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Advice from a Failed Startup Founder

Advice from a Failed Startup Founder

This business took everything. Two marriages. Two cars. Homes. Money. Sanity. Everything. How ready are you to open a business?

There is no founder on the planet who has lost absolutely nothing in the process of gaining success. If anyone has ever told you that, call bullshit immediately. I refuse to believe that someone opened a business, and shot to success without hindrance of any form. The reason why I say that is because a business is like a needy baby with an ongoing temper tantrum and never eats anything you prepare for it. Constant resistance. Hey, if you’re reading this and you somehow magically were able to open a business and not have the entire world pull you back, then hats off to you. Please direct me to the fairies who assisted you.

Am I bitter? Yes. My business went tits up and three people lost everything as a result, and we’re now all neck deep in debt, struggling to recover. But I am so very grateful for the experience, because it has taught me so much about myself, and about business, specifically how not to run one for future reference. Will I stop? No. This isn’t about winning, or success, or money. This is about life.

So, how prepared are you? I wasn’t, at all, in retrospect. I quit my stable day job thinking that this client we got, being the biggest beverage company in the country, would have been a career changing, life altering move. Big fucking mistake. We did everything right. Set up a limited liability company. Distributed equal shares. Had a solid business plan. Offered a service no one else did. Offered prices no one else did. Gave away a lot of free shit. We should have dominated the market easily. But we didn’t. And it’s taken the last three months for me to finally admit why, to myself mainly.

There are three people involved in this business venture. Out respect for their privacy, I will call them John and Tony. We all know who I am, and I could care less about privacy at this point. (I mean, this entire blog is about my life experiences and it’s not under a pseudonym.) Also, I’m glossing over a lot of the details here. This is two years of constant drama with no day being without some shit happening. So I have to just give an overview, unless you want to read a book, which I’ve not yet written.

Mistake #1: We rushed.

Timing was shit. We got the call on a Thursday to start working on a brand “ASAP”. My mother was having a procedure done at hospital the following day, so my head was pretty clouded with that drama. On Sunday, I was asked for a confirmation. I made a quick decision without being careful. I said yes.

Now, I wasn’t in an unstable financial position at this point, so it didn’t seem risky at the time. We (John and I) were okay. Just had a car on finance and did not have to pay rent where we were staying. But we could not both be working, as this client needed at least 10 hours a day from one of us. So, given that my job was with a company that was a little less stable than John’s, I signed and delivered my resignation letter to my General Manager the next day. I honestly thought this was going to work. I believed it in my bones. I was so very fucking wrong.

We weren’t foreign to the industry entirely, which is why we believed it would work. I had a business plan in my head already, since I was consulting over the last three years in this industry. I knew the competition, I knew the pricing, I knew the work load, I knew what resources we needed, I did not know the people personally, or the lengths some people would go to just to destroy you or snuff you out.

Mistake #2: We didn’t separate our finances.

This business was everything to us. So we did what every new founder does: we poured our hearts, souls, organs, and bank accounts into it. And we also stirred the two together. Never will I ever do that again.

We required a credit card for the business, but because the business was under three years old, we did not qualify for one, so you know what we, the big idiots did right? We used our personal credit card… YES, we made that mistake. Looking back, all I can think is, “Des, you stupid, stupid girl.” So, when clients did not pay on time, and this was our reality, we had to cop the bills. Which meant, we either paid the bills to keep the business open, or ate.

After a couple months of this, we had to make a tough decision. John and I reluctantly went to the bank to take the loan they had been offering us for months. Des, dig that hole girl, dig that hole. And it brought some breathing room, because we had car insurance to pay, and the credit card needed to be cleared. So, for a little while, we weren’t constantly looking over our shoulders in panic.

Now, this is about five months into the mayhem. Which also meant that I had not been paid yet. Which meant that John had been carrying all of the bills, just about, for five months, and some of the business’ as well. You can just imagine the pressure here. There were even days when we didn’t have enough money to put petrol in the car for John to get to work. Yep. All for the love of business. [insert snarky sarcastic comment here.]

