Running a small business is hard, but nothing is harder than running a failing small business.
Economists predict that over 1 million small businesses will shut down for good this year. Some will go bankrupt, and some will simply close their doors. People’s lives will be hurt and some will be destroyed. As someone who was forced to close a business, I know first-hand the toll it takes on you and your staff and all of the people who depend on your business. It’s a no win for everyone. This weighed on me for a long time, and it seems particularly timely now, as so many businesses are struggling.
Here are seven things I learned from my failure running a business, with the hope that my lessons might make it less painful and more understandable for those living through it and those affected by it.
First, a quick history:
I worked with my brother Scott and an amazing team over fifteen years building Northside Media into a highly respected media company that included Brooklyn Magazine, The L Magazine, Northside Festival, SummerScreen and Taste Talks. Our events drove tens of millions of dollars through the creative community of Brooklyn and beyond. Our publications spotlighted, elevated and gave a voice to thousands of creative people. At our peak, we were on the cover of the New York Times arts section. We bowled with the prime minister of Holland. We held Chance the Rapper’s first NYC show. We bootstrapped and never raised a dollar of capital. We defined ourselves as a community company — our most valuable product was our community.
Then, we were approached out of the blue for acquisition in November 2014 by a new company called Zealot Networks. They were helmed by Danny Zappin who had just sold Maker Studios to Disney. My brother and I had a difficult choice to make, and, ultimately, in May of 2015 we were acquired along with a number of other companies in a rollup. Zealot did not succeed for a variety of reason, and in less than two years, we were faced with a decision: to buy our business back or see it shuttered along with Zealot’s other acquisitions.
It seemed like the most obvious choice in the world, and we took it over, making Northside independent again and re-hired the entire staff. Unfortunately, two dramatic ownership changes in two years proved too much, and the business went belly-up. Although I poured all the money I’d earned into the new venture and eventually deferred my salary and took additional loans to save the business, in the end, we were left with overdue payments to our vendors & contributors — all of whom were left high and dry. The truth is that when a business fails, people get hurt. What I lost myself doesn’t diminish the pain that others suffered.
It took me too long to get here, but I can finally look back and feel both proud of what we accomplished and terrible for the harm that was caused in the end. Our success was the product of many people’s hard work, including hundreds of employees, contract workers and freelancers. Our failure was left on my shoulders alone. I held on for too long. I lost friendships. I lost the respect of many people that I admire. I lost the business that I put my adult life into. I lost hundreds of thousands of dollars. I lost my mind.
The worst part of all — had I been honest with myself after the failure of the Zealot deal, the damage could have been severely mitigated.
Here are a few of the lessons that I learned and that I take with me to my next endeavor:
- Don’t Be Afraid to Let Go. I held on too tightly for too long. Zealot Networks had already failed. When we bought our company back, we inherited a pile of debt. We were overly optimistic that when we bought back our business that things would return to normal and those debts would be repaid quickly. We re-hired every single employee. We thought that things would return to the culture and independent spirit that had made it fun, exciting and successful. We were wrong. There were many signs and opportunities to let go. We had been blinded by the growth and the overwhelming cultural response. When it finally fell off the cliff, I was left alone with the responsibility for what had been a two-year maelstrom of failure. It always seemed as though there was a light at the end of the tunnel. Sometimes it was the next big revenue milestone (the next big festival is only a few months away!), or signed term sheets from big investors (the final straw was when a $6 million offer turned out to be fraud).
For a long time, I continued to fight & hold onto the dream that Northside Festival and Taste Talks would rise from the ashes and that our creditors would be re-paid. Brooklyn Magazine was recently firesold for the cost of what it had taken to maintain the archive of our 1,200 writers. The very writing of this is the first step toward my long overdue Letting Go.
- Acknowledge & Grieve. A business fails for many reasons, which might often be beyond the control of the owners and founders, but it’s still the responsibility of the leaders to keep the business on track and successful.
I lost the company that I loved and spent 16 years of my life building, even after forgoing a salary and sinking hundreds of thousands of dollars, but the losses experienced by our community — our employees, vendors, advertisers and friends — ARE EQUALLY IMPORTANT TO THEM. It’s essential to recognize the pain you caused, even as you’re dealing with pain yourself. Communicate transparently about what’s happening, set realistic expectations about what might happen, and never be afraid to show your feelings and apologize for letting them down.
