I have no prior experience in running a business.
It started on a whim when I was laid off by 2 dot-coms (that is what we called tech startups back in early 2000). I then joined an aircraft spare parts distributor thinking I have moved away from volatility.
Then SARS came along. People stopped flying.
The company business suffered badly as no airliners would need to stock up or replace spare parts. I could sense deja vu when the MD assured us of the future but resigned the week after.
That got me thinking about how to prevent another layoff and naively decided to start a business with a few other friends. This was back in 2004.
What it become
The recruitment business survived and thrived over the past 11 years. I manage to score individual and company awards, grew it to a peak of 28 head counts and reached revenues that I could not have possibly dreamed of when the company first got started.
But as I look back, there are many other things I could have done better too. Things that could have leapfrogged our position way ahead of our competitions.
I am fortunate to conduct better marketing initiatives than many but a lot of slip-ups prevented maximization of potential.
Here is a list of mistakes and screw-ups I made along the way. I hope these will serve as good case study on how to better improve your own entrepreneurial journey.
1. Took a back seat
The business went into auto pilot mode around 2006. This mean I have team of people who are working in the business and so I could spend more time working on the business.
A smart entrepreneur would be using those new found free time to do strategic planning instead of working on the next day.
Not me. I slipped into comfort mode and found myself gliding from day to day without any real objectives. My days would be filled with reacting to emails and surfing every websites I could think so. Why bother with the thing called work when the machine you have is running smoothly?
That was okay if we are in good times forever. But when the Global Financial Crisis hit, we were caught with our pants down.
Because we didn’t go full speed ahead during the good time, we had less buffer for the down time. That led to us to borrow from the banks for the very first time and it marked the start of the many loans we have to take.
2. Refused to listen
I read an article before about the entrepreneur who asked many questions during meetings. Tough questions so he would remember and you would too. The questions led to new ideas which helped the company to grow and he managed to exit and became a multi-millionaire.
But the minute that happened, he stopped asking questions. He believed he has all the answers and that triggered the beginning of his downfall.
I refused to listen when I was given a piece of invaluable advice around 2007.
We were in discussion to be acquired. That didn’t materialize but buyer’s rep told me to emphasize on the temp/contracting side of business so that future valuation would be much higher.
I felt we are doing good enough just on permanent placements and completely ignored his advice.
True enough this became a sore point in all future acquisition talks. The valuation is always depressed significantly because we are too heavily weighted in permanent placements.
3. Fed my ego
Around 2009 I had the epiphany that we needed to shift into an office building.
For the longest time we have been based in shop houses, an affordable alternatives for local businesses back in those time.
I felt we need to up our image and office building is the way to go. After viewing numerous units, I decided to go with one at Raffles Quay on the 24th floor.
It carry a fantastic view of Marina Bay Sands from a bird’s eye perspective.
Subsequently I realized it also offer another convenience – a high enough altitude for you to jump down from when things goes spiraling out of control.
As we move along, the numbers just doesn’t add up. The cost of rental was 3x more than our previous place but we are still functioning at shop house capacity.
Scaling was necessary but it wasn’t done efficient, quick and ruthless enough to reap rewards.
That started the drip-feeding of bank loans to keep things afloat. I had to ask our new General Manager to go and it eventually forced me to a corner to accept external investors.
4. Partnership woes
The recruitment business started with the 4 of us and an employee on full commission. 2 of them were my tertiary school mates and 1 was my secondary school mate.
Given how young we were, I dare say all of us embarked for the adventure but never prepared for the journey.
The lack of serious thought process resulted in one of the co-founder leaving within the first year as her idea of entrepreneurship is more focused on the lifestyle and rewards rather than the hard work that is necessary to reach that stage.
My 2nd partner decided to leave after 2 years due to personal reasons and jump into the real estate market, which was booming hot back then (It was 2007).
The final partner had always been a dormant one. I bought them out around 2007 to prepare for an acquisition inquiry.
I had always wondered how things would have turned out if we had stuck it out together – I am sure the trajectory would be much greater.
There are many things you just can’t do alone and I know for a fact that I am the kind that require peer support to keep me on the edge.
I lost those support when the partners were all gone.
5. Lack financial sense
If there is an Olympic competition for the worst financial literacy, I probably would get silver if not a gold.
The thing about running a business is it takes up the persona of the business owner. So if I have poor financial sense, the same would apply for the organisation.
I didn’t do any cash flow analysis or proper profit and loss forecasts. We were burning through so much cash for the purpose of feeding my egos (new office, furniture).
I can only imagine the stage we would be in if all the monies meant for shifting office were invested into growing the business instead.
It looked like changing for the better but in hindsight, they are only cosmetic distractions.
6. Fire too slow
Despite the lack of financial sense, we were still in good standing prior to the Lehman bros crisis.
And Lehman was the first time I have to go through an economic downturn during the time of running of business.
When our bigger competitions started their layoffs, I thought they are over-reacting. Without having seen how catastrophic downturns were, I simply couldn’t comprehend.
The company performance dipped and went on for the next 6 months. It was too much to bear as we are just burning and not building.
That led me to layoff employees for the very first time. It was tough to do so but it would have worst if we had continued to push on foolishly
This is one of the hardest blog post I have written as it force me to go back and revisit the painful memories.
But I felt it is important to share this so other aspiring and current entrepreneurs can learn from my mistakes and won’t repeat them.
I hope this has been useful.
Question: What are the business failures you’ve been through? You can also leave a comment below.