Mistake #3: We didn’t really have a backup plan.

This ties into mistake one. We didn’t have a backup plan, because we didn’t think we really needed one. Yeah, if shit got bad, then we would fold, I’d go back out to work and call it a day. But that did not happen. In fact, the very linear plan we created never actually happened. Somehow, we ended up on the other side of the map, in undiscovered territory. Were we prepared? Fuck no. Were we happy? Absolutely not. Was this nightmare going to end? Didn’t feel like it.

So, we brought a third partner on board to help with the work load, since I was delivering a shitty product I was not qualified to produce in the first place (which really made me feel like a fraud to the point that I never wanted to leave the house), and I could not be in two places at once, so I can’t be at home at the computer and out there selling the service. Enter… Tony. Tony was a long time friend of mine, who was an experienced designer with lots of awards to his name. Tony was freelancing and looking after his newborn baby girl, one year old son and wife, when I approached him with the offer of being a part of the agency. His freelance business wasn’t doing too great, so he took me up on my offer. The risk was big, but so was the reward, and his talent and skill opened a lot of avenues for us. So this meant, we could do more… and make more money… HA. HA. HA.

This was not a part of the linear plan we had. This now meant that we had to hold our course, as there was now a very real risk of two children not eating as a result of us not getting the job done, or building the company. This was my motivation to get everything moving. And we were moving at a good pace.

But…

Mistake #4: We were too hungry.

We were like blood thirsty ravenous wolves, which meant we took anything we got. We were desperate. We took work on for half the price, and sometimes did not even bill for it. And this cycle only got worse.

We did this for the love of the business and the brands we worked with. We got emotionally involved. Another fucking mistake. Getting emotionally involved in what you do gives the other person the upper hand. In the end, these clients easily turned around, after all the work we did for them, and went with a competitor, not because of quality, or even price, but because of nepotism. We trusted, and we never saw it coming. That hunger is blinding.

Don’t get me wrong. Being emotionally involved about what you do isn’t always a bad thing. It’s sometimes even a good thing. What’s bad is when the person you’re working with doesn’t share that passion and interest, and it becomes one-sided. Save the passion for your personal projects, and your own intellectual properties, not for the clients’. In the end, the only person who will lose is you. And you’ll lose big time. It’s a business, and think of it like that. That’s what we did not do.

Mistake #5: None of us were cut out for this kind of industry.

“Know who you are getting into bed with,” rings true here. I knew both John and Tony fairly well. I lived with John for five years and I knew Tony for an odd ten years. But did I personally really know them? Honestly, in retrospect, no. John and I had grown so far apart and neither of us really wanted to admit it for fear of being alone. Tony and I spoke once or twice a year, always about some business idea, but beyond that, we hadn’t spoken much in nearly 8 years. And John and Tony didn’t previously know each other. So, I was the common ground between everyone. And guess what? We all had serious trust issues.

To further compound that issue, we were all highly emotional creative people. We were all super passionate, but all suffered from severe depression, and were all quite volatile. Again, something you only see in retrospect. We all had our own personal issues which only grew with the stress of starting a company. Lots of hours had to be dedicated to this, and as tensions continued to rise, so did the number of and intensity of arguments. This was a business made up of two young families, on the brink of starvation and holding onto life by a degenerating thread.

Now put that combination with what was happening above. Add the fact that clients weren’t paying on time. Add in the increasing arguments. Add in the emotional attachment to our work. Add in the sacrifice of time and money for people who did not give a shit. What do you get? Chaos in its purest form. Everyone turned on each other in some way. And it all came to a head one night. I had enough and called it quits with John. This caused more stress between the partners and how we were going to separate the business. Within two weeks, Tony and his wife split up. It was nothing short of hell.

If I could do it over, what would I do?

Nothing. If I had to do it again, I wouldn’t. I wouldn’t open the business because I cannot work without investing myself into what I’m doing. It’s just how I work.

