Entrepreneurs Corner: 10 Things You Learn From Deals That Don't Go Through

Be grateful for those deals that didn't go through. In many cases the deals that don't close are often to your benefit and hidden blessings for later.

(This article is part of a series by our resident SocialTimes entrepreneur, Ellie Cachette. Cachette is the founder of ConsumerBell and also writes on topics covering Consumer Web. For more articles by Ellie, click here )

Starting your own business is a massive learning experience, especially your first time. Unlike that newspaper delivery business in middle school, or your online scheduler program you built in high school, or that awesome innovative notes taking business in college, running a true business requires employees, paying corporate taxes and getting love letters from the SEC. Those previous “businesses” don’t count and there is nothing more irratating then meeting a twenty-three year old entrepreneur who has “successfully started 12 businesses.” Starting a business takes dedicated and focus and falling on your face often.

Lately we see a big discussion about entrepreneurial resources and leveraging your network, but I would argue that the best blessing an entrepreneur has are the deals that didn’t go through in the beginning.

Here’s a few reasons why your beginning fumbles are blessings:

1) You Have No Clue What Anything is Worth

Consider your scale broken the minute you no longer earn a regular paycheck, every number you make up is figurative. You will need twice as much money for the business and half as much money for living and three times as much money for the unexpected. Most people will sense this immediately, so anything you close will be grossly undervalued.

2) You Are Probably Getting Screwed

Sensing your freshness to the business world, any experienced entrepreneur or investor will know how far along you are by the questions and needs that you have. If a deal is done very quickly its usually because you are getting screwed. There are some exceptions like if you have a close friend or Advisor who only gain is to see you successful, but keep your eyes wide open.

3) Anyone Worthwhile Will Not be Helping You

This is not entirely true but generally true. Anyone with major experience running a successful business is swamped so their ability to help you in the early days will be limited. Getting amazing people in the business to help you will require luck and calendaring. The best bet is to find a recently exited entrepreneur or Angel investor looking to foster someone. In both cases luck (and determination) will come into play, great help won’t arrive overnight.

4) Your Company Will be Worth Significantly More Quickly

Many friends have entered funding rounds that took months to close and while starved themselves for weeks, find that when the round closes all that hard work despite starvation will pay out. Remember you are your company and every tear, deployment, new customer, keeps your business moving forward. You keep pushing and your valuation will continue to go up. Hang in there and hustle any way possible to keep the lights on.

5) Higher Tolerance for Pain, Lower Tolerance for Bullsh*t

As time and deals go by your tolerance for being uncomfortable emotionally and financially will increase ten fold. Things that you think are emergencies in the beginning end up being speed bumps later on. That said, you also will get better at sniffing out people that want to waste your time either out of curiosity or maliciousness.

6) You Will Lose an Amazing Investor

There will be someone you pitch to way too early, everyone does it. The sting will haunt forever you and then you will find yourself checking in with them throughout the growth. Surprisingly their approval will become important to you all of a sudden they become that hottie you can’t stop asking to dinner. Feeling the burn of not bringing on a certain investor will get you charged up and with deals moving forward you won’t overstate or underestimate someone who is more seasoned than you.

7) The Paperwork Will be Easier

Remember that deal you once cut with a 47% interest rate and weekly payment installments? Or that equity stake you almost gave up for someone to pay your Amex bill? Those wild deals won’t go through and in the moment will destroy your emotional confidence. Months if not years later you will feel grateful if not wholeheartedly faith reinforcing thankful; when it comes time for due diligence the paperwork will be much cleaner. Less deals = less paperwork.

8 ) The World Is Small

Occasionally a deal will be lost because of something completely random. This randomness will save you. Rather than have a deal go through and later find out that a co-founder is sleeping with an Angel investor’s wife (extreme example but I have heard of even worse cases), losing that deal in the beginning is a blessing. Imagine trying to buyout or convert stock from someone who has a vengence for the team? The sooner a fire, the sooner it could be put out.


9) The World IS Small, Hold Out

Similarly to high school you want to hold out for the “cool kids” rather than become part of the first group that invites you to lunch. Deals that will get overlooked often will be for your benefit, its similar to getting turned down to prom by the kid with intergalatic braces and pizza face. Don’t worry the Varsity Tennis star will get dumped a few weeks before the dance and you will be ready!

10) Partnerships Are Like Wine and Take Time

Those partnerships you thought were absolutely crucial the first two weeks in business would have actually bogged you down, distracted you from success and been more paperwork (again) to deal with. Partnerships should be leveraged once you have built something up, not to help you build something up.