Lessons from Failure: A Path to Growth

0:00Hey, everybody. Welcome to another episode of the Business Lunch Podcast with your hosts Ryan Dice and me, Roland Frazier, talking about all the cool things that we talk about over lunch. Ryan, what is today's topic for discussion? So I just finished my annual ritual where I look back and I just simmer in all of my failure and regret for the year that was. Nice. It sounds fun, doesn't it? It sounds really cool. I just can't wait to do it tonight. No. You know what I'm going to do? I'm going to do it from a personal standpoint. I'm going to ask my kids over and my wife and say, Hey guys, tell me all the times that I let you down over the past 12 months.

0:43That, I like that. That sounds, I think it sounds invigorating. I'll tell you for me, it actually is, I don't enjoy it, but it is, it is cathartic. And I think it's from failure. You learn way more from failure than success. So success is a terrible teacher. Failure is the best. And so that's kind of the basic ideas I go through and I look at what were all the failures? I list them out. What are all my lowlights? and then I try to extract the lessons from them. And then that, I just say, okay, I'm now gonna literally turn the page and I don't think about the failures and regrets anymore. I only think about the lessons.

1:18And so - This is great though, because having it in a recorded form where I can refer back to it time and time again to bring up to you anytime that, you know, I've done something maybe that's not perfect. I can be like, yeah, but remember last year when you blank, blank, blank, blank. And I'll have a whole list of things. It's really gonna be helpful to me, I think for the coming year. Well, some of these were lessons that I've had to learn, it seems like, every single year. So yeah, I'm going to encourage you to bring some of these and remind me of some of these things. But this was an interesting year because, as you know, it was a hard year, right?

1:52I mean, it was kind of cool because going and looking back, we were actually up revenue-wise, we were up profitability-wise, but it didn't feel that way. I was thinking like it was a hard three quarters and then a hard month. And then the last two months, it just seemed like it finally all came together. Yeah. I mean, before that, though, it was like, you know, layoffs. It was shuttering of projects. It was I mean, it was just it was like running in sand uphill. And so I guess what I'm saying is lots of lessons to be learned. And so I thought it'd be fun to to share some of them. So I'm going to kind of just throw out what they are, maybe give some context.

2:29and I'd love to get your thoughts. So lesson number one, distributions are the ultimate sign of a healthy business. And this lesson was learned, and I know you remember this, but we had one of our companies where going into the second quarter, this business had basically been flat year over year. And I was actually sitting in a meeting where they were talking about, okay, how are we gonna grow? How are we gonna break out of this funk? How are we gonna start growing again? and everybody's throwing out kind of all the usual ideas, all the random acts of marketing and things that I know weren't going to work because it's all the same stuff we've talked about 50 ,000 times that didn't work the 50 ,000 times before.

3:10And so I just said, like, look, let's ask a different question. What needs to be true to just be able to distribute 50 grand next month? Now, for context, this business is doing about half a million dollars a month. who that's about 10 % of, you know, of its revenue, it's targeting 24%. So that shouldn't be unreasonable. It's not unreasonable, but it wasn't doing that. And I'll tell you when it shifted from how do we grow to how do we distribute the conversation completely changed. And it was a harder conversation. We talked about different parts of the business. It made for a really difficult next month, but within two months, the business was healthier.

4:00The business was actually growing. And that next quarter, we were able to make a much larger distribution than we had the previous two years. And so I would just, I think the takeaway is sometimes if you want to grow, instead of focusing on growth, instead of focusing on sales, you might just be better off focusing on distributions because I continue to believe that the ultimate sign of a healthy business isn't revenue. It's not NPS. It's the ability to distribute large chunks of profit. What say you? I like it a lot. Yeah. I think that it's interesting because I've always leaned towards distribution as an important thing.

4:44And I'd say that you and I, we're aligned on that. But I think that most people are like, yeah, but I should be putting that money back into the business so the business can grow because if I don't feed it, then, you know, it won't be able to grow. How, how do you answer that? Um, if the business needs it to grow, then you can put it back in. And so, I mean, what, and I learned this from you, um, because you're being very gracious to me right now because there have been times when you and I in the past have butthead over this. some like we need to leave it in. And, um, and in reality, when we did leave it in the business, it just had a way of getting spent.

5:28Cause if there's one thing, yeah, it just gets spent because the optimistic entrepreneur's ability to spend will always, always, always outpace our ability to earn. Like we can always come up with new and exciting ways to spend the money that we have. And so I think you either need to say, okay, we're going to leave it in because here's the specific budgetary line item that we have for it. And everybody's agreed that this is how much we're going to invest. So it's been budgeted for and it's been approved. And this is what it's for and everybody's agreed to it. Or you take the money out. And if the money needs and if the business does need the money, then you do a capital call.

6:13And what's nice there is it gives you an opportunity to find out who really believes in this business. Because if some people, if somebody wants to put money back in the business, cool, they can do it then. And it gives you an opportunity to restructure the cap table if necessary. Yeah. Yeah. That's what I was going to say. When the money's out, people don't want to put it back in. Yeah. That's what I was going to say is that when it is in the business and you're leaving it in, it's very easy to make an investment with absolutely no information, no due diligence, and very little, if any, accountability.

