During my long career as an entrepreneur, I’ve learned more from watching people fail than succeed. I’m always interested in seeing what went wrong in a business and then figuring out a way to avoid that particular mistake. I’m certainly not immune to making mistakes; over the years I have regretted several decisions I either made or failed to make in businesses I owned or invested in, and each one made me a stronger and better entrepreneur. Let me share a few examples.
My first regret dates back to the early days of Paychex, in the 1970s. As I mentioned before, when I first started the company, I had no intention of making it a national business, but people started approaching me and I began taking on partners and selling franchises. Looking back, I think I would have been better to have capped the number at around ten, but I had difficulty saying no to people who offered to move to a new city and start a new Paychex branch.
My big regret is that I didn’t really have a plan. The company grew territory by territory when people came along and convinced me they could make a success of launching a new office. If my criteria for choosing partners and franchisees had been stricter and I had brought fewer people on board, I think it’s likely that the company would have grown faster and today my share of the company would be greater. Having seventeen people reporting to me was a headache of epic proportions. I remember one occasion where we spent the better part of a day discussing whether the company should pay for employees’ coffee.
Now, having said that, I have nothing against any of my old partners. They were all good people; they worked hard and did a good job. But a little strategic planning in those very early days would have paid dividends (literally) later. The moral of this story is to avoid letting things happen; take planning seriously.
I’ll always regret not being able to convince Electronic Accounting Systems to join forces with me. Even before I launched the forerunner of Paychex, Paymaster, I’d tried to convince the company of the potential of selling payroll processing services to small businesses, but I never could persuade them of the massive value of the market. Several years later, when Paychex was preparing to go public, I once again offered them an opportunity to be part of the public offering and once again the CEO turned down the offer.
Even though we ended up being competitors, I was friends with a lot of the people in the company and had strong relationships with them. Some years later, EAS was sold, but for a tiny fraction of what they would have been worth had they taken me up on my offer of joining Paychex. That’s a huge regret for me, but I’m not sure what else I could have done to convince them.
Looking back at other regrets I can almost track the way I learned how to be a successful entrepreneur: how to make money, not lose it; how to focus on what is important; and how to spot a good opportunity rather than just a shiny one.
Shortly after Paychex went public, I made a serious mistake. We had acquired another company, and the management team had been working on an idea to match employers with job seekers. This idea was similar to the concept of the highly successful www.monster.com. It was a good idea, but to provide a matchmaking service of this kind in the mid-1970s, long before the internet existed, was expensive and cumbersome. Once the internet arrived, www.monster.com showed us all what a great idea it had been with access to the right technology.
My timing could not have been worse. With Paychex having only recently gone public, Wall Street was watching us closely, and they began asking with considerable disdain, “What are you doing with this venture?” They saw this new company as way beyond our normal business parameters, and it made them very uncomfortable. As a result, the company only lasted about ten months before I pulled the plug and shut it down.
During that period, we lost credibility with Wall Street at a time when we should have been consolidating our relationship. I learned through that experience not to enter a business where the market isn’t ready for the service you want to provide, that’s outside your area of expertise, or where current technology cannot meet the distribution needs of what you are selling. My regret is that I broke my own rules when I let others convince me of the validity of a concept that went counter to my gut instincts.
I’m known for my sound investments, and in recent years, for the most part, they have been highly successful, but I have several regrets over situations where I got it all wrong. One such business was Pay to Play. The idea was simple: We had facilities in shopping malls full of games for children. Parents could rent the space for birthday parties, and we’d supply cake and other refreshments. We lasted a year, and I lost $500,000. As the primary investor, I took a significant hit. This was a case of not having a business plan that demonstrated exactly how we could make enough money to pay the bills. My advice is that if you fail to develop a good business plan, you, like me, will regret it; in this case to the tune of half a million dollars.
Another one of my early ventures from thirty-plus years ago was a business called Equipoise. My regret with that particular business is that I invested in a concept that was out of my normal comfort zone. I didn’t even know what the word equipoise meant at first, but I soon learned that it referred to a balance between lifestyles that makes a person comfortable and happy in their skin.
Louise Woerner, the founder of Health Care Resources Consulting Group (HCR), approached me with the idea of starting an alternative and complementary health-care facility where practitioners could rent space in the center and pay a percentage of their sales revenue to Equipoise. The concept behind Equipoise was strong in that it made sense to bring together chiropractic, acupuncture, acupressure, aromatherapy, biofeedback, massage therapy, reflexology, and other medicines in one place at one time. HCR was and still is a highly successful operation, and Louise had a stellar business background. Her business credentials included CEO and chairperson of HealthNow New York Inc. and a director of First Niagara Bank, National Association.
I was attracted to the business because I’d had some personal experience with acupuncture. At that time, I’d been a smoker for twenty-seven years and after just one hour of treatment I walked out of the acupuncturist’s office and never had a desire to smoke again. I remember I kept a pack of cigarettes in the console of my car for a week and a carton at home and finally gave them away. I’d also used acupuncture to treat my baseball-throwing arm for several years, so the concept of alternative medicine impressed me.
I was a believer, but you need more than blind belief in something for it to be successful. I did, however, have a good partner and a concept I thought should succeed, but we never had a well-thought-out business plan and we didn’t carry out enough market research. This was back in the 1980s in Rochester, New York. In retrospect, the concept was way ahead of its time and in the end never managed to generate sufficient revenues from practitioners’ rents to get it off the ground.
Then there was Networks, a business that was close to my heart, and my regret was having to close it down when it was still servicing a small but loyal group of listeners. Networks offered specialized music programming in senior residences and nursing homes. I started it because my partner and I owned some broadcasting equipment from another business that failed, but that’s another story. The idea was to broadcast music that came from the era the residents had lived through, music they would relate to and enjoy. This was once again a recurring revenue opportunity; we charged a fee per bed, per month.
The business got off to a good start, but we continually struggled to cover our overhead, due to the high cost of installing the equipment. We managed to build it to a point where we were broadcasting in three hundred residences, but the added high cost of sales was killing us. The challenge we faced was a long selling cycle to the nursing homes, as they operated on tight margins and had significant budgetary constraints, combined with the fact that sales representatives had to travel long distances between prospects.
I kept that business going for many years past its sell-by date for sentimental reasons, but in 2017, after investing over $12 million, we had to close it down. For one thing, technology was against us; even older seniors owned smartphones and tablets that could stream music. We couldn’t even sell the business to another operator.
I’ve not had many human resource regrets and have usually been satisfied with my hiring and firing decisions. There is, however, one exception, and that was when we needed to hire my replacement when I retired as CEO from Paychex. The person we hired went through an extensive interviewing process; he had excellent credentials, the right background, good references, and a strong interview. The rest of my board felt good about him, but my gut instinct was that he just wasn’t the right person for the job. In the end, he wasn’t a good fit, and after five years he left. His replacement, Marty Mucci, has been CEO for eight years now and has done an excellent job for the company; I consider him one of my best hires. But to this day I regret not following my instincts and hiring the wrong person initially.
A common regret I am sure I share with many entrepreneurs is not spending as much time with my family as I should have. This is a tough one because you are working hard building your company so that you can provide a better standard of living for your spouse and children. However, I do regret not finding a better balance. Work-life balance has become a big thing in business in recent years, and I’m not sure how qualified I am in giving advice on the subject, but remember it’s no good being successful and having no one with whom to share that success.