If you are looking at starting a business in Australia, this is your opportunity to learn from an incredibly successful business owner’s mistakes and be at a great starting point. Katherine Edgar bears all in this portion of an interview conducted by Dale Beaumont.
In 1999, Katherine founded The Synergy Group, an international professional services firm that operates in 23 Asia-Pacific cities. The Group recently extended its reach to two emerging economic powerhouses, India and China.
What are the biggest mistakes you’ve ever made in business and what did you learn from them?
The Lure of Equity Investors
Three years after starting The Synergy Group, I sold 20 per cent to inject equity into the business and instigate growth. When the relationships between the parties involved ended in tears, I then had to buy back those shares at a substantially increased cost.
What prompted this mistake was that I thought I needed to buy big corporate experience in order to grow. The equity investors we brought in were talented and had large corporate experience.
Unfortunately, they were not the right fit for our small, entrepreneurial business. We were not ready for them and we should have done our due diligence on whether we needed to hand over equity to obtain such skills or whether – as we now realise – we could have obtained those skills by hiring consultants.
In fact, after we bought back control of the business, we hired two consultants to help us develop a corporate strategic plan, which cost us a few days of consulting fees.
We realised then that it was possible to buy that kind of expertise without surrendering control of the business. I should emphasise that I am not averse to offering equity in the firm to other investors – and I would like to eventually offer shares to my staff – but it was a serious mistake to think that I needed equity money, at the cost of relinquishing control at that early stage.
Not Having Robust Financial Management in Place
For the first four years of my business, I had bookkeepers but I didn’t have proper financial management. I recall, with horror, when I realised that my personal and business tax returns had not been completed for three years because my junior bookkeeper, who assured me all was in order, was not on top of the job. Suppliers were not being paid on time, invoices were not done in a timely fashion and staff wages were being messed up.
I didn’t make the decision early enough to fix the situation as I did not realise how critical it was to have ‘big business’ financial management in what was a relatively small organisation at that time.
We finally advertised for a company accountant and now have a general manager who is an MBA graduate and focuses on business growth strategies. She is also a chartered accountant and has completely transformed how we run that aspect of the business. She is responsible for financial planning, modelling, projections, cash flow management, timely and accurate reporting and future funding of key initiatives. She costs four times as much as our old bookkeeper but is worth every cent.
Knowing the financial ‘health’ of the business at any time is critical, and as an entrepreneur it is your responsibility to ensure that the financial viability of your business is managed effectively.
Growing Too Fast
When we grew too fast, we did not plan for the resources that would support that growth. There were actually a couple of very large projects where I realised we didn’t have the staff to manage them effectively. When I needed some people to manage a project over several countries, I ended up having to hire new people on the spot.
That meant I was being sucked into managing the ‘micro’ side of my business, distracting me from the big picture and plans for the future. We did well in the end, but I had to stretch my staff and myself to a point where we were all working 12-hour days.
Not only did that put pressure on other parts of the business, such as innovation and marketing, but I realised I was putting far too much pressure on my people. So again, we may well have gained the extra business but we still made a significant strategic mistake. It’s not one I’m going to repeat!
Not Maintaining Balance Between my Personal and Business Life
This is probably one of the most important lessons I have ever learnt. There were times in the earlier years when my business was my life. As a result, my personal relationships suffered a great deal.
What I have since found is that it is possible to maintain balance and invest time in other important areas of my life. Sure, creating a successful enterprise requires many sacrifices, and there will be times when it’s very lonely and you won’t have time to spend with loved ones, but it is important to put a limit on your work hours.
For me, having a loving, understanding and caring supporter in my husband, Stefan, has really made it all possible. I would not be the person I am today without his patience, his creative ideas and advice, his encouragement, his tough love and his help in reminding me about the importance of a balanced life. I count my blessings every day for his guidance and love. That kind of support structure for me has made all the difference.
For more of this interview and what to learn in starting a business in Australia, check out “Secrets of Entrepreneurs Under 40 Exposed!“