Today, I am 23 months into this nightmare. I am now finally able to sit up, and not be flat out on my ass. I’m not yet in a position to stand, or even think about crawling or walking. But I’ll get there.

Do I regret this? In some ways, yes, but as a whole? Not in a million years. I have gained some very valuable insight and hopefully, I can pass that on to you, so you can learn from those mistakes.

Now here is the interesting turn of events. If none of this happened, I would not be sitting in England, writing this. I would not have had that push to come back home and I would have been struggling with the same issues back in Trinidad. Also, by having these extreme circumstances, I’ve learned a lot about myself, the way I work, what really motivates me, and what I want out of life. It has also prompted a complete career shift, and has opened avenues I had not previously thought of before.

So, while it is a pile of shit and I feel like it was unnecessary and none of us deserved this heartache and stress, in many ways I am grateful for it, because it’s brought me to this very moment, where I can now, finally, build my life as I want it.

Another important lesson in all of this is my situation opened up a lot of avenues for me to see what people truly are. I’ve seen who I can and cannot trust and that experience and knowledge is invaluable. I’ve also seen how cruel people can be when all you’re doing is fighting for them. I’ve learned what real support is, what genuine people do and how to sift out the people who have a hidden agenda. I wasn’t completely naive to this before, but I’d be lying if I said I knew it could have been on this scale. Quite an eye opener this has been.

And now…

Advice time:

Take your time. Do not rush this. Write a business plan. Take six months to evaluate the market. Do not quit your day job. Think about what you are doing.

Start small. Do not quit your day job. Slow and steady. Do not depend on the money. Save as much as you can. Bootstrap everything. Outsource as much as possible. Don’t quit your day job.

Do not panic if you see a competitor pop up. Competition is good and healthy. See how well they do; it is an indicator of the market health.

Be passionate, but trust no one but yourself. Clients and companies do not have your best interest at heart. Always safeguard yourself. Do not get attached or emotionally involved. The world is very selfish, and it takes nothing for someone to pull the rug from under you. Trust in only you.

You are not a charity. Repeat after me. YOU. ARE. NOT. A. CHARITY. Do nothing for free, because people do not respect free. Charge full price. Stand your ground. Do not quit your day job.

Know your partners. This might be a bit tough as stress and certain situations can change this, but put as many safety measures in place if you’re not sure. Always be careful.

Have a safety net.

Do not quit your day job.

Why is Business Planning Important?

Why is Business Planning Important?

We’ve all wondered if a business plan actually makes sense.

I didn’t do a thorough business plan for my first serious startup and it flopped, in ways I was not expecting it to. My justification for not taking the time to do it, was that it was all in my head and we didn’t need it because we were all aware of the financial milestones ahead, but I did not take into consideration that my two business partners weren’t psychic (neither were the employees) and probably needed validation that the idea would really work. Six months and six clients later, the partnership broke up, and the remaining two founders had no plan to keep us grounded and focused in the chaos and stress. So, we spiralled out of control until we hit ground bottom. And then we did a business plan.

A business plan keeps you focused and grounded

When the monkeys are running around like headless chickens and the storm is raging, you’re going to be grateful for that business plan. Many times, a business will start at point A, and the right path should be A through B through C, et cetera, but what tends to happen is A, F, X, W, H… ERJUIP… NQYBZ…. A business plan helps you to expand your business in a healthy manner, and keeps you on the right track, so you won’t have a host of disjointed items and a confused consumer market. It’s a good place to refer to when you’re stuck, or disenchanted.

 

A business plan holds you accountable with milestones

Milestones are key to businesses; they keep us accountable with a date. They also tell you from a glance where your business should be in year or two from now. As a business owner, or even an employee, you can think of milestones as personal KPIs that you’re trying to reach, so every little bit contributed to the overall effort helps. Milestones also indicate to employees that you have a vision and a plan; you’re going places! And if you miss a milestone, you can rally your team together to try to make that milestone happen.

