, systems, networks, and know how. This type of business is often called Venture Capital. This is wrong. The work I do in this type of model is Angel Investment. People use the terms back and forth so I thought I’d lay it out once and for all. After completing 25+ of these deals, I thought that I would take a moment to illustrate the difference.

Venture Capital is someone like me using a pool of money owned by others, and leveraging an equity stake in a company. This is done to grow, flip, transform, or be amalgamated into something else. The money is almost always held in a ‘fund’ that investors put their financial resources into.  Think of it like a capitalist co-op.   There’s a lot more to it, but that is the simple definition.

.Angel investment is an individual like me using my own capital, knowledge, contacts, ideas, systems, etc. to take an equity stake in a company and co-pilot its development into a profitable model. Dragon’s Den makes itself out to be Venture Capital, but it is really Angel Investment. I found a great reference on WIkipedia that lays it out:

Angel investments bear extremely high risk and are usually subject to dilution from future investment rounds. As such, they require a very high return on investment. Because a large percentage of angel investments are lost completely when early stage companies fail, professional angel investors seek investments that have the potential to return at least 10 or more times their original investment within 5 years, through a defined exit strategy, such as plans for an initial public offering or an acquisition. Current ‘best practices’ suggest that angels might do better setting their sights even higher, looking for companies that will have at least the potential to provide a 20x-30x return over a five- to seven-year holding period. After taking into account the need to cover failed investments and the multi-year holding time for even the successful ones, however, the actual effective internal rate of return for a typical successful portfolio of angel investments is, in reality, typically as ‘low’ as 20-30%

When an Angel investor gets into play, not only could they waste their time, money, and systems, but they risk damaging their reputation with too many failed companies. That’s why Angels consider the personality as much as anything else when determining fit within their portfolio. A good person that is bad at business can be fixed; a bad person that is good at business is cancer to an Angel Investor.

Due diligence is a part of business that Angels do to try to weed out the good ideas by bad people/bad ideas by good people.

For existing businesses, I look at:

• financial modeling
• exit opportunity analysis
• research of the industry
• validation of market size
• competitive analysis
• site visits, and etc
• As a rule, I don’t buy debt as an Angel unless the model is making positive cashflow

For new businesses, I look at:

• target market identification and size
• competitive analysis
• competencies of the people involved
• industry trends
• cost of penetration
• the personality of the person with the idea (Can they get it done? Can they survive while the company is growing? Are they committed? Are they an employee (mindset) pretending to be and entrepreneur? Will they listen to the advice you give them or are they going to fight without knowing?)

At the end of the day, it is a gut cheque (using your intuition). Does this company make sense at this time, with this person, in these markets, following this plan? If all lines up, I pull the trigger. If I’m not sure, I start to pump the brakes, and if something feels really off, I hit the kill switch.

I’m sitting at Starbucks in Kerrisdale looking at my business models. We are about to close the first month of the year and when I was looking at the numbers and status of everything, a thought pops into my mind. HOLY SHIT! This is all working! I set a pretty aggressive plan for this year. Quadrupling revenues while decreasing costs. I’m on pace right now from a revenue stand point and I’ve decreased expenses (compared to last year), by a whopping 87%. Yes…87% reduction in overhead. That all goes into my pocket. Campus CEO is rolling with an amazing group of ladies, the bookkeeping/babysitting models are rolling with new opportunities coming in daily, and I’m sitting here with a shit eating grin on my face because what I envisioned is now happening. The coaches are all in play (but some are working much too hard which we need to tweak.) New clients are coming in through champions, a handful of prospective coaches have some interesting potential we are exploring, and the US market is waking up again. Did I mention I’m heading to the Caribbean for 4-5 weeks?

It all starts with a plan. It starts with you (or me) sitting down and putting to paper the revenue projections and then placing strategies that will support those projections. Is it magic? No. Does it take focus and commitment? Yes. I’ve found myself the last two weeks having a hard time sleeping (and fighting off a lingering cold). It dawned on me today. I don’t have insomnia. I have excitement. Last year, all the cannon fodder got out of the various models and champions are running the race together. Partners, clients, coaches all running in cadence towards big things and it’s fun. In any given day I’m chatting strategy with a client in Miami, chatting with a prospective coach in Vancouver, and having frank conversations with 30+ entrepreneurs that are still in university. This doesn’t suck.

What are you doing to make this your year? Are you getting rid of your dead weight? Are you focusing on what is working and buring off what doesn’t? It only gets easier if you make it easier. I’m seriously thinking about ramping up my own private practice to 100 clients by the end of summer. I mentioned this in passing to three champions, and I already have some really interesting people waiting for sits when they open up. Tell me this isn’t living!

Get out there and clean house people. If you want to fly with eagles, don’t run with turkeys.