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Businesses you've failed at - Spill It !!!

Discussion in 'Small Business' started by Ace in the Hole, 17th Oct, 2015.

  1. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    There's no shame in failing at a business if you gave it a genuine go.
    Only if a repetitive problem happens and you don't learn your lessons, that's when you have a problem.

    My first was a vending machine business with 15 compact vending machines located in small businesses like factories, warehouses and some industrial type offices.
    I bought these 2nd hand already sited and took over from the existing owner, I was about 21 years old at the time.
    I'd fill these up a couple of afternoons a week after my regular full time job, always rushing and had to schedule my run so I got to places before they closed.
    Over time I lost a couple of sites and my weakness at the time was sales and people skills, and I was too shy to cold call on places to ask if they would have one of my vending machines in their workplace.
    In the end I opted to pay the head company $400 to find a site and place the machine, sometimes they gave me bad sites.
    Another problem was that these were mechanical machines and set to take a $1 coin and they were built to take 375ml cans. I got worried when plastic bottles started getting more popular and was vulnerable if prices of cans went up or even got discontinued, as my initial buy into the biz was about 20k, which I had to partially borrow at the time from my parents. I actually went for a bank loan, but they wanted a mortgage over my parents only PPOR which was a modest unit, no way and too hard.
    Anytime supermarkets had a special on Coke I'd have to buy trolley load after trolley load and take them home, it was hectic at times.
    At the time I was going to TAFE 2 nights a week studying Building Studies and also going to the gym a few nights a week, and this too, on top of my 6 day/week job.
    Anyway, in the end I sold it after about 1 or so years and probably broke even, less all the work and petrol I put in to source stock and refill the machines.

    My 2nd attempt was buying a concrete resurfacing franchise, where you spray on decorative coatings over plain concrete. I was lured by the opportunity to make about 100k, when I was making about 40k at the time labouring hard doing roofing work. In this job I had to advertise, go and quote and sell jobs.
    I think this one cost me about 25k and I was about 25 years old at the time.
    I was too much of a perfectionist to perform this kind of work, and it was really hard on my back.
    Again, sales was my weakest point and when you're a one man band, it's hard to survive.
    Looking back, I realised I got used badly to quote jobs in all areas of Sydney. I should have qualified potential jobs before wasting my time doing quotes for jobs which would never eventuate.
    Weather was another major issue with this business I never thought of previously. Once I was trowelling on basecoat, laying stencils, hours and hours of prep, then a sudden storm comes over and destroys it all :(
    I tried really hard in that biz, it was all the money I had at the time.
    I'd go to the material suppliers and learn from them, as I was not a concreter and this trade was heavily connected with concreting.
    Basically, the franchisor saw a loophole that if you go to do a 3 day course with them in Adelaide, you can get a license there and use it to operate in your home state.
    I fell for this and paid with my inexperience.
    In the end I just let the business die and lost my outlay, more lessons learnt.
    Got to say though, this was like a real life business apprenticeship, got thrown into the deep end and had to learn the hard way having never been in this position before, all on my own.

    Today is a completely different story.
    If I didn't suffer the pain and lessons of the past, I wouldn't be crushing it like I am today in online and in store sales with our current biz started from scratch 10 years ago when I was 30 years old. I'm not getting taken for a ride anymore and am very grateful for those 2 failed businesses of the past.

    Please share your stories.
     
    Last edited: 17th Oct, 2015
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  2. JenW

    JenW Well-Known Member

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    Thanks for your honesty Ace. It's hard to go over past mistakes, especially expensive ones like failed businesses.

    Haven't been involved in unsuccessful businesses myself - my only experience personally has been my flute teaching. This has gone well, I consider I'm reasonably well recompensed given the time and energy I put into it. I'm currently fully booked with students - I could take maybe one more, but that would be it (I currently have 13).

    I'm also lucky because I do it as a sideline, I don't require any of the money I make to pay bills or the mortgage, so really I'm in the situation where I'm making money from doing something I enjoy. Not to say there aren't challenges - I have an autistic 7 year old, and a older guy, both of whom are very demanding in different ways - but I'd have to say that overall I do get a lot of enjoyment out of teaching.
     