6:53If you take that money out and it's in your bank account, and then you have to make a decision as an investor to take money out of your bank account and put it back into the business, you're going to think a lot harder about it. It's funny that it's as simple as that, but it absolutely is because you're looking at it differently. When you start and leave it in, you don't think of it as your money. You think of it as the business's working capital or the business's money. When it's in your bank account, you think about it as, okay, business, I'm going to give you this. And if I do, what am I going to get?

7:31And when am I going to get it? And what are you going to do with it? And how sure are we that what you're going to do is right, right? I love the mental change that happens just like that when you take the money out and it's your money. And that's ultimately what, because again, and granted, you and I've been business partners for a long time. I've evolved and changed my mind in a number of areas, this being one of the biggies. Because I did used to feel like, oh, you need to leave a lot of money in. And when you were like, let's take it out. And if it needs to go back in, we can put it back in.

8:04And I remember thinking, well, that's reasonable. Let's do that. It's so simple. But the reality is, you know, if it said like, we're going to take$100 ,000 out of the business. Oh, I don't know. We should do that. the company needs it, right? We'll say the company needs it. And yet, if you take the $100 ,000 out to your point, now the company says, we could really use$100 ,000 because we want to go and do, well, actually, we could really use$100 ,000. Now, I've got my$50 ,000, you've got your$50 ,000, right? What do you need it for? All of a sudden, we're asking a lot more questions than we were when it was just leaving it in there.

8:43And so, I think businesses would be a lot healthier. I think that entrepreneurs would be much better capital allocators. They would think more like investors if they would take more money out of their business. So a hard lesson learned, and again, it's a lesson that we have to relearn. It's something that we teach, but it came out of a need to spark growth in a company. And that's something that was unique in this area. It didn't come out of a, what do we do with all this pesky extra cash? It came out of a Can we use this to spark growth? And the answer is yes. So what was the failure in that, that you didn't do that sooner?

9:24Yeah. What are you at desire? The failure was tolerating. We said, I mean, we believe in a profits first model. And the failure was tolerating a lack of profits from the company. Hey, business owners. I've got a quick question for you. Do you feel like you're missing the data you need to make strong business decisions? If so, it's probably time to build a CEO dashboard. It's an easy way to get everyone in your company literally on the same page, focusing on the numbers that matter. So the scalable company put together a free spreadsheet template that will give you everything you need to deploy your own dashboard.

10:00And to make it even easier, Ryan Dice recorded a short training on how to use it. If you want to get your hands on the template, go to businesslunchpodcast.com slash dashboard. That's businesslunchpodcast.com slash dashboard, and you can download it for free. I mean, it really is just as simple as that. If we say that we're going to budget for a certain amount of profit, and if that profit isn't there, that's not okay. And we have to agree that that's not okay. It's just as simple as that. Okay. That's the failure. Number two. I can only do one thing at a time, and the same is true for everyone else.

10:40so i went back and i looked at and and this is aligned with my lesson number three which is show me your calendar and i'll show you uh your priorities so lesson number two is related to the company lesson number three was related to me so for the company i went back and i looked at which quarter were we most productive and which quarter were we least productive Define productive? We got the most key initiatives done that we set out to do. Okay. And they were actually things that moved, that impacted our North Star metrics. So if you don't know anything about how we do our strategic planning, every 90 days, it's generally 3-5-1.

11:29We select three North Star metrics. And it's like these are the three metrics that we believe we can optimize these three metrics. These are the three critical metrics that if optimized are going to get us close to our goals. Five, five key initiatives. If we can execute these five key initiatives in the next 90 days, that's going to allow us to optimize those three North Star metrics. And then what's kind of the one big theme or rallying cry that's going to keep us focused? That's kind of the three, five, one that we do and that we teach. And we say five, but really, if you want to stretch it to seven, you can kind of stretch it to seven.

12:01Well, in Q2, we had, wait for it, 17.

12:0817 but that was because you had seven companies right no it's just for one guess how many we got done um none two nice okay win two that's almost 10 no that's even more than 10 percent two i mean and of course right i mean so much of this is just breaking our own rules. And it was the same. The next quarter, Q3, one of our most productive, picked five. The other thing is when you pick less things, you pick bigger things. You pick higher impact things. Because the two things that we got done were two stupid little things. So it really was just that simple. And when you have less things, then you allow yourselves to just do one of them at a time and actually get it finished.

13:03Whereas if you have a billion things, you feel the need to do all of them simultaneously. And while we only finished two things, we kind of started all 17, but got none of them to any point of completion. And so it was just so many half-built bridges, so much, you know, wasted time. Was it just a few? So much distributed focus. That caused it to be done or was it something else? Was it just that there were not as many? Yeah. I mean, we picked, yeah, when we picked the five, we knew that we actually had the capacity to do those five. And then we did one and got it done. And then we did the second one and got it done.

