I failed at business but what I learnt through that failure has changed my life. I want to share the positives and negatives, the things I did right and the things I did wrong with you.
Most businesses fail that's a fact but what you don't hear about, is how the failure of these businesses cause people to lose their families their personal assets and in the end, the number of these people take their own lives. Since they don't see a way out or they can’t handle the shame of failure or the thought of being talked about.
I understand all this as when my business collapsed I almost lost everything. There was a moment that if I did not have a strong partner, life as I know it could have ended. Luckily for me, she stood at my side and we worked through the minefield together. I could have kept the business shortcomings from her and taken out more loans and continued pressing forward, as pride could have got the better of me and the gamble would have been a success or lose everything. I decided to cut my losses and although I lost plenty of money and now life is a bit tighter it was not enough to change my life in a negative way. In fact, it opened my eyes to a new way of life that is far more rewarding.
If I can save just one person through the power of words, then my failure would not be a failure, so here it goes.
I feel now that all is said and done, and the business has been liquidated. I should share my failures with the world, to save someone else from making the same mistakes as I did.
Firstly, my business failed but it was not a failure, and although I count the business as one of my failures in life the lessons and experience I gained from doing it were priceless. I learnt more about business, people and myself in the two years I worked on the business then I had in my entire adult life to date working for larger corporations. Although I would not purposely do it again due to the things I discovered about myself personally, I know if I did it again it would be a success.
Overview: the business was supposed to be a restaurant that turned into a take away on a night, we were going to offer everything from coffeeshop fair to Italian food from early morning till late at night. eat in or delivered.
Planning
Planning has always been my strong point and my business plan was meticulously planned. The issue was I planned to do too much! When we opened we were open from 8am to 10pm every day. Doing so much increase our build costs by 25%, equipment costs by 50% and our wage bill by 66%. As planned to trade during the day time, we went for a town centre location this increased our rent bill by 50% which ate up all our start-up capital had we started smaller and more streamlined, we could have had a lot more cash in the bank to see us through the start-up phase and onward to profitability.
Things we did right!
Lease negotiations: we negotiated the lease to be in the businesses name that protected us in the event of closure. If you can't get the landlord to agree then don't rent those premises.
Product: our product was superior to our competition, people loved our food.
Fix your budget: When I started the business, I had a fixed amount of capital, a lot of it was acquired through loans. I took the maximum I could afford, and that was all the money I had at no point was I going to take another loan for the business. Know your limits do not risk everything unless you are prepared to lose everything.
Things we did wrong
Services: We tried to do too much from the start, which could have worked had costa not opened 4 months before we open our doors. We should have identified the competition in Costa and Greg's and identified there was no means for us to compete straight away, we should have focused on one of the services in the beginning that did not clash with the already establish the trade. Had we focused on the Take-away side, we could have found a cheaper and potentially already renovated unit for half the rent and renovation costs we paid.
Staff: When we opened we had too many staff this cost us a valuable chunk of our start up cash over the first 6 months. Started off with 10 employees it took us 6 months to get it down to 6 and another 3 months to get it down to 4 we lost the sum that sunk the company in wages alone.
Equipment: should have bought our catering equipment from an auction this would have been easily procured and if we had focused on just the takeaway side we could have bought all our equipment for less. Instead, we leased the equipment which was easy to begin with but cost us dearly when we were faced with closing the business. As the contract stated that the debt would transfer to us personally which has resulted in us to experience massive monthly payment even though the business was a limited company.
If I was to do it again I would buy all the assets in my own name and lease them to my business that way if you ever close your doors you only need to find a new premise and start again. I only found out too late that this is how most small takeaway businesses function
Lease for unit: we should have negotiated a better-tiered lease that could have increased with our turnover.
Execution: Although our menu was good and food quality and hygiene, set at the highest standard. We could not get the majority we planned to get, due to high start-up costs and the opening of a major competitor months before we opened. This put us under financial pressure from the onset. This reduced our ability to advertise and reduced the availability of new customers looking for a change. Pricing was an issue altogether due to our inexperience, we priced to be competitive with others but we were competing with establishments that operated small and did not have to register for VAT.
Our biggest downfall was pricing this cost us dramatically, we had too much trade in the beginning that affected our quality and our profit was just enough to pay our bills, but not the VAT bill that followed which ultimately put us in a position that required the business to close its doors.
There is plenty more to say on the matter, but I can’t think but please feel free to ask a question in the comments and I will be more than happy to answer. Remember failure is just a lesson and those who don't try will never fail at anything other than life because you should follow your heart, and your passion and never be ashamed to admit you failed or made a mistake and know that a true partner in life will never turn their back on you.
No comments:
Post a Comment