Of all the startups I've done, from software to healthcare to the automotive companies, the hardest by far was a local night club.
The night club business isn't very difficult to understand on paper, but in practice it's a business that lives and dies on the details. In my case, it died.
A Quick History
The night club was called "Status" and it was a trendy upscale night club that held about 1,000 trendy people. I had launched the club just after I had sold out of Blue Diesel, and I was looking for something "easy" to do after a long 8-year run.
More importantly, I was going from a company that was doing $600 million in sales per year (Blue Diesel + parent company inChord) to a night club that was doing thousands of dollars in sales per night.
The transition from dealing with really big numbers to dealing with really small numbers was fatal. When you're dealing with hundreds of millions of dollars you can't afford to worry about $50. Yet when you're dealing with thousands of dollars, you can't afford to ignore $50.
What followed was a valuable lesson in how the profits are in the details.
Night Club Business 101
There are a few things about the night club business that are helpful to know.
1. Every Dollar Counts - From the extra dollar you collect as a cover charge to the price of a martini, a dollar is all the difference between making money and losing it. The margins in the night club business are not nearly as high as you would think they are, especially if you're not buttoned up on the details.
2. Money Disappears - We're talking about an all-cash business in the hands of mostly inebriated people. It's not exactly the most professional transaction. It's not uncommon for bar owners to lose 20% or more of their profits in spillage, comped drinks, and all out thievery.
3. Never Close Your Eyes - A bar is about lots of tiny moving parts all moving simultaneously. There is no way to sit back and just watch the money tumble in. You have to be watching every last detail at every last moment - or else.
It All Goes to Hell
I dropped the ball on all three of the previous points. If a bartender was $20 short on the cash count in her drawer, I let it go. If the doorman counted 500 people in the door (at $10 a head) but only had $4,900 in his hands, I let it go. If talent was late, or our deliveries weren't exactly on time, I let it go.
My rationale was simple - I wanted to focus on the bigger picture items and let the details work themselves out. But as it happens, the details were the business, and the big picture items weren't important.
We were in business and out of business in record time. From the day we opened in February to the day we closed in July we were barely in business six months. The only thing we did right during that time was to mitigate our losses quickly and get out before the bleeding could get any worse.
Apply Here and Hold
From that point on I had a newfound respect for minute details. At Swapalease.com and now at Go BIG, I pay attention to every last dollar and to every last detail - and our profits have grown accordingly.
What I've found is that the minute details - the $5 you don't spend on a new stapler or the $100 you save in Web hosting - are the details that can make or break a startup.
It's not just one decision that makes the difference, it's the consistent application of detail-oriented principles that matters. It wasn't that I lost $20 on a bartender's drawer on a Friday night, it was that I created an environment that accepted those losses. It just compounds from there.
No matter where you've come from or what has mattered in the past, when you're dealing with startup dollars - every dollar and every detail counts.