Are you currently, or have you in the past been faced with making a decision that may compromise the future and control your passions, dreams, and small business? I have on multiple occasions, and my first time making this decision could have cost me my dreams of being an entrepreneur. I hope the ideas and strategies from this article will shed some light and give you some qualified advice on how to make the right choice. For some, these decisions will be easy to make, and for others, not so easy. Is your business providing a roof over you or your families heads, do you have employees working for you that depend on your leadership to secure their career with your company? These are just a few of the questions you may ask yourself when deciding to take on investors, sell your business, or bring on a partner. Can you afford to risk losing your income, or eventually lose a business you’ve risked everything for to start? If you are like me, then you have put in blood, sweat, and tears to see your business succeed. Letting a wanna be big shot with a checkbook just waltz in and start telling you how you should run YOUR business, or tell you that it is flawed and not running right is not a place that you ever want to end up. Here’s my story of how I was taken by a greedy investor myself:
In late 2007 I started a retail print, sign, and graphics store called Kalifornia Printing aka KalPrint.com located in Citrus Heights, CA. By the end of 2010 I had moved my small operation from 650 Sq ft to over 3000 Sq Ft. in Midtown Sacramento just blocks from the capital. We had over 3,000 happy customers, tens of thousands in equipment and we provided jobs for more than 10 people. In April of 2011 I was approached by a former employer Randy who was also in the printing business but specialized in direct mail. Randy talked about all the success he had and how he had all the resources he needed for his business under one roof. He then offered to buy my entire company from me, while keeping it as my business and told me to put together a proposal for purchasing my Kalifornia Printing. Randy said that he saw great potential in me and saw the vision I had for my brand that I had worked tirelessly to build. He went on to say he could see us taking KalPrint nationwide. He even went as far as putting stars on a map in his office of locations where he would want KalPrint facilities. At this time my business, although profitable, was going through some real growing struggles. My stress level was high, my liabilities were very minimal, but I was truthfully overwhelmed. I thought at the time that this offer could be something really great. After all my hard work, I was more excited than I had ever been about the future of my company. I wrote the proposal and emailed it over, within 3 days we met again and he had a contract written up with his counter offer and what he was willing to give me. Not one of my offers were met, in fact, I was offered a tenth of what I was asking for upfront, and half of my monthly salary that I wanted. I felt at this point like I was stuck in a corner. I needed help. I could continue like I was with all the stress and wearing 12 hats, or take his offer. So there I was, faced with a tough decision that would not only affect my life but the lives of everyone of my employees and customers. Randy was offering to relieve me of all my liabilities, stress and give me the financial backing and resources I would ever need. It seemed like a no brainer at the time. So I signed on the dotted line without taking some qualified legal advice first. It was this decision that I would regret for a very long time!
After signing, Randy ordered (not asked) but ordered that we move our entire operation over in one weekend and begin to run out of his facility in West Sacramento. Hesitantly I made the switch hoping that two moves in less than 9 months was not to big of a jump, we had been growing our facility month by month in downtown and things were really starting to pick up. Randy then fired all but one of my current staff which was my cousin, and he exiled my company mascot “Gizmo the Pug” from the building, which was one of my biggest sources of traffic downtown. Unwilling to even compromise, Randy told me that I was no longer allowed to design, or draw, the whole reason why I had started Kalifornia Printing in the first place! My new job was sales, and sales only. I was no longer allowed to have my own office, and I would now have to take orders from one of his managers. This was not at all what I had in mind for the future of my company, and the horrible feeling that I had made a huge mistake began to sink in. It was not 3 weeks after our move when Randy, trying to prove a point began to threaten me, so harshly that his nose began to bleed. He said to me that if I did not do things the way he wanted then he would “sue the shit out of me and take me for everything I had”. The situation had quickly become a hostile working environment and keeping quiet was no longer an option. I explained to Randy that one more threat of that nature and I would walk out immediately. Clearly my promise to leave was not enough to get his attention, because less than than two weeks later on a Friday evening one of his employees directly went against his and my requests and let a customer take an order that was not supposed to leave the building. This sparked an absolute furry and Randy began to belittle, and threaten me while screaming at the top of his lungs on the phone. Luckily the last employee I had happened to be my cousin. He heard the entire conversation and told me “You don’t deserve to be treated this way.” So I packed up my computer that Friday, wrote a letter of resignation over the weekend and delivered it via email Monday morning to Randy himself. That was the end of my empire I had worked so hard to build, it was at that time the most devastating experience I had encountered since becoming an entrepreneur, it affected my personal life, my drive, and will to continue working for myself.
With the small sum of money I had received from Randy for my business I took some time off to assess the situation, reflect on the decision I made leading to this event, and how I was going to dust myself off, learn from my mistakes, and keep pushing forward. This first thing that I learned was choosing money over my passion had been a huge mistake and was a bold statement that I was giving up to the trials and tribulations that came with starting a new business. If I was ever going to prosper and repeat the success I had with KalPrint I needed to stay committed, be patient, and turn the stressful times into learning experiences and use them to make my business better. Make sure that the ideas and visions you have for your business are in line with your investors goals and ideas and that the changes in your vision are red flags that you should take very seriously. The second thing I learned was that just because the investor tells you it’s still your business, it all comes down to what is in writing. I signed the contract stating his corporation was purchasing KalPrint. It was my choice that led to the failure of my first company. Failure, like crisis, breeds the opportunity to learn and to grow as an entrepreneur. If you are even considering the idea of selling, partnering, or buying a business NEVER make a final decision without consulting a legal professional who can asses the situation from a legal standpoint and guide you in the right direction. The last thing I learned is to trust my instincts, my heart, or what some might call “My Gut”. Every good decision I’ve ever made I had followed “my gut” and it had never let me down. If you have to ask yourself if it’s the right decision more than once, chances are high that it’s the wrong decision. Fortunately my negative experience was not enough to make me give up my dreams of entrepreneurship, and after a long vacation away to reflect, my fuel for starting over and building Adrian Agency LLC began.
The bottom line is that good relationships are built on trust and take time to form. Make sure the person that you are thinking of working with is not only qualified, but has the same life values as you. Never give away complete control of what you have created. Trust your gut and don’t rush or make a rash decision just because you are being pressured by a potential investment.
I hope you enjoyed my story of my hard lesson I experienced, if this helps just one person it will be a great success, and I would love to hear from you. Also if you have experienced something similar to this please get in touch with me, I’d like to hear your story as well.