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  3. Catalyst

    Catalyst Well-Known Member

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    Interesting thread, @Ace in the Hole

    How did you source for your 3 different businesses?
     
  4. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    First one was through classifieds in newspapers, but I think I made the purchase from an ad in The Trading Post, business for sale section.

    2nd one I think was sourced initially from a Business Opportunities magazine, then further online searches of business for sale websites.

    Current biz was built from scratch.
    Imported products from China and started selling them online.
    Discovering what to sell was primarily based on sold items history from eBay Australia, it was great 10 years ago and much more competitive if you were to start the same way today.
     
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  5. House

    House Well-Known Member Premium Member

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    Great read and well done on the resilience, glad it paid off eventually. I did commission only door to door sales job for a year to work on the sales and people skills, learned more there than I did in my Psych degree.

    My "failed" business was a mail forwarding one where I would receive and hold mail on behalf of travelers/foreign students/internationals and send it on when the requested. Also charged $1 per page to scan any documents which was delightfully profitable as that alone covered rent every week. There was about 5 similar companies but in my opinion they were overcharging for such a simple job. So I got to work on a SWOT and Business Plan.

    Pretty quickly the client base was starting to build steadily as I was the cheapest per month but also offered a login service to view all mail received which was done purely for the competitive edge. Whole website and login section was designed by a friend and myself over a few weeks and many slabs of Tooheys :)

    Spent $3k+ printing and distributing 10,000 leaflets to the magazines of my target market. Unfortunately it was time and money wasted as not one of those leaflets led to a new customer! Was quite surprised by that.

    Anyway, it was an easy side business that was starting to generate some decent cash but I learned that dealing with mostly nomadic people and AusPost can be quite frustrating. If I had of known of the 80/20 Rule I would have not allowed certain clients to renew!

    Unfortunately just as I was getting excited at the cashflow and potential, Mr GFC came along and crapped all over my parade. Lost more than 80% of my client base within 2 months as everyone decided to cut back on discretionary spending and traveling is top of the list.

    It was a pretty good business to start with given the very low entry costs, very low running costs but high income.

    I have a book for my business ideas and it's half full. Plan is after I buy my third IP, I'll start one a year, learn the lessons and keep going until one works well enough. Onwards!
     
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  6. JDP1

    JDP1 Well-Known Member

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    tried starting Microsoft, apple and google...
    failed miserably...so here I am hyping Brisbane.:p:D:eek:
     
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  7. Lizzie

    Lizzie Well-Known Member

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    I haven't had a "failed" business as such - but have had a few startups, where I've invested maybe $10,000 in getting prototype designs etc and then ran out of steam and enthusiasm. Still have the designs somewhere - and they were good ideas that would still work - might revive them someday.

    Another I folded because the cost of shipping the product was to high - the business was really starting to take off an I was looking into contracting staff, but most of my market was in the USA and Aust Post costs were prohibitive.

    Had one major failed development that cost us around $300,000 - still smarting from that one
     
    Last edited: 18th Oct, 2015
  8. Truly Exotic

    Truly Exotic Well-Known Member

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    depends on what your definition of fail is but if its starting a small one to only not proceed further after a little while, then ive failed about 5 of them

    some didnt get far due to competition, high postage, lack of marketing, alternatives

    however im talking about doing small things forpocket money with very little outlay as possible
     
  9. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    I haven't had any that went backwards but I did not have a business mind or any sense of leveraging.

    1. Music website (review, interviews etc). Had a lot of traffic and made some cash from google adwords (plus got to see hundreds of bands for free) but I ended up with ~10 volunteer staff and 20+ CDs arriving in my mail every single week to distribute for review...plus hundreds of emails a week. A record label offered to buy the site but I said no (they wanted to keep its name but plant reviews for their stuff). After 7 years I pulled the plug to focus on my career as the time going in was immense and the dollars it was producing were minimal. I didn't do it for the money though. Massive time drain but learned heaps.

