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I started a successful business, then immediately shut it down
The importance of starting with the end in mind
I started a business earlier this year. Within a few weeks it was on track to generate $3-4k a month in profit — and there was a clear path to doubling that.
Instead, I decided to shut it down.
This decision cost me thousands in extra income, this year alone. And it was absolutely the right decision to make.
What was the company?
In my day job, I’m a small company CFO. I own all the financial stuff in the company. Statutory accounts. Bank relationships. Accounting systems. Budgeting and forecasting. Raising, investing and distributing capital. Paying suppliers and employees. If there are pound signs involved, it’s probably my responsibility.
I’ve done this for companies with as little as $10-15M/yr in revenue — and I’ve worked in companies that do up to $25B/yr too.
Companies with less than $10M/yr in revenue have basic finance operations. They’ll have bookkeeping, payroll, tax accounting, and legal filings, and that’s about it. Most or all of this will be outsourced, if they’re done at all.
At that level, companies don’t hire more senior roles like a Financial Controller or a CFO. They don’t have the revenue to support that level of salary, or there isn’t enough work for a full-time role.
Enter Fractional CFO work. Someone like me, who has experience in big and small companies, can provide high-level finance resource to small companies a few days per month. They can bill on a day rate or a monthly retainer. It’s cheaper for the company, and the fractional CFO gets the benefit of earning more on average than they would in a full-time role.
That was in February 2022. By April I knew I could make it a full-time thing. By June I shut it down again.
Wait, why would you do that?
On the face of it, shutting down a profitable business seems a bad decision.
Honestly, in the short-term it felt shitty. I had to let down some people who I liked, who trusted me. I had to turn down short-term money.
Most importantly, I had to admit that I’d built a cage for myself.
When I think about the destination and vision for my career, this is what comes to mind:
Constant learning and growing
Surrounded by a high-energy team that motivates and pushes me to be my best
Ability to focus on deep work for part of the day
Mentoring and coaching more junior colleagues to develop their skills
Flexibility and control of my time
Equity ownership in a business or able to directly increase my own earnings with leverage
Starting a Fractional CFO business did mean that I’d own the business. I could increase my earnings if I got clients on monthly retainer and could work effectively and efficiently.
But there’s a huge caveat to that.
The biggest caveat is that this is primarily a freelance job. Yes, there are ways to scale it beyond just working in that specific role, but they are a nightmare to execute. The reality is that my clients were hiring me, not my company, to carry out specific functions in their business. So although I’d own 100% of my company, that equity isn’t worth much if the business can never be sold to another person.
Secondly, my clients are hiring me for my expertise and specific knowledge. That means a big part of the role is simply sharing what I already know, over and over again. That caps the personal and professional growth.
I’d be working remotely, from home, with multiple clients in different timezones across the UK and US. As an outsourced function, I’d always be a part of the client’s team, but never fully integrated. I’d also have no junior colleagues around to coach or mentor. So there’s not much in the way of a team around me. It’s not an environment that pushes me to be my best.
Given the fact I’d be working in multiple timezones, a lot of my day would be taken up with client calls or emails. From my experience with US companies, I’d be responding to emails and calls until late at night. So while I’d be in control of my time, the demands on that time would be much greater, and there’s not a huge amount of scope for deep work.
So Fractional Finance Guy ticked some boxes for me: running my own company and having more control over my time. But it fell short on all the other criteria.
In fact it falls so short on those critera that shutting the company down was a simple decision for me — but only once I’d worked through the emotional issues of having to let people down, and admitting that this situation was something I’d created for myself.
Once I actually made the decision, I had to let everyone know. I drafted an email to my clients, hesitated for a moment, then hit ‘send.’
And I immediately felt a wave of relief.
That was when I knew it was the right decision for me. It was the same wave of relief I felt when I left Scribe Media, a job where I was intensely unhappy. It was the sensation of knowing I’d got myself out of a situation that wasn’t right for me.
So what’s next? I’m not sure — but I do know the direction I want to head. And that’s half the battle.
I’m borrowing this section from one of my favourite podcasts, Acquired. At the end of every episode the hosts take a couple of minutes to recommend books, TV shows, movies, and other things they’ve been enoying recently. Here are a couple that come to mind for me.
TV show: House of the Dragon on HBO / Sky Atlantic. This feels like the early series of Game of Thrones again. It’s good, which is a huge relief for me given the absolute shitshow that was the final season of Game of Thrones.
Book: The Founders: Elon Musk, Peter Thiel and the Company that Made the Modern Internet, by Jimmy Soni. The PayPal mafia is the most successful group of tech founders in the world. This book is the history of the company that brought them all together. It’s fascinating to get a peek into the early careers of people like Elon, David Sacks and Reid Hoffman. Loved it.
Music: the Hamilton soundtrack. We saw Hamilton in the theatre a couple of months ago and since then, I can’t stop listening to this. Wait For It, My Shot and The Schuyler Sisters are probably my favourite tracks.