One of my biggest prides over our 16 years was giving opportunity, work & spotlight to so many people. We gave many writers their first start. We discovered many artists and put them on-stage and in our publications. Yet, when it failed, our business was the one that ended up hurting our community when we couldn’t make payments owed to freelancers, illustrators, photographers, and artists.
- Take a Deep Breath and Wait: When the daggers come flying — and rest assured they will — you want to fight back with every bone in your body. You’ll want to fight for your employees and the creditors that you have relationships with. And you’ll certainly want to fight to defend your own name.
When the business and my character were attacked, I drafted dozens of emails and letters to explain myself and to defend my name, but I never sent them — they all still sit in drafts, or I emailed them to myself, or I just screamed at the top of my lungs off the Brooklyn Bridge. I was always head-down working on the next deal or waiting on a signed term sheet to close. I didn’t see the value in defending my own name if it might jeopardize an opportunity to right-size the company. It’s hard to operate with integrity and clarity while the whole world is falling around you, but you can always wait a day. Sleep on it.
- Forgive: When any business fails, people will point the finger at you and scream out the reasons you let them down. And you’ll have a laundry list of the reasons that were out of your control. You will remember the lies people told you, the broken promises, broken contracts, and the people who never paid their bills. You can blame those people forever, but you’ll just be digging deeper and deflecting responsibility. It’s time to let them go and come to terms with your mistakes, acknowledge them, and promise to learn from them next time.
The eventual end of Northside was caused in many ways by contracts, promises, and investments that each went sideways, one by one. Most were not malicious. For a long time, I had a restlessness about things or people that had wronged the business, but eventually, there was nothing left to do but to forgive.
- Operate with Integrity: My mom taught me that integrity doesn’t heal. When it’s weakened, it doesn’t grow back. Integrity is a unique trait — I personally think it’s a contract with yourself. Only you can know yourself when your integrity is weakened. It’s hard to operate with integrity when people around you are spreading lies. One of my favorite poems states “being lied about, don’t deal in lies.” No matter what is happening around you, stay true to yourself and operate with integrity. And when it’s a challenge, sleep on it. Talk with your staff. Talk with your vendors & creditors. At times, I was overly honest — each time it seemed that we would overcome our challenges I would let all of our creditors know that the light was right around the corner. Signed contracts led me to believe it was true. Yet I failed to deliver my promise, and that is my responsibility. I was doing my best to act with integrity, even though I had long missed the signs that it was too late.
- Know what you want: We were a family-run business working with the best humans on the planet. We did work that made us all incredibly proud. We were growing and were happy. We weren’t looking to sell the business. When Zealot Networks came out of the blue with an acquisition offer, we were divided. There were a million factors at play, but we had options: we could have continued as we were; we could have raised capital; we could have hired some experienced execs; or we could make the decision to sell. I don’t regret the decision that we made, but I sure regret the outcome — it was awful, and it was the first step that led to the failure of the business. This could have been avoided if we had known our ultimate goal from the outset.
- Move On and Learn: Most small businesses fail. It’s impossible to succeed without experiencing failure. Failure is a fact of life. My last and most important piece of advice is to get back up and to try again.
People were hurt by the failure of my business. Unfortunately, those people will not be paid for the work that they did, and that isn’t fair. Likewise, I’ll never recoup the money that I put into the business as I was trying to save it. All of my adult life was tied up with the business. But the lesson here is that you are not only your business. People can be upset with me, and I can be upset with myself, but failure happens, and while it can be hard to separate yourself from your business, you are not one and the same. I spent a long time fighting to try to make things right, but I should have learned from the mistakes and moved on long ago.
I hope to bring these lessons that I learned to my next enterprise, and if you do have a business of your own that is struggling, I hope these lessons give you the conviction to do the right thing, even when only you yourself know what that is.
Northside Media operated from 2003 to 2018, (including the acquisition period under Zealot Networks during 2015–2016). Its success was a product of many people’s hard work, including its alumni, hundreds of freelancers, and to all of the people who came to our festivals and engaged with our content and who believed in the work that we did. Thank you.
Thank you to Rainier Harris & Lili Anolik for reading drafts of this.