My first personally owned business was that of Copenhagen Limousine Service that I purchased in late 1996. At the time I was the CEO of the fourth largest car rental company in Denmark, with some 200 employees, 1,500 vehicles and managing some 60 million dollars.
I was 25 years old when I was appointed CEO and two years later I had the thirst for having my own business — something truly of my own and something I could run exactly like I wanted to run it.
Although I was CEO of the car rental company, I still had to report to a Board of Directors and although I carried out most daily operations the way I wished, I still felt there were things I couldn’t quite try out and test out in the business. To an extent to be honest, much of this probably was just my own personal limiting beliefs or me being scared that I might mess up with someone else’s business.
Whatever the case, I took over the limousine service business by November 1st 1996 and now I had my own business to run. I was extremely lucky to have been able to convince the Board of Directors to let me buy my own company while still remaining the CEO of their car rental company. The implicit and explicit agreement though, was that this was not to interfere with my responsibilities as CEO of the car rental company, and also that the limousine services activities on my part were to be on my own time.
Essentially, this meant I would only have available the time for my own company evenings, nights and early mornings, plus weekends. It also meant, that from the get go, I would have to have other people carry out all operations and I would have to run it by what I call “Remote Control”.
I was super excited and certainly had a notion that I could make something of this business. I was also super scared.
Although I received a CEO salary, it wasn’t a sky high salary. I had accepted the salary at its level for I was young and felt that on top of the salary the experience and the lessons I would derive from running that position would be worth so much more than what the salary brought on its own. I was right about that and today I’m so grateful for the experience that taught me so much.
To pay for the business, however, the salary wasn’t enough. I actually had to borrow every single dollar to pay for it. On top of that, I felt the need to make a little splash as an announcement of the new ownership that I wanted to upgrade the fleet of limousines by adding some new vehicles. I needed to borrow every single dollar of that too.
The addition of new vehicles basically doubled the amount of money that I needed to borrow. This was back in the day when you could more easily borrow money in the bank. I had to of course vouch personally for every cent I borrowed, which at any rate I found only natural, understandable and acceptable.
With your own business the bucks stops with you. Fail and you will have to pay for it. It was a personal business and personally owned business. Limousines need a permit each and as legislation was back then and still is, these were attached personally to you, so there’s no hiding behind a corporate veil.
Signing the loan and now I was on the hook.
I had a large loan already on my amazing and huge house, which frankly was an over-extension of myself to take on, but which also represented such a huge chance I had to take it. The house would later prove me right, when I sold it at a huge appreciated value before immigrating to the United States, but for most of the years I lived there, I was a bit under the gun and always struggling a bit to keep up with the mortgage payments.
Admittedly, I was also struggling a bit, because I always liked the finer things in life and certainly overspent on cars, gifts for the girlfriend, travels and other extravaganzas.
It appears to me today, that a lot of would be entrepreneurs fail to understand that they may well have to go into debt in order to make their first business. I do believe it’s great to commence your business while you still retain an income from somewhere else, which usually means from a job you hold.
Yes, it’s a challenge to carry out everything you want to do with your new business, while you work full time at your job, but unless you have won the lottery or have been given a huge sum of money by someone (perhaps your rich parents), then it’s probably your only course of action outside of raising money with investors, partners or venture capital.
Ultimately, I believe that if you wish to achieve more than being a wage earner, you will have to risk more. It will bring you out of your comfort zone and you may fail and have to pay for it. I have had successes which have been great. But I have also tasted huge failures that have taken me long to get over. The failures can certainly be hard to overcome.
It is worth it though?
You bet. For me at least it is. Most people have this notion of taking their job and keeping their life on this steady course, mostly because “it’s safe”. But it isn’t safe at all. If the company you work for experience a great set back you are likely to experience cut backs and that could easily mean your job.
Some 22 million jobs were lost in the US alone due to COVID-19 this year. While a large number of those have later been replaced, the replacement of lost jobs seems to be yet only about 42% (August 2020 reference), so in other words many people stand jobless still. Being a job taker isn’t safe, but it may earn you a living for as long as you can keep it or move to better jobs, and that’s fine.
Being an entrepreneur isn’t safe. I know all about that from personal experience. As mentioned, I have had ups, and downs. Some of the downs set me back for years. The last real down I experienced, stemmed from the crash in 2008, when over the period of just about 3 weeks, I went from the wealthiest I have ever been to the poorest I have ever been. I lost millions in what seemed overnight, and ended up with a large NEGATIVE net worth.
That’s right, I ended up owing away more money than I was worth.
My huge fall wasn’t due to my businesses failing, but due to my very high risk profile in my investments. I had all these fancy currency swaps and other financial investments, typically geared with lost of borrowed money.
These investments made me loads of money, until they didn’t.
My investments would allow for the markets to go against my bets by up to 30%, so I thought I would be pretty safe. But 2008 wasn’t any other year. The Subprime mortgages went bust and markets collapsed taking down some of the largest triple A rated financial houses in the world. Along the ride, it took me down too.
Regardless, of the risks of being en entrepreneur, I would choose it over anything else if at all I could. I believe the biggest payoff of entrepreneurship is the sense of freedom you’ll have, and the sense that you are at least trying to build and create something that could bring your dreams about.
My limousine business already had a staff when I took it over. It was lead by a young man probably around my age and a couple of others assisting him. So my operations was in place, or so I thought.
Soon after I took over the business and after having reviewed things in greater detail, I found that several changes needed to be made.
