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Shutting Down a $3,500/mo Business due to Overwhelm and Overwork

Michael Hawthorne Jr. was the founder of Atlanta-based consulting agency Hawthorne Strategies LLC. The agency worked with NFL Players to develop their philanthropic foundations and awareness campaigns to address community issues that they cared about. Read on to know how overwhelm, overwork, and failing to scale led the potentially-profitable business to the ground.

United States
Agency
Capital

Michael Hawthorne

August 19, 2020

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Hi Rev! What's your background, and what are you currently working on?

Hello everyone! This is Michael Hawthorne Jr. or “Rev” and I am excited to tell you about how I created a consulting agency that failed to scale.

In 2013 I founded Hawthorne Strategies LLC based in Atlanta, Georgia which was a consulting agency that worked with NFL Players to develop their philanthropic foundations and awareness campaigns to address community issues that they cared about. 


What motivated you to start Hawthorne Strategies?

Oh boy! I remember this day like yesterday. At the time when I started my company, I had just come off the campaign trail of working for a slew of campaigns including Obama for America, Repower America, and Greenpeace. 

Hawthorne Strategies LLC was purely formed because at the time, I was working with KSTB Enterprises --a nonprofit development resource agency-- and had received a client who needed more than what the agency was able to offer, which was a national PR campaign.

I remember the CEO, Kim Sellars-Bates, coming to me and asking if I ever considered starting my own business. I had no intention of doing so. I remember the immediate fears of failure since I never owned my own business. But Kimberly inspired and believed in me so much that she risked losing me as an employee to see me fly. To this day, I’m ever grateful because she was the very reason that helped me connect with and discover the entrepreneur inside of me that I had no clue existed.

Needless to say, that was the beginning of Hawthorn Strategies. I took on my first client and shortly afterward, I was off to my first Super Bowl to debut my client’s campaign.

How did you build it?

So, I remember going on a research expedition in my office that was down in the basement of our home at the time. I remember the constant coffee stains on my desk created by endless nights of researching the rights and wrongs of creating and sustaining a business.

My desk was covered in accounting, corporate management, and marketing 101 books. I remember waking up to ruffling of papers and the occasional sighs of breath from my wife who was searching for her stash of books that I stole during the night to understand the business world.

With that said, I read a lot and connected with a great attorney who filed my LLC. He was a stellar attorney with a multitude of colorful business experiences. He created my consulting agreement, which was my ticket for contracting businesses. 

Among people competing for my first client’s business to do his marketing was a scrawny kid who stayed up all night who mapped out an entire campaign using Gantt charts and tons of stickies. After a series of consultations and weeks of free work, I had signed my first client. 

Hawthorne Strategies Logo

With the revenue I generated, I created my first website through Wix and hired a marketing consultant to do my branding. I went to do as any Founder not savvy in accounting would do: hire an accountant to manage my taxes. Ironically, my wife managed my payroll. When I asked how things were going, she would just smile sarcastically and say “ oh well, it's going”, which was code for “be glad that I love you”. 

Before you know it, I was a full-fledged consulting business with my first client generating a decent revenue. I was scared and excited at the same time.

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Which were your marketing strategies to grow your business?

Believe it or not, I didn’t put much towards the marketing budget. I took a grassroots approach, which in the political world it would equate to being the bible of marketing approaches. The little marketing that I did was through networking events and constantly selling myself, including providing high-quality work with the client I already had.

NFL events

In a sense, it was working quite well since I had a niche market. I soon found myself in conversation with two other NFL players to develop their foundations whom I met at the Super Bowl during that time. 

The two contracts that I had coming down the pipeline were between $3500 - $6000 per month, of course with different time frames. I’d say things were going well until I woke up and saw a heart-aching reality was heading my way fast. 

Which were the causes of Hawthorne Strategies failure?

As I worked to close the contracts that I had coming in the door, a storm was wreaking havoc that would cause me to shut my doors before I could finalize both contract deals. The business problems were quite obvious and were growing each day as I woke up and I didn’t address them. I had a client that required so much of my attention, that I went home in the wee hours of the night with the same question on my mind: “how can I possibly scale if I have clients that require so much of my time?”

I soon found myself in a terrible reality where I needed to scale but didn’t have the bandwidth nor enough revenue to consider hiring a second person or did I ( looking back). I often wondered where I went wrong. As I looked at the daily demand of my current client, the cracks started to appear more and more.

