BIO: Paulina Tenner is an entrepreneur, angel investor, TEDx speaker, and author. Her company, GrantTree, specializes in research and development tax credits and grants. She is passionate about burlesque and used to perform as a showgirl!
STORY: Paulina’s company ventured into a new business area of renting out office space, a venture that almost killed the company.
LEARNING: Focus on your core business. Check-in whenever you delegate a project and ensure you put controls in place. Do not fall prey to overconfidence bias.
“Focus on what you are good at instead of trying to break into new territories.”
About five years ago, Paulina’s company reached a point where the team was too big for their current office, so they needed a new one. They had the option to get an office that was a perfect fit for them, slightly bigger than the current one, so that they could grow into it. But there was also this genius idea of taking over an entire building, renovate it, and sublet to other companies with a similar culture to theirs.
Paulina’s instinct told her to go with the smaller option instead of an entire building. But when the two options were put into a vote, there were two or three votes more for the building. So they decided to go with the idea of an entire building.
One colleague in Paulina’s company had big ambitions and a clear vision of what he wanted that building to be. So he found one. The company took over the building and paid a hefty deposit of about £300,000 or so. Then they started renovating it.
Paulina and her co-founder decided to put the colleague with the big vision in charge of the entire project. They were not paying too much attention to the management of the project and thought because this particular colleague was in charge, everything would be fine.
So much money was spent on renovating the building. By the time Paulina and her co-founder put a hard stop to it, the company had spent over £600,000 on renovating that building. It was over the top and way more than they needed.
After they were done with the renovations, they started advertising the building and looking for companies to take up the office spaces. That is when they realized that they knew nothing about the office rental space, it was not their specialty. Their specialty is finding government funding schemes to fit in with what their clients do.
It took many months, more than they anticipated, to find companies to use the space. At some point, they got truly desperate to get people into the building and share their ongoing costs with them, so they decided to rent it out at cost. So no profit whatsoever.
And as if that was not enough, when the company decided it was time to wrap up this crazy idea and get out of the building, they were charged enormous amounts of money for dilapidation. The landlord wanted the building in its previous state, even though they had made it better with all the renovations.
Paulina’s company lost so much money on the entire operation, it almost died.
First, focus on what you are good at because it is tough to diversify and break into an entirely new industry before you get good at what you are doing. If you are a relatively small startup company, do not take on projects that cost a lot of money upfront.
Every founder will, at some point, make a costly mistake. It’s part of the learning process.
If there is a big project that is important for you, do not delegate it to just one person. Make sure you put controls in place on how much money is to be spent and how the whole thing is to be managed. As a founder, you need to get involved in that project or at least have oversight of it if it is significant for your company.
Understand what your core business is and focus your energy there instead of trying to venture into an area you are not good at.
Do not fall prey to overconfidence bias where you think you can do anything and everything because you will end up losing it all.
The most important thing when starting a business is not to make the wrong mistake. But the hard part is that you don’t know what’s the wrong mistake. Unfortunately, the wrong mistake is the one that knocks you out of business.
Put controls in place and monitor your investment, particularly when investing in a new project.
Paulina’s number one goal for the next 12 months is to see her upcoming book, Laid bare: what the business leader learnt from the stripper become a success. The book will be out in July 2021.
The book talks about the innovative company culture Paulina implemented in her business (such as financial transparency and self-set pay) and wholesome leadership, all inspired by her showgirl adventures. Join her book’s waiting list and receive a surprise—and naughty—digital gift!
“If you’re thinking about renting a building, think twice. But if you’re thinking about starting a burlesque course, don’t think twice. Just do it.”