Michael Petherick learned the hard way that while failure means losing in sport, in business it can be exactly the feedback you need to get you back on track.
The road to small business success is littered with cautionary tales of failing and financial distress. But if your venture gets off to a rocky start, is it ever possible to have a happy ending?
Spoiler alert: Yes – provided, as with the heroes of all the best stories, you’re prepared to learn something along the way.
Identical twin brothers Michael and Todd Petherick started their high quality rowing skiff company Proskiff in 2011, essentially as a repair and maintenance business. Both brothers were successful rowers and rowing coaches, and had become frustrated at the lack of good, affordable boats and maintenance services in New Zealand.
“As our rowing went on we became interested in the boats, and we saw improvements that could be made with the gear,” Michael Petherick says. “We saw a gap in the market. We probably talked about it for a few years before we eventually made it happen.”
That hesitancy in pulling the trigger would become symptomatic of the Christchurch firm’s issues in its first few years. Combined with a lack of communication between the brothers and a lack of visibility in their operations, the fledgling enterprise almost toppled over and the brothers’ partnership was strained. As a result Todd walked away from Proskiff entirely in May 2017, leaving Michael to run it alone.
Instead of pulling the plug Michael and his wife Shelley Magic, who is a product marketing manager for MYOB, took a hard look at Proskiff and what had to change.
If we’re calling this a cautionary tale, the key message is perhaps understanding the difference between starting a business because you want to be in business, and starting one because you see a gap in an industry you know intimately and have a product you are passionate about.
Michael and Todd were well-known and highly regarded in the rowing community. They had great connections, vast knowledge of their product, and were selling to people they knew. It wasn’t enough. What they lacked was the business acumen to turn things around when it wasn’t working.
Magic, who since Todd’s departure now handles the business admin part-time, has an interesting perspective on how the Pethericks’ rowing background has been both a help and hindrance to the business.
“They were both perfectionist, elite sportsmen who’ve competed at high level, high performance sport and as a result they really struggled with the idea of failure. In sport failing is losing, and you don’t train to lose,” she says.
“Rowing is very reputational. It’s a small sport really. Todd and Michael have a very good name within that network but it meant they tried to make sure every single thing was right and in place before they launched. It took forever.”
The company missed a crucial opportunity to shift focus from repairs to production when the only rowing boat builder in New Zealand went into receivership in 2015. A lack of confidence to hit the ground running meant that by the time Proskiff was ready to go, another two operators had already filled that gap.
“That fear of failure was really the one thing that held us back for so long,” Michael Petherick says. “Now, I have little failures here and there on a daily basis and know that it’s part of the game.
“Changing that fear of failure mindset has been really important. You don’t necessarily know that if you haven’t been in business before.”
Connecting with other business owners, entrepreneurs and financial experts was a big factor in realigning his attitude. Previously Michael and his brother had worked almost in isolation, worried that to ask for advice was to admit to the dreaded failure. It had become apparent that while the Pethericks were extremely well-connected in the rowing community, they had no business networks and therefore nobody to seek advice, support or perspective from, Magic adds.
With Magic taking a more hands-on role in the business, Petherick was introduced to the ecosystem of free advice and support now available to small business owners. The couple appointed a business mentor and began attending incubator events and networking sessions to learn from those who’ve done it before.
It’s helped a lot, Magic says. “Entrepreneurs can be in and out of business and understand that failure is a learning opportunity. You go to some of these events and meet people who are on their seventh business idea. They just think, ‘OK that one didn’t work, what do we do now?’.
“When you’re coming at it from a ‘failure isn’t an option’ point of view, it’s quite a negative thing.”
With the fear of failure in check, the next step was to shine a light on the day-to-day operations, which were something of a mystery even to Petherick. It’s where Magic has made a key impact on Proskiff.
“When I came into the business later in play there was zero visibility to anything,” she says. “If something went into the workshop, there was no idea when it would be coming out. We had no idea how much work we had out there that had been quoted for, or what had been invoiced. All that boring accounting stuff, the systems.
“You have to know how you’re performing. How’s our cash flow? Have we made any money this month?”
Now the pair have availed themselves of a full suite of free management and accounting software that takes care of the legwork involved in keeping the finances visible. “It took a solid month of organising it all, but now it just takes a few minutes a day to check in and see where we’re at,” Magic says.
For Petherick, essentially a sole operator, it means he can focus on why Proskiff was started in the first place.
“I would prefer to be in the workshop working on boats. I’ve had to get more involved in that side of the business but this way we know exactly where we stand, and Shelley can alert me if something needs my attention. It’s been really great to see what’s out there and how it all works,” Michael says.
“I think I was probably quite naïve before. I did just leave that to Todd.”
Which brings us to a separate cautionary tale about going into business with family. Is it ever a good idea?
Both Petherick and Magic are optimistic that it can work.
For Petherick, the key lesson was communication. Given his business partner was his identical twin brother, it’s perhaps not surprising that they fell into the trap of presuming they were on the same page rather than actually discussing it, he says.
“It’s very easy to assume a family member is heading in the same direction as you, but it may not be true. You have to be well organised, with very clear expectations and communicate well. Have things documented, so if there is a disagreement on your direction, there is a clear process in place to deal with it.”
Having a mentor in place earlier would have provided an impartial third party perspective on disagreements, he adds. As it was, by the time it was suggested he and his brother were too invested in their separate points of view and a mentor would have had to be more like a referee.
“Family is the most important thing,” Magic says. “You have to protect that, and you do it by having all the documentation in place up front. When it’s family you can’t just walk away.
“When you work with other people there’s normally an etiquette in place in how you deal with them, even if you don’t like someone. When you’re with family and not having a good day, it can get nasty really fast.”
With the choppy waters hopefully behind them, Petherick is hoping to steer Proskiff into a bright future. There are plans for some diversification to offset the seasonal nature of their business and, in the meantime, become the market leader for rowing skiffs in the South Island.
“Our point of difference really is that we are a more niche, premium product”, as opposed to mass produced boats made offshore, Magic says.
The dream is to grow to the point where Petherick can take on a team and his wife can step out of the business altogether.
“The good news is our financials are strong and in we have increasing profit, which is an awesome result.”
Quick lessons from the Proskiff experience
Knowing an industry doesn’t guarantee success. There was an expectation in the beginning that people would buy from Proskiff because they knew him, Michael Petherick says. “But that didn’t happen. It’s not that easy.” Often big decisions in rowing are committee-based so a club or an individual might give you really positive feedback but won’t sign the order. “They didn’t discover that till the business got going,” his wife Shelley Magic says.
Ask for help. It’s ridiculous to assume you should know everything about running a business if you’ve never done it before. “Make the most of the experts,” Petherick says. “You can find good help for free. Ask for help.”
Stubborness isn’t the same thing as success. Petherick is not a quitter, his wife says. “That can be a strength but at some point you can get lost in it and go well past the point you should pull the pin.”
Transparency, visibility, and communication. The holy trinity. Make sure everybody knows what their role is, and that they have the information available to do it. Ensure the key people are checking in with each other regularly so that they are on the same page.
Love what you do. “Passion is important, because the novelty of running a business runs out fast,” Magic says.
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