I realized that I failed to establish the boundaries of my service. I soon found myself fulfilling services for the client that were out of scope from the original contract whereas I was traveling almost every day to different cities serving as a cameraman, PR campaign manager, Website Manager, and sometimes as Administrative Assistant. I know what you’re thinking, how? Even as I was trying to make room for new clients, I ended up losing the contracts because I just couldn’t dedicate enough time to answer the questions on time which raised too many concerns in the end. Ultimately the players signed with a veteran marketing agency.

Needless to say, my lack of a robust pipeline of clients, no business plan, nor financial projections of the next five years of how I would scale assured failure. Without the big picture in mind, I was lost in a swamp without a compass, trying to figure out where I was going. 

Ultimately, I knew I needed more business experience. With my failure to bring on new clients due to my lack of responsiveness and depleting bandwidth, I found myself painfully closing the doors to Hawthorne Strategies.

Shutting the door on something that you built and witnessed brief successes can cause a wealth of mental issues. Closing the doors left me with a bit of depression and endless thought that I was a failure. I ended the contract with my client as thankfully there was a clause in our contract that allowed me to terminate my services. I remember canceling the payroll services and taking my website down and putting all of my files on a storage drive. This was the end of Hawthorne Strategies, but not the end of the entrepreneur in me.

After the shutdown, I took a couple of weeks to deal with the emotional baggage that came with us closing the doors before getting my first corporate sales role with a global Fortune 500 company. Looking back, I don’t regret starting Hawthorne Strategies as it was the funniest, most impactful, and exhilarating time of my life. Only entrepreneurs I guess can only ever understand that feeling. One thing was for sure, a sleeping entrepreneur giant was just waking up and things were just getting started.

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Which were your biggest mistakes and challenges you had to overcome?

The biggest mistakes I made with Hawthorne Strategies were not securing capital and leaving my job prematurely even though it required me at a full-time capacity. Additionally, I had created a consulting service with no boundaries and didn’t know how to enforce contractual obligations.

I jumped into the Hawthorne Strategies, LLC with peanuts of resources and was totally dependent on my first client for survival, which is a recipe for disaster. That created a stressful situation and created leverage for the client to take advantage of talent and offerings. 

The verdict remained: my lack of understanding of how to run a business was at the core of all of my problems. I was trying to figure it all out as I went, like many entrepreneurs; but unfortunately, I ran out of time before that lack of knowledge caught up with me. 

Which were your expenses? Did you achieve some revenue? In the end, how much money did you lose?

As a consulting business, I had little overhead costs of around $300 monthly, which created a monthly profit margin of $3,000. Sounds good until you realize it has to pay the bills. 

If you had to start over, what would you do differently?

If I had to start over here’s what I would do differently:

  1. Keep my job before hopping full-time into the business.
  2. Hire an accountant
  3. Create a business plan and find a lead generation tool once we hit revenue and sales milestones.
  4. Secure capital for 12-18 months
  5. Hire another consultant and administrator
  6. Scale offerings.

Which are your favorite entrepreneurial resources?

I spend most of my time reading books as well as googling articles and saving them to my Evernote. I essentially created a library of business how-tos. Here are some of my favorite resources and why:

  • Harvard Business Review: I picked up my first HBR magazine and never looked away. Timely and insightful business insights matched with scholarly work is a major plus for me. Every time I read HBR I come away with what's happening in the world of business along with the latest trends in businesses across the globe.
  • Fast Company: My wife actually bought my first copy of Fast Company, another great ready usually giving me a vibrant perspective and unique topics that seemed to mesh well into questions I had about understanding business with a flair that always caught my eye. 
  • Investopedia: I remember bookmarking Investopedia and then saving tons of articles into my Evernote especially on the subject matters of financing and investments.
  • Linkedin: Linkedin was very helpful in finding business profiles of not only prospective clients but also partners. Today, I think Linkedin is critical to any entrepreneur that wants to examine your network while making strategic moves to connect with new clients and/or partners. 

Where can we go to learn more?

Currently, I’m underway with my second venture called Haloloop which is a spirit-tech startup based in Santa Monica, California. Haloloop is a revolutionary spiritual wellness platform that supports your emotional and spiritual health.

So, far Haloloop was accepted into a top Santa Monica Tech Accelerator called The Preccelerator and is currently raising capital as we start to scale our services.

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