From $700K to $8 million to zero

THE PROSPEROUS CONSULTANT

Turn your decades of expertise into a premium consulting practice built around the life you want.

Issue #41

This morning, I got one of those annoying unsolicited calendar invitations from somebody I've never met.

The title read "How to Launch an AI-Powered Social Media Agency."

There was no email first, no question at all to see if this was something I'd be remotely interested in... just a meeting sitting on my full calendar.

It felt like somebody had walked into my house uninvited. I grumbled under my breath and deleted it.

Maybe you've gotten one of these too.

The AI gold rush has everybody scrambling to get theirs. Maybe it's a rush to "make it" before the singularity makes us all irrelevant. I don't know.

But that's a topic for a future issue. This week I want to tell you why I said no to this invitation... besides the fact that it was rude.

Twenty years ago, I'd have taken that meeting. This morning, the whole decision took less time than it takes a skunk to end a picnic.

It took me ten years to learn that just because you can doesn't mean you should. And just because it makes money doesn't mean it will make you happy.

Expensive years. I'll get to those in a moment.

First, here's what's in this issue:

• The question that matters more than "can this work?"
• What a decade of running a successful business taught me about failure
• A short list to help you make better business decisions

Let's start with the lesson that cost the most.

In 2005, after fifteen years in the corporate world, I bought a struggling IT training company. It was doing about $700,000 a year and was close to shutting its doors.

I could see exactly how to fix it. And the only question I asked back then was... can I make this work?... At the time, buying it was a good opportunity.

We renamed it. We moved it out of training and into IT staffing and consulting. We put new people in the right seats. And it worked. That $700,000 grew past $8 million in our best year. Four straight years on the Inc. 5000. Forty-eight people on the payroll.

A success story. That's how I told it at networking events, anyway.

Here's the version I didn't tell.

The plan said grow the revenue, watch the overhead, and profit pours out the bottom. The plan lied. Every new dollar of revenue walked in with its own expenses on its back. Cash was tight at $700,000, and cash was tight at $8 million. The scoreboard climbed for ten straight years. My take-home pay didn’t.

Five years in, I promoted my second-in-command and set his pay above my own. On paper the move made sense: give a strong operator the reins, free up the owner, everybody wins.

He won, anyway. And because our biggest customer was his relationship, not mine, every one of us understood the math without a word spoken: if he walked, the revenue walked with him. My partner and I felt like hostages inside our own company.

In 2015, I handed my ownership back to the man I'd bought it from. After ten years of building, the check I walked out with was no check at all. A modest salary along the way, and an education.

So when I tell you that decade taught me about failure, what I mean is, the business succeeded. I didn’t. At least not financially.

I spent ten years answering an important question... "can I make this work?"... but I never once asked the question that mattered.

Because here's what those years finally taught me: a good opportunity and a bad one look exactly alike on the day you say yes.

Both of them pencil out. Both of them have believers.

The difference doesn't show up until one of them delivers.

A writer I follow, Justin Welsh, puts it well, in just five words: what happens if it works?

An opportunity can hand you everything it promised... the revenue, the growth, the bragging rights... and still leave you with a company you don't want and a firm grip on an empty sack. He wrote it as a warning. I lived it for a decade.

That's the question that separates the good businesses from the bad ones. And you should ask it before you sign anything.

Which brings me to the list.

Welsh keeps six non-negotiables he wrote down when his business was young, and he checks every opportunity against them. I never had a list during those ten years. So the business wrote one for me, one expensive lesson at a time.

This week I finally put mine on paper. Four of the items:
1. I measure what I keep, not what I collect.
2. Every client relationship stays mine.
3. My name only goes on work I approve personally.
4. Pay myself first.

Each one has a story attached. You just read the longest of them.

Now, back to this morning's rude little calendar invitation.

It never had a chance. An agency is a payroll. "AI-powered" means a machine doing the work and slapping somebody's name on it. Strike one, strike two, and the skunk hadn't even cleared the picnic grounds. The deciding didn't happen this morning... the deciding was done at a kitchen table, in about five seconds, backed by ten years of hard-won wisdom.

That's also how the practice I run today got built. The list came first, and the business got built to fit it. A business can pass every test the world gives it and still fail yours... unless you've written yours down.

P.S. I never did learn how to launch an AI-powered social media agency, and I've made my peace with that. What stays with me is the ratio: the list took ten years to learn and twenty minutes to write. Most of the important things seem to work out that way.

P.P.S. The reply box works too. Tell me the first item on your list... the one rule your next yes has to live by. Just that one line. I read every reply myself.

"You can only tell what someone values by what they're willing to say no to."

... Mark Manson

Want to dive deeper? Check out these related articles:

👉 The Prosperous Consultant | Issue #40
👉 The Prosperous Consultant | Issue #39

You might also find these interesting:

🔎 What was under the blanket
🔎 The "Strategic Ascension Designer" Prompt

P.S.: When you're ready, here are more ways I can help you...