13:42Now, some of them happen simultaneously, but they happen simultaneously because they were taken on by different teams. And so that was the distinction. And then, you know, less than three, show me your calendar, I'll show you your priorities. I did the same thing for me personally. Normally what I do is I'm really good at keeping my calendar and like I'll set meetings for myself and decide what I'm going to like what I'm going to do. So it doesn't have to be a meeting with somebody else. I'm just for this time, I'm going to do this thing. It also allows me to go back and audit. There were times when I just couldn't remember what I did.

14:17You know, for example, like, you know, in the month of May, just it's a blur. like there are just some months that were a blur when i go back and look at my calendar it's just wide open and so i can guarantee you if it was wide open it got consumed by somebody else's priorities and i think that's the the thing that we don't realize if we don't claim our calendars they get they get taken by somebody else yeah i like it i like it i think that's true Makes sense. What's four? Four. This is one we talked about on a previous podcast, but good content takes time to compound. I was really shocked, and I shouldn't have been, how long it took for our content efforts to actually pay off.

15:16Because we basically started it at the beginning, and we really didn't start to see it have an impact until the fourth quarter. But by the fourth quarter, we were able to turn off paid traffic as a test. We still haven't really turned it back on and leads and sales are continuing to accelerate. And so that was, it's a reminder that the things that are the most valuable take the longest to build. And if it happens quickly, it's probably not going to be as valuable. I don't know. Has that been your, I mean, again, we talked about this before, but has that kind of been your experience as well? Yeah, I think it makes sense.

16:12I think it takes more time to build the things that are going to have the most impact. Um, lesson number five. And this was one that I'm just calling, uh, this, this is kind of going to be my theme going into next year. And it is, uh, across everything. And I'm calling it, uh, the excuse is the reason because I noticed something when I looked back on all of my biggest failures in 2025, in each case, there was something that I knew that I needed to do, but I had a reasonable excuse for not doing it. And so I didn't. Nice. And I think this is true for most of us, right? I can't let that person go because they're just, you know, too critical, right?

17:13We can't retire that product line. there's just too many legacy customers, right? If we'll flip that and just, I mean, it's just inversion, right? If we'll flip it and we'll make the excuse, the reason, I have to let this person go. They're too critical. We have to sunset this product line. There are so many legacy customers that are kind of holding the brand back. it's amazing how often the things that are difficult to do, if you'll take the excuse and invert it, it's much better advice than the actual excuses. And so when I just go back and I look at all the things that I didn't do, had I done that, the answer would have been a lot clearer.

18:07And so that's kind of something that I definitely want to make sure that I bring in. And then I've asked my wife, I'm asking you, I've asked Richard, When you hear me make an excuse, just to remind me like, hey, is there a chance that maybe the excuse is the reason? Because I think more times than not, that's the case. Nice. All right. And you got one more? No, that's five. No, that was five. Okay. So let's review them. So lesson number one, distributions are the ultimate sign of a healthy business. lesson number two um i can only do one thing at a time and the same is true for everyone else and so just to help people there because i because i get number one is pretty easy so if i'm listening i'm uh or watching it's okay i gotta my my north star there's distributions i i don't understand it as well for the second one just i mean lesson two limit your um limit your activities limit your priorities just figure out what your right next thing is and just do one thing at a time.

19:15Okay. So have fewer things that are bigger that move the needle more sequentially executed. Yeah. Sequentially executed. It's, again, nothing there that you haven't heard a hundred thousand times. It's just something that when I looked back on why didn't stuff get done and where did we have a lot of wasted resources? It was that same mistake again. um lesson three um show me your calendar and i'll show you your priorities okay so if i look at your calendar if you say you don't have time for something my ask is is it on your calendar and so if you're not willing to block it onto your calendar you have to acknowledge that it simply isn't as important to you as the things that are on your calendar yeah so if you want to get some of these forward moving things done, you know, in the business and stuff like that, then you have to, you have to put it on, on your calendar and you have to be intentional, um, about it.

20:15And when I was intentional, those things got done. And when I wasn't intentional, other people's priorities got done for me. Yeah. Uh, okay. Lesson four, um, good content compounds. It just takes time. And so that's, I think, content around brands is essential, but oh my gosh, it's going to take a while for it to build. And then lesson five, the excuse is the reason. I like it. That's awesome. Those were my big, big lessons, big takeaways. had I applied each and every one of those lessons in 2025, I estimate that I would have an extra, I don't know, million, at least million, couple, maybe couple.

21:12I'm not kidding. I mean, at some point, mistakes start being worth millions of dollars. And I think it's safe to say that some of these mistakes, you know, cost us at least that much this last year. And so I'm hoping that, yeah, this year, if we can implement some of these things, they can save us or make us that much. And maybe they save or make some of our listeners even more. And if you take nothing else from this episode, remember every million dollars helps. I've always said it. You've always said it. Ever since I've known you. Yeah. Well, guys, I think that's great, Ryan. Thank you for sharing that.

21:47It's really nice. I think that that will help a lot of people. Those are five very, very good things to focus on. If you guys found it helpful, please share the episode. Feel free to give us a like, a review, distribute us to all your friends, and take some of this stuff and actually do it. It would make us very, very happy. We're available on socials. Love your feedback, and we'll see you next time on the next Business Lunch.