A picture worth $100,000

You may have seen pictures of people holding checks for huge amounts of money.  Typically, when you see those pictures, someone is trying to sell you a dream.  Today, while cleaning out my office, I stumbled upon a similar picture.  Though it might not initially look like it, it was worth $100,000.  Here is the picture and then I will tell the story.

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This is me on a television set in Miami with two beautiful actresses about four years ago.  We were in the process of shooting an infomercial for a stretch mark product called Everderm-CL which we had developed and were selling.

I said this picture was worth $100,000.  But what I did not tell you was that it was a picture of me LOSING $100,000…

The story went like this. At the time, my company was engaged in practices that while perfectly legal, managed to infuriate our competitors.  We would wait for someone to develop a home run product and then sell a similar product against it for a much cheaper price (sort of a generic equivalent).  We were selling Everderm-CL against a huge product and a huge company.

Initially, we had great success.  Then we started getting cute.  We launched a national radio campaign.  By the time the smoke cleared, we had lost about $50,000.  Then one day, an infomercial company stroked our egos about our product and convinced us to write them a check for $50,000 to produce and test an infomercial.

Of course, $50,000 was only the start.  When you added travel, legal fees, script writing, and various other things, we were down about $100,000.  But it sure was exciting going to the shoot.  I remember that day well.  And if I forget, I still have this picture with the two actresses from that day.

Suffice it to say that the infomercial bombed.  I think $10,000 in air time generated about a dozen orders.

That is why I say that this picture is worth $100,000.  After all, I don’t have much else to show for the $100,000 we spent.

As it turns out, we were making more mistakes.  Before we were done, we were in a long, very expensive lawsuit with the other company.  By the time we settled, we were down another $100,000.  All in all, the Everderm-CL debacle cost at least $250,000.

While I wish I had the $250,000 back, I have a number of things I am thankful for.

1) I am thankful that I had $250,000 to lose (it was not borrowed money).
2) I am thankful that I only lost $250,000.
3) I am thankful that I (and my company) survived that tough time.
4) I am thankful that I learned the lessons I needed to with only $250,000 instead of $25,000,000.

There is a reason why there is no school like the school of hard knocks.  That education is expensive but worth every penny.  I have spent plenty of time in that school, so I know what I am saying is true.

That is why by the way, many business owners (including me) really struggle with young people with a fresh college business degree that think they can “fix” our businesses.  I would much rather take advice from someone with years of real experience on the front lines.

What lessons did I learn?  They are very simple but hard for some of us to apply.  Look before you leap, do your homework, start small, and cover your bases.

Here is the main thing I want you to hear.  If you ask someone with significant business experience about a business idea and they start throwing up red flags, don’t get frustrated, and don’t accuse them of negativity.  They may know things that you don’t.  They have likely gotten an expensive education in the school of hard knocks.