A couple of years ago I decided to change my construction business. At the time I was doing 90 percent residential construction. I wanted to break into the commercial market. Because of the cash flow problems I knew that would follow if I just jumped right in, I was doing this gradually. Commercial projects usually pay in 60- 90 days. I would have to pay for labor and materials during this 60-90 days. Without a large line of credit and a backlog of work, it is really difficult.
As the beginning of my work season neared, I was trying to figure out how to make this work. The gradual process of switching from residential to commercial was not fast enough for me. I needed things to move faster. I am getting older and have things I want to do in life. At the time, I was listening to motivational stuff, which I tend to do at the start of yet another year. I was listening to our friend Tony Robbins actually. In the recording, he was talking about going all in and burning the boats. The exact quote was, you can’t take the island if you don’t burn the boats. In other words, go all in and give yourself nowhere to go but forward.
It sounds good. It sounds noble and heroic. I have read many biographies where great men have done exactly this and turned out to be hugely successful. In hindsight, I think this may have been the worst advice I have ever taken in my entire life.
The idea was to take out a loan once I landed some commercial jobs. This money would get me through to the first payment period. Then I would be off to the races.
Now, let me explain something. Going into this, I was completely debt free. Zero business or personal debt. I had money saved, investments, real estate etc.
I figured I had some room to take a little risk. My business had been stagnant for a few years and I needed to do something. So I jumped in. I took out a loan for 50k and increased my line of credit.
I bid some jobs a little cheaper than I should have to load up with spring work. I figured I would fire through these jobs, collect money in 60 days and be rolling. In the meantime, I could bid work for the summer at a higher rate.
Here is what happened. Everything started off fine and I finished a portion of the first job I had bid. I started using borrowed money to pay payroll, material costs, etc. I soon figured out I had bid this work much too low. Oh well, I thought. I will work harder, finish this work and move on to more profitable jobs.
Then the rain came. It rained most of the spring. Every week we were rained out.
The cheaper work I was planning on finishing in the spring got pushed into summer. Then we had a wet summer. So instead of finishing higher priced work in the summer, I was slogging through all this cheap work I had bid for the spring.
By the time fall rolled around, the whole year was collapsing and I was learning a really hard lesson.
By the end of the year I was in debt. I had burned through the borrowed money and a lot of other personal money. The year was the worst I have ever had. I actually lost money overall. A good deal of money.
My business was in worse shape than ever and having problems paying suppliers, etc.
Fast forward to now (two years later) and I am still working my way out of this mess. Eventually, I will get out of it and move forward. I am going to lose two years or more that I will never get back. Instead of growing or maintaining, I am rebuilding. Such is life I guess.
The lesson is this. Don’t take advice from anybody when you know better. I knew better.
To be honest, I didn’t do all of this because of some recording of Tony Robbins telling people to burn the boats. I was already basically planning on doing this. But his ra ra style definitely got me fired up enough to do so. I let my emotions get the better of me. This is what people like him do. This is why I started this blog. To give people real business and life help. Not motivational bullshit.
Business should never be emotional. It should always be methodical. Stick to the basics. The goal should be to make money. Or better yet, never lose money. If you are taking money out of your business and it is profiting, stay the course. Gradually move into new areas.
Don’t burn the fucking boats. Your weapons might fail.
You might need them damn boats to keep the natives from slaughtering you!