Building a business - the story continues

In the time since my "Moving from working a job to building a business" post a few weeks back, I've been through a few ups and downs. My day job (CEO of a metropolitan council grouping looking after waste management, called somewhat misleadingly a "regional council") continues to cross over into Garbologie. Moods go up, they come down, they go bleak, exultant, then bored. I think I know what I'm doing, then I realise I never will, and finally acccept I know enough.

It's no tougher than what anybody else goes through.

The sideswipe

A few days after the post, I was summonsed along with all other metro Council CEOs and Mayors/Presidents to a presentation by the Premier of Western Australia of the findings of a Metropolitan Local Government Review. To cut a long story short, we learned that the 30-odd Councils in Perth are recommended to become 12. All of the Councils in my regional council become one, making my job redundant. And, in case you missed it with that recommendation, the review explicitly recommends that all metropolitan regional councils be dissolved. But because this is in fact a long story, there is consultation through until 5 April 2013. Almost 6 months!

Now this shouldn't really bother me. I'd already decided that I wouldn't be renewing my contract at the end of May 2013. I'd crossed the Rubicon, telling Council of my decision. But in thinking this through for the regional council, I'd satisfied myself that a new CEO would be good for the organisation, taking it to new levels. The news shattered that hope for the future, wiping out the work over the past 2.5 years to build the organisation.

Side-swiped! From the AFL. Source: The Age

It also brought out a sense of greed. To recruit a CEO for the role, the council will need to offer a pretty attractive early termination bonus in the event that the organisation is wound up. Six months is not uncommon. "Why?", I thought, "should some schmuck come in to the place I've worked so hard to develop and walk away with the loot? Why can't I have that? It sure would come in handy when I'm trying to get Garbologie off the ground.

I'll be honest. Having the prospect of $50,000 (perhaps) of free money is very tempting, with the only catch being that I have to put my plans on hold a little. The devil couldn't do better.

The yawning abyss

On the weekend after learning that my organisation will be dissolved, I looked at a potential property for Tip/Shop. It was pretty grim, and the area the sort of place I'd rather not be. Seriously. It had a bad vibe, and I tend to listen to those vibes. So I didn't take it any further with that particular place. The challenge is, for the business to work it needs to be in the general area that I looked at. Fortunately there are places that are nice, but they are very hard to come across.

So I faced the abyss. My core selling proposition, a location that is the most convenient offering for a large population, might not be possible to find. Certainly not easy to find leasehold, and I don't have the capital to buy it myself. About $2m for a suitable site. My piggy-bank comes nowhere near this.

The yawning abyss. From Star Wars. Source: Kahri Sampson blog

The bridge

It was not all bad. A meeting with our mortgage broker (we are looking to borrow against our house to finance part of the business) drew really strong affirmations of the business idea from him, and a strong belief that he can find investors prepared to invest in the business.

So we're back to happiness. That parcel of land may not be inaccessible after all. Structure a business such that there is a separate entity owning the land, with most of the funds coming from investors and the entity paid a standard lease. Garbologie is then financed as a straight business, preferably with me holding 70%.

The bridge. Sydney Harbour Bridge from Sydney Showcase

So the bridge and the belief worked wonders.

The fog

The joy of believing that you have a business after all doesn't last a long time. If you're lucky it survives a day. In this case, I got myself all befuddled with thinking about a swirl of futures. Part of that was prompted by my reading a whole heap of really interesting books. Most was brought on by a "future scenarios" session I did in at Spacecubed. I was the faux client for an international consulting firm, and the exercise was intended to train management consultants in how to use the tool. The upshot for me was despair about the challenges ahead, and amazement at the use of future thinking.

The fog. London 1952. Source: Another Nickel in the Machine

The despair has now dissipated, but the amazement has grown. The fog remains. I think I attempt too much, am getting ahead of myself, will find my way back home if I follow the hazy outlines of features I know well. The business. The core offering. The trajectory it is to follow. The rest can come later.

The light

Finally, after the crazy ups and downs, a light.

In my day job, we learn of a project (not generally known) being done by a consultant for the Department of Environment and Conservation to learn what happens to mattresses in Perth, and the barriers to recycling them through the sole recycling plant at Hazelmere. DEC only starts this sort of a study if it is thinking about intervening. The word is that it will contribute to the cost of recycling so that more mattresses are recycled.

Now I'll withhold my opinion on the merits of the subsidy, and merely state that mattress recycling is a core part of what I intend to do. The timing is about right - I should be up and running in time to be in the way of some of the river of money pouring out the DEC.

And so a light. The core offering is fine. Not that I want to be reliant on the Government for my business to be viable, but it will help get the business off the ground.

The light. Source: cFranklinPhotos, Flickr

The light is further strengthened by Eric Garland quoting Clayton Christensen:

First, innovators peel off your least profitable business, increasing your operating profit and making you feel like you got rid of your worst business and that it is not a big deal. Now the smaller competitor is financed, hungry, and ready to go after even more business, perhaps changing the market dynamic for good. The incumbent is left being gnawed at by a ravenous mob of innovators, like some poor wildebeest beset by a pack of hyenas on the Discovery Channel.

And that is me. Or at least, where I want to be. I am taking on the least profitable business of the current waste operators because I know I can do it better and I also know that they won't chase me. They may even help me take it off their hands. After then, well, that's when it gets bloody. I had decided this before reading Eric or Clayton, and so having it affirmed is tremendously empowering. A light beaming through the fog.