    I should have captured emails from day one (I never did). It'd have helped a lot for launching #2.

    2. I started a record label and online store. Silly me was too tight and unaware to leverage others to fulfil my orders so I was going nuts packing for hours a day after full time study and freelance work. Again, got too much for me and pulled the plug to free up time. I could have outsourced everything and had items drop shipped and still made a profit but I didn't know what was possible or have the brains to find out if it could be done.

    TL;DR:

    I started some stuff for fun that went better than expected, then failed to outsource and leverage, so I threw the towel in to liberate my time.
     
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  10. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    Good point.
    I guess failing would be not meeting your initial expectations after a reasonable amount of time.
    Like Steven Ryan's case, a lot of time and effort spent for little monetary reward could be considered a fail.

    I think a genuine fail would be if you committed either a significant amount of funds, relative to your position at the time, or a significant amount of time, but didn't get the results you wanted.

    Failing, to learn, is better than failing to learn.
     
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  11. Perthguy

    Perthguy Well-Known Member

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    I started a lawnmowing and gardening business when I finished high school. I didn't know a thing about marketing or selling, so I didn't pick up much business. The main issue though is that I have severe allergies and hayfever. It wasn't a pleasant few months before I chucked it in. :(
     
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  12. Greyghost

    Greyghost Well-Known Member

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    My lawn mowing business when I was 13..
    Broke the mower.. School holidays finished. The end.
     
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  13. skater

    skater Capitalist Premium Member

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    After we got married, I fell pregnant & lost my job. Hubby also got retrenched & 17.5% interest rates came along. As there were no jobs available, we decided to create our own. We tried Amway, Tupperware, Avon, & more. Avon was a funny one, as I used to walk the streets with the kids in the pram & I basically treated it like a job & turned over quite a large amount. Then came a stint Telemarketing & we saw what they were doing & copied but opened an office in a different area. That went really well for a while, then crash. Closed up shop.

    We had a Sani Bin run at one stage, that was a few days a month. Good money for the small amount of time put in, but we had to buy fragrances & the quality was variable.

    Then came full colour Business Cards & Promotional Products. We did really well with that starting from scratch. We were the largest supplier of Promotional Products in Wollongong for a while. That started to go downhill when we opened a Roller Skating Rink. Under capitalised, crappy venue, large rents. Nearly lost the house. We swore that we'd never have a business again.

    Until.....I started up the skate business. I wasn't expecting it to go the way it has. Spent a heap of money on a website, only to have all the Australian suppliers refuse to supply me because I didn't have a bricks & mortar store. So plan B was hatched & we started importing them. Most sales now come through Ebay & turnover is pretty decent. If I was really motivated, I could approach the rinks & sports stores & develop a wholesale customer base.....but I'm not really all that motivated to tell you the truth. We don't NEED the money anymore, and I've come to realise that you've got to work out what you want. To go big means lots more stock. It means a large warehouse, it means staff & all the expenses that go with that. It also means a full time job & I'm not willing to do that, so I'll stay part-time, doing as much as I want to do, for as long as I feel like it.
     
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  14. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    How come you stopped Avon if you were turning over a lot, @skater?

    Didn't like it? Wasn't worth the effort for the comissions? Found other opportunities? Baby got old and your conversion rate dropped?
     
  15. skater

    skater Capitalist Premium Member

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    When I say a lot, I mean a lot for an Avon rep. At the time we were desperately broke, so we gave anything that brought in a $$ a go. Some things worked better than others. Not sure what took it's place at the time. It was useful as I could do it with the kids in tow....but it was never a long term prospect.
     
  16. Graeme

    Graeme Well-Known Member

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    In 2002 or 2003 I wrote a game for mobile phones. This was before the advent of the iPhone and Android, and there weren't app stores in place.

    The short version is that it was a rotten deal, there were technical issues, and at the time I'm not sure that the business was viable.

    A big problem was down to the distribution of revenues. The mobile operator would take the lion's share. I can't remember the numbers, but it was around 70%. The publisher would then pay me after their costs had been covered, and my royalty rate was pretty pathetic.

