Georgiy Volodin, Founder of a Failed Consulting Company

Georgiy Volodin, a Russian founder who failed as a result of a bad partnership and government corruption, shares the story of his government contract consulting company. In his interview, Volodin emphasizes exactly what not to do when first starting a business. 

Can you describe the business that failed and what your position was at this company?

I used to run a consulting-legal advising business. My team and I helped our clients deal with government contracts (trying to get such a contract, preparing all legal and technical documentation, pursuing contracts in courts, etc). As one of the founders, I did a lot of stuff including planning, managing, marketing, and sales. I also occasionally helped with the legal documents when my team had a lot of work to do.

What happened that caused your business to fail?

A number of things caused it to fail. First off, although there is a lot of corruption in government contracts (in Russia), even corrupt government servants can't deny you a contract if you meet all of the legal and technical requirements. We were lucky from the start - we found a huge construction client, we started to work with him, and with our first try we won a huge contract (by ourselves, no corruption, everything was really legal). The contract itself was worth over 1 billion rubles (around $15,000,000 in that time), and we were going to get around a $120,000 commission. This massive victory was ruined by our competitors - they couldn't do anything legally, so they (I suppose) bribed the chief accountant of our client, who then gave us the complete wrong documents. The accountant added some numbers manually with a ball pen. to these document that were not in the original document. 

After this, one of my partners betrayed us, grabbing all of the money and fleeing. He left us out of business and in debt. 

What lessons did you take away from this failure?

A) Try to have all your agreements, even with your partners/friends in documented form, so there can be no disputing who gets what.

B) Do not let one guy have all the contacts, insist on being introduced to everyone personally. 

C) The first thing you do when you start earning money is hire a lawyer and an accountant. 

D) You can rely on your friends and family if they love you, and if they are good people. 

How have you applied these lessons later on that has helped you succeed?

I haven't succeeded yet - I'm still getting over the consequences of that fail ( I guess what I'm doing now is “hustling”). I use every lesson I learned in my daily life. Even with small projects like reselling goods for more, I always write down the agreements, I have all the contacts (even the small ones), and my friends and family help me a lot. I still don't have a lawyer though :)

What could you have done differently to potentially have saved your business?

I should have been more strict with our client - I should have went to him and explained that his accountant had probably taken a bribe. I also should have asked my partners to check EVERYTHING the client did, even just making copies of all the documents for our own records. And I definetly should not have trusted the guy who abandoned us. 

Is there any general advice you want to give to an aspiring entrepreneur?

You should remember that for every single success story there are a thousand failure stories, and there is a 99.9% chance you are not a chosen or a special one. You can avoid failure and make a successful business if you have 3 out of 4 of the following components: money, a hard-working nature, connections, and luck. The last one is probably the most crucial. If you get 3 out of 4 - you will do alright with your business :)

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