I had known this already from observations of the business before my take over. Indeed, I was fueled by a deep belief that I could do something more out of the business than what the previous owner had done the past several years. Previous owner, had bigger businesses, so frankly he had been more involved in those and the limousine service had much been left to own devices and I felt its results showed it.
Speaking with the limousine service manager, I brought a number of suggestions for changes. It wasn’t long before I was met with one closed door after the other with him. “Oh, no you can’t do that, you’ll lose all the clients”, he would often respond, or “Oh, if you’ll do that, you’ll lose all the drivers”.
It became very apparent to me, that if I were to have any success with this new endeavor I would have to pick a new team, so I had to do what it never any fun for any business owner or business manager to do: I had to let him and his people go.
So there I was. Huge loans, debts and responsibilities, and my first business on my hands, and I just said goodbye to the only team that knew all the insides of the operations in the business, the drivers and not least the clients. Open prey for sure for all the existing competitors.
I knew nothing about the IT system, nothing about the clients, nothing about the operations, and pretty much none of the drivers. Perhaps more importantly too, none of the clients knew me or anything about me. Plus, I had to do whatever work on the business on my own time.
A great start for sure of business ownership and entrepreneurship. Yet I was convinced this was the only way for me to proceed. I had to hire a new team. A team that also came with no experience or insights to this particular business, its people or its clients.
I was scared for sure.
The first fiscal year of my first personally owned business, this limousine service business, reached remarkable results though. Numbers would show that we nearly increased sales by 350% and increased the EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) an astounding 3200%.
No, that isn’t a typo. The EBITDA doubled by 32 folds. It also set me free on a whole other level than I had ever experienced before, and it made me many times more the money that I was making in salary at the car rental company.
Again, all of this happened by remote control, while holding another full time job as CEO of a large company, being able to spend only my free time on my own business, and all on 100% borrowed money.
I believe there are many lessons here to be learned. Please allow me to point out some of them. Here’s the first one:
You cannot venture far without assuming some risk.
I would never have gotten the results without assuming the risks of purchasing the business. Borrowing all the money necessary for acquiring the business and the fleet upgrades, and assuming the responsibilities for the employees and the clients and services offered.
The freedom and let’s not forget the extra money I earned, would not have come to me without accepting the risks associated with it all. Likewise so, with the discomfort and disruption it all meant for me as a person.
To gain more, requires you to venture outside your comfort zone and do something you have never done before.
Debts are good, when they are linked to something that can bring you greater results than you could without it and can help you create more value than the debt and its burden.
I have gotten myself into debts many times. The worst kind of debt is the debt that is associated with buying just liabilities. This is when we buy a car or even sometimes our home. This is when the money is splashed on something that represent just spending or when what we buy something that typically can only depreciate.
The good debts are debts we acquire in order to make way for something that has a good chance of producing more value. In the above case, such as purchasing a business with which you create more value and more money coming in, so that over time the debts can be paid off again, or the new money can be utilized to create even more growth or more value in the business or elsewhere.
There’s good debt and there’s bad debt.
Successful businessman and author, Robert Kiyosaki, explains this best in his book “Rich Dad, Poor Dad”, which I highly recommend you read, if you haven’t already.
One of my young mentors, Dan Henry, reminded me recently that (paraphrasing): “You cannot go up, without first going down”.
He sells among other things high ticket online training courses and coaching programs, and his price range for his products, course and coaching ranges currently upwards $55,000, with even higher priced offers to come soon for sure.
Very often, his clients will have to go into debt in order to pay for his course or coaching. Debt on a credit card or via some other means.
This is an extension of natural laws, that states; if you want to go up, you’ll first have to go down. If you want the value of the insights from someone who has gone before you, you’ll have to down in your cash to acquire it. If you wish to build a skyscraper, you’ll have to first go down into the ground with pilings, typically of steel or reinforced concrete that go many meters down.
But most people are scared of doing so. They will have to succumb to living their current life and lifestyle probably forever and will have to accept that most of their dreams probably won’t ever materialize either.
You must be willing to invest in yourself.
The above also demonstrates that when things look terribly bleak and your back is up against the wall, you probably still have a chance to turn things around, and
Sometimes the best thing is for you to start anew.
This entire series of posts that I’m presenting here on Medium.com is all about that. How you can turn the most distressed business around. Can it save all businesses?
For sure: “No!!”
Some businesses are too far beyond a path of no return, and the better course of action is to kill it off entirely as quickly as you possibly can. Some businesses also probably shouldn’t be wasted more time or energy on, but that is a subject for another time and we may well revisit that later on.
But most businesses carry the livelihoods of the business owners and their families as well as the livelihoods of employees and their families. A lot of history, blood, sweat and tears have gone into them, and a lot of them can be saved and things can once again become successes.
I have to admit that I have personally gotten surprised just how many of the extremely poorly performing businesses I have witnessed and helped, could find a way out of their misery and return back to healthier financials again. a lot of them relatively quickly too.
Some of the businesses I saw, I could quickly recognize as being “easy” to turn around. But many of the businesses I saw, took a few days, before I saw a glimpse of light and hope. Surely and steadily we would turn things around, but yeah sometimes we would have to dig a little deeper to find our solutions.
Over the course of this series of posts, I will share with you my insights, including many secrets of the Top Business Turn-Around Agents and how they do it. I hope, you’ll follow along as I extend my personal invitation to do so.
If you wish to learn more about me and what I do, you can find more information on my website https://theautomatedmillionaire.com
(This story is a continuance and part of a series describing real life like existence of a top business turn-around agent. To be continued soon…)
