When I was hired to be executive director for a group of rock 'n' roll summer camps all over the country, it seemed like a dream job. I got to hire hundreds of musicians to teach kids of all ages how to write an original song, and I traveled to interview potential staff members and recruit campers.
The camps, which no longer exist, had a history of success, and I was brought on board to expand their reach in partnership with a national music retail chain. It all looked good, and I was very excited. But I quickly learned that I was taking over a business that was on its way to failure.
What went wrong?
Sometimes the market can only bear so much capacity for a certain type of business. When the camps I worked for began, they were the only game in town. That allowed them to charge a premium price in order to hire a top-notch staff to deliver an impressive experience.
By the time I had joined the company, it faced competition from at least one player in each market -- and sometimes more. In some cases, the competing camps offered a similar experience at a lower price. Our rivals would use college kids as counselors while we used much-pricier professional musicians. Our camps were better, but if a parent had the opportunity to pay $200 a week versus $500, most will pick the cheaper price.
What did I learn?
From almost my first day, I realized that our backs were up against the wall. Our music-retailer partner had told us it would sell out a bunch of new locations we had opened up near their stores, and that was simply not happening. In some cases, we had no enrollment, so we canceled those camps. In others, we had some kids, but not enough, so I went on the road.
At the time, my goal became generating enough revenue for us to last through the summer. I wasn't so much working to save my own job (I expected to be laid off after the summer even if the company survived) as I was making sure the kids and parents counting on us would have camps to go to.
Once the situation was clear, my bosses and I got together to break down the budget. We figured out exactly how many paid campers were needed in each location and implemented every cost cut possible. I had to make countless difficult calls to tell staff they would not have jobs and to ask others to handle more than one role.
I got on the road and met with parents and prospective campers. It was a lesson in sales and money management that I would apply to many situations after. We literally had to account for every dollar coming in and going out if we hoped to make it through the summer (we did).
Every company should manage their money that way. Each dollar should be accounted for, and every decision should face a reasonable amount of cost-benefit analysis.
What did I take with me?
In the years since my experience with the rock band camp, I have worked at a number of start-ups and advised some others. The one lesson I tried to pass on was that no matter how excited you are or how well things are going, be very careful with spending.
That lesson helped me and a business partner bootstrap a successful company. We could have taken in investor money on a couple of occasions but kept our expenses so low that we never had to.
In addition, these lessons apply in my current life as a self-employed writer. I'm not afraid to invest in myself (I attend several trade shows a year), but I do consider every dollar I spend compared to how many are coming in.