 

A business plan helps you in a ugly times

Any business plan should highlight the major threats which exist to put you out of business, or to cause you to fail. Once your risks have been properly assessed, you should have some step by step guides to tell you how to deal with your situation. This should (or may not) keep you from panicking and making the wrong decision. So many startups fall at the point where they hit a snag, because there is no planning in place that looked at where they could go wrong; in fact, most startups don’t have a business plan due to a lack of knowledge, a lack of funding to pay for one, or a combination of the two.

Can anyone write a business plan?

Can anyone perform open-heart surgery? No. So why do we so often try to do specialized tasks ourselves and become disenchanted by the result? Business plans should be written by someone who can map your business out properly, while looking at all of the possible instances or roads your business can take over a defined period. It’s also unbiased and removed from your emotional attachment to your business idea. If a business plan is the blueprint to a business, I wouldn’t want just anyone writing mine.

A business plan should also provide some level of validation and comfort that your business is in fact possible, and should give you enough courage to push through regardless of the circumstances.

So, if you have a business idea, it’s time to validate it with a proper business plan.

It’s your job to create value, not chase revenue.

It’s your job to create value, not chase revenue.

For most, starting a business is about making money. I mean, that’s the crux of it, but should it be your main focus?

We’ve seen time and time again, especially on a local scale, how businesses with a money-only focus either fizzle out or end up perceived as corrupt or greedy, and the consumers are the ones who suffer in the long run.

What if you can have your cake AND eat it too? What if you can create a business where people want to work at, and people want to shop from, and you can make a sustainable revenue on a long-term scale? Sounds too good to be true? While some may say it’s idealistic, I call bullshit.

You love when you get great customer service, right? I do, too. I remember those places, and recommend them frequently. So build your business on that touch point of value.

People don’t buy a product for what it is, they buy because of how they value it.

When you create something that’s worth something to someone, not only yourself, you’ll find that your consumers will become brand ambassadors, and those are the people who keep your business alive. Repeat business is the most valuable business in a sustainable long-term revenue model.

As entrepreneurs and business owners, it’s up to us to change the landscape in Trinidad in terms of value and customer service.

We always think that local items are of lower value and customer service is always crap, but what are we doing as business owners to change that? We have to add more value to our product bases and look at our offerings in a new light, putting a consumer first, not money first.

The money will come, it always does, but you have to be patient. You’ve got to run this one like a marathon, not a sprint. One of the issues here is that many small business owners are unaware of the struggles in the first two years, but I’ll get into that in another post.

Start by building something of value, something that people want, something that people will remember, with happy employees, a great company culture and fantastic customer service… You will outsell every single one of your competitors with this strategy.

Getting Clients to Commit! 

Getting Clients to Commit! 

As a startup, and even as an existing business, it’s becoming seemingly harder to get clients to commit to business for a set duration. However, for some businesses, it might mean the difference between sinking, floating and sailing.

Committing clients to a five year contract for a simple service in this economy is ludicrous. Six-month and twelve-month contracts with three month trials are more favorable, and even then, termination clauses sometimes have to be penalty free from the client-side, which reeks of unfairness on the service provider’s end.

Striking a fair balance is sometimes hard, especially if a young business is providing a service to a company who has been around for some time. Negotiating termination and payment terms seem to be the biggest hurdle, but something to keep in mind is that if the client came to you, or chose you out of a pool of suppliers, you may have more weight than you think. Opening a discussion about changing the standard terms to something more fair is always a good place to start.

Working closer to your ideal arrangement with a client with every contract is also a good method to get what you need from them while providing fair terms. It will give the relationship some time to grow while you establish trust and confidence with your client.

Client contracts are key to the health of a business. Use them with as many clients as you can manage as it helps you to forecast your cash flow and protects you legally if a client does not want to pay. They should be mandatory, at least for new clients, conglomerates, or companies you’re unsure about.

DISCLAIMER: I am not a lawyer, just speaking/writing from personal experience, and there may be important details missing, such as the specific protection a contract can provide. 

How valuable is YOUR time?

How valuable is YOUR time?

How much do you value your time? Do you have a dollar figure per hour?

