5 lessons from losing $50K

It sucks when something doesn’t work out, however, its even worse when you don’t know when to cut your losses.

A while back, I was looking to test my feet on niche websites that are driven by SEO. At the same time, we were looking to purchase a 35% share in a business in the outdoor photography niche.

The main business was generating about $200,000 per month and had a lot of potential. While doing due diligence, there were some issues with that business, and at the very last minute, it fell through.

While we were in due diligence, I saw a small bird photography website come up for sale… I thought to myself…

A). This could really help direct SEO traffic to the main business

and

B). This could help me understand niche websites (something I didn’t know a whole lot of at the time— from advisory, yes— in action, not so much).

It was generating about 60,000 visitors and making roughly $2,000/month at the time. It wasn’t expensive, and I was able to purchase it at a super low price.

I said: “What do I have to lose”.

Well, it hasn’t worked out, however, it’s probably the cheapest way to teach me a lot of lessons that would cost more in the future, and it reinforced many of the rules that I continue to refine in my business and life.

Here are those lessons, for you…

1). Only invest in businesses where you have multiple ways to create massive unfair advantages— in this case, my main unfair advantage was a business that I didn’t own at the time. It fell through, and my core unfair advantage vanished.

2). Don’t invest in things that you don’t fully understand— while I understood the niche website business, I didn’t understand anything about wildlife photography. While my business partners-to-be from #1 did, that didn’t work out, and the entire thing didn’t work out, due to that.

3). Only invest in things that have enough upside to be worth the time. This is probably one of the biggest lessons that this taught me. Due to the fact that it was generating only $2,000/month, there is simply no real high R.O.I of investing my time or my team’s time. By itself, this business is great for someone where $2,000 is a big deal.

4). Connected to this, due to the fact that we didn’t have a team brought together to be able to run this (again from #1), it meant that my development partner (while good), simply wasn’t amazing, and the numbers were never going to make sense (the investment was going to be too large for the return).

5). I let FOMO creep in on this purchase, simply because I knew I was getting a low multiple on this website. If that other deal went through, this would of helped that business add a massive traffic channel. This continues to show me one of the most important lessons in business: Be patient.

6). The last thing that I think is important as you start investing— is to not invest in things you don’t care about. When I made this deal, it wasn’t from my heart, it was from my head. Investments that don’t connect with your heart are difficult because they lack passion, and when they lack passion, it’s difficult to sustain things even when they aren’t easy.

In total, these lessons are extremely valuable, and while it cost me about $50,000 to learn them, that’s totally okay.

The more important part? Last week, I threw in the towel. When something isn’t work and isn’t in flow, you can tell.

However, our ego and desire to “win” make us continue. In all businesses that I’m in, I always have a litmus test for how far I’ll go until I “cut my losses”.

And… that’s likely the thing that is critical when investing as an entrepreneur— To not be emotionally invested to the extent that you don’t have “stop losses””

In this case… without going into even more detail… nothing really went “right”. It was sticky and not in flow. All parts of me said…

“Let’s move on”…

So while, I win a lot. This time? It's a good lesson and a great story.

In the meantime, if you have a wildlife photography business and looking for traffic and a pain-in-the-ass content site… do let me know 🙂 

- Scott