My Mistakes. Episode 23 All about Dogs

I'm occasionally sharing a series called "Learn From My Mistakes".  I number each episode, but I just make up the number.  I've made so many.  Some I just haven't written about yet.

Recalling the mistakes I've made is often funny, but I write about them because they have a serious message.  One of the smartest things you can do is to learn from the mistakes of others.  It's a much cheaper lesson than making the mistake yourself.

Many years ago I hired a guy named Hank to help with a project of building an office in our shop.  It was a temporary job.  Hank was a really interesting guy.  Kind of genius in certain ways, and in other ways....not so much.  

Well, one day Hank said he wanted to visit about a money-making business idea.  Being flattered by his asking my opinion, I took him to the restaurant where big-time money entrepreneurs go to talk about business.  Taco Bell.

Hanks idea?:  A Luxury Doggie Day Care.  I said, "Tell me about it, Hank."

Hank replied:  "I love dogs.  That's the most important part of this idea.  Loving dogs.  I'm going to train them.  Exercise them.  Give them plenty of room to run.  I've got a big yard, but I am going to limit it to only 5 dogs per day." 

"How much are you going to charge?" I asked.

"We’re gonna charge $7 a day per dog."  We’ll make some big money.

I was rather startled by Hank's business plan, but Hank didn't really catch on.  I asked, "How much money do you think you’ll make?"

Hank replied, "I don’t know.  A lot.  I do love dogs."

I proceeded to lay out the financial component of his business plan.  "Hank, think about this.  If you have absolute full occupancy of 5 dogs times $7 per dog per day, with no expenses at all, you will make $35 per day."

Hanks response?  He said, "I never really thought about it that way." 

Please note that earlier in the blog, I said that Hank was a genius in certain ways.  Not all...

Let me emphasize that everything I am telling you here is true.  It may seem cartoonishly silly, but it is true.

Ultimately, Hank abandoned the idea.  He was disappointed.  Hank was very serious about his business idea, but he really hadn't thought it out on the most basic business level.

The lesson here is really simple and obvious.  You have to analyze and understand how you are going to make money.  When people want to consult with me about a business idea, that's the primary area of focus.

Maybe you are thinking,  "Joe, the title of this blog is Learn from My Mistakes.  Where was your mistake?"

Well, let me tell you.  Years later I was visiting with a dear friend named Dorothy.  Dorothy was in an uncomfortable work situation and wanted to leave.  She had become friends with a woman who had a small dog grooming business.  (why these stories always involve dogs is a mystery.)

Anyway, the dog groomer wanted to retire and offered to sell the business to Dorothy. Dorothy wanted my opinion about buying the business.

The price was good.  It was basically for the grooming equipment.  Dorothy showed me that this shop averaged 15 dogs per day, and could do as many as 20.  The numbers made sense in theory.  Dorothy wanted to do it, and I encouraged her to do it.

My mistake?  I had forgotten to apply the simple lesson that Hank taught me.  We hadn't thought out some practical components of the business plan.  We thought out financial considerations, but not practical ones.

Here's what happened.  Dorothy bought the business, and I didn't see her for a couple of months.  When I finally did see her, I asked her how it was going.  She responded that it wasn't going well.  She was exhausted and hardly making any money.  

I asked Dorothy if she was averaging 15 dogs per day like the financial plan figured.  Dorothy said no.  She just didn't have the strength and energy to do more than 9 dogs a day.  She was just too exhausted.

Dorothy and I had worked through the financial plan of the business.  It all looked good, but we had failed to consider the practical performance of the work.  It is one thing for an idea to work on paper.  It is another to make it work in the real world.  

Many of us work behind a desk.  We deal with computer programs and spreadsheets.  Multiplication of effort is just a click on the keyboard.  We forget that there are lots of jobs and businesses that deal with physical work and logistics.  Production capacity is a real thing, and it often ties closely with the physical capacity of the people doing the work.  It definitely needs to be thought through when evaluating any opportunity.