Every business has tasks that no one wants to do, but someone has to do it, right? And if no one else can do it, then you have to do it, right? Wrong.

When you, as a specifically-skilled individual, have to do a million things unrelated to your exact skill-set, you’re wasting your time. Wasted time in a business is bad for business. You’ll end up being strung out, exhausted, and unable to focus on anything, because you’re doing things you shouldn’t, and you’re not doing a good job anyway because you’re probably dragging your feet on it.

Outsourcing or hiring someone to do the smaller things will allow you to focus on your business and provide a better product and service.

Knowing what you’re worth helps you weed out unwanted clients. 

Every business knows this one… The clients that are an instant migraine. Clients who are usually unwilling to pay you for your time are usually not worth it, because they waste a whole lot of your time and theirs, most likely don’t know what they want, and you might just end up dropping them.

It’s better to just say no from the onset, than to subject yourself to that pain. Do yourself a favor and send them to a competitor! It will keep them busy, haha! #sorrynotsorry

Now that you have all this free time by hiring/outsourcing those tasks, and saying no to all those waste-of-time jobs, you can now plan your time more easily, and live your life doing things that mean something to you. Take your dog for a walk, or read a book.

It’s very tempting to accept every single request from a client, especially as a small business because that means extra revenue (which could mean an equipment upgrade, a bonus or a new employee), but you have to stop and ask yourself if that task is worth your hourly rate, and if it’s not, then don’t do it!

Adding Value

How are you adding value to the world?

With every word that you say, every action that you make, how are you adding value?

With this blog, adding value is key to its success, but also adding an element of speed, is key. Shorter blog posts packed with sometimes just two lines of the value bomb. Longer isn’t better, I’ve learned.

Focus on adding value, refine your ideas, find the points which will make it more successful and build it.

Success is attainable for anyone who’s brave enough to put their mind to it.

Relax! Not everyone wants to be a business owner… 

Relax! Not everyone wants to be a business owner… 

Have you ever had an idea that you wanted to discuss but you were SO afraid of someone stealing it that you said nothing, and nothing ever came of that idea?

We have ALL had ideas like those. And the bullet to the chest is when you see someone else, totally unrelated to you, execute your idea… better.

Unfortunately, what most people don’t understand is that ideas are a dime a dozen, it’s the execution that counts. I’m actually not afraid of talking about ideas, and here is why:

Not everyone wants to be a business owner… 

90% of the time, when I ask someone why they don’t want to talk about their business ideas, it’s because of potential intellectual theft. Yes, we live in a very disloyal community, but that should not stop you from bouncing your ideas off of your potential consumers.

You have to ask yourself, do these people have what it takes to open the exact company, complete with your vision and execute it to become a sustainable competitive company? Are these people ready to make the same sacrifices you’re willing to make in order to take this idea and build it into a company? Probably not. 

I’ve heard a common local story, about a man who thought about bottling water and discussed the idea among colleagues because he was looking for funding, but one of the people in his audience decided that they liked the idea too and had access to the capital, so they opened their very own bottled water company. While I get the moral of that particular story, it leaves me asking what became of the entrepreneur looking for funding, and how much detail did he actually spill at that discussion? It’s up to you to be able to ascertain who can and cannot be trusted. (This is where your gut comes in handy!)

Business is about opportunity; has always been like that and will remain so. You will have those who are honest and like to see others succeed, and those who are like thieves, lurking in the shadows.

One way to look at this is while discussing your ideas (leaving out the secret details of course!), someone might just like your passion about the project and decide to invest, which can either make or break a venture.

So here are some pointers:

  • Do be careful about who you’re talking to, and what you’re talking about.
  • Do not disclose any information about your project which can arm a competitor or create one!
  • Do not be afraid of discussing your basic idea, as you will garner valuable feedback

[Side note: if you don’t agree with the above, that’s fine. Most people choose to hold their ideas very close to heart for obvious reasons and nothing is wrong with that. This is just a different perspective of a topic rarely discussed among young local business owners.]

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