    Oh, and I didn't get an advance, so I had to fund development out of my own pocket.

    The publisher I was working with also had a reputation for not paying its developers, and taking projects back in house. There was even a clause in the contract that if the contract was shut down then they would automatically get ownership of my work on a royalty free basis.

    The main technical issue was that handsets weren't completely compatible with each other back then. I'd have to re-implement sound code to cope with different APIs, and one or two devices would lock-up randomly. Without decent bug reports, or test hardware, it was something I couldn't fix easily. The publisher was meant to supply these, but, well, they didn't.

    So I ended up spending about a year alternating between being held up waiting for them to run a QA sweep on the latest version, or being pressurised to deliver a bunch of features that weren't in the original agreement. (There wasn't a written spec.) At one point I was threatened with legal action by them to recover their costs on the project.

    It was somewhere around that point that I told them where to get off. I think that the game was eventually released, but I never received a penny or cent for it. I probably delivered them $100K worth of work, give or take.

    Incidentally, I ran into someone on the other side of an interview in Switzerland a few years later who'd been through the same experience with the publisher. So I wasn't the only victim.

    Lessons?
    • Always use a lawyer before signing a contract.
    • Middlemen will try to take as much of the profit as possible, whilst taking a minimal risk. So being further up the food chain makes a lot of sense.
    • If someone is being a pain in the neck to deal with then cut your losses sooner. At the time I had minimal assets and was incorporated as a limited liability company, so they'd not have been able to sue me directly.
    • Be careful about entering immature markets. First mover advantage is fine if you're a Silicon Valley start-up backed by a vast amount of venture capital. But the rest of us have to pay bills, and if there isn't an adequate income stream you're going to starve.
    If I was doing it again, I'd have kept going in the mobile sector from 2003 or 2004 onwards, and tried to leverage my position into being a digital agency. Once the iPhone and Android platforms gained traction, apps actually became viable. I think that there'd have been a window for doing very well out of the scene.
     
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  17. Kinnon Bell

    Kinnon Bell Finance Broker

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    In my early 20's I had a dog grooming business. Didn't make a motza out of it but it was enough and I absolutely loved hanging out with the dogs all day, every day. But after about a year of ownership I was getting sicker and sicker and the doctors couldn't figure out what was wrong with me. I was being hospitalised more often than I should have been and at one stage the doc's thought I had an auto-immune disease and pumped me full of steroids but with all the testing they did nothing was conclusive.

    Anyway, long story short, after a process of elimination it was put down to something I was using in the business. Sold the business after just shy of 2 years and started to come good after about 6 months but still took quite a few years till I was close to being recovered and it's only in the last 18 months or so since I've modified my diet that a lot of the remaining issues have gone.

    So in a way I felt like I failed, or at least my body failed me.
     
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  18. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Treating spare time businesses like a job or a PART time business usually ends up with a similar result

    Folks think they can make these a "spare time business" and end up with very little,and invariably the business model is placed at fault.................

    ta
    rolf
     
  19. wylie

    wylie Moderator Staff Member

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    I know someone who sells Avon. She thinks she is doing well but with her costs (she will drive half an hour to deliver one item) she is losing money. She doesn't understand but her husband (who does the figures) sees where the money goes. It is not a big problem or a big loss but all the effort and not making anything is crazy. She really is using it as a way to have a social life IMO.
     
  20. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    ^ Nothing wrong with that if her aim isn't to make money but to have a social life :) Or maybe she has a longer term goal. I don't know how the Avon stuff works but I imagine it grows over time so maybe she's running at a loss initially (like most businesses) to build something that will produce her a result down the track.

    Another possibility is that she simply wants some new skills. If you've read many books by finance and/or personal development authors @wylie, you've probably read more than one book in which the author espouses the huge growth they underwent in doing network marketing and/or direct sales. Even at a loss, getting over things like the fear of rejection, lack of progress, better communication skills, ability to build rapport, getting out of your comfort zone etc are well worthwhile. Kiyosaki, Rohn, Robbins and others will all attest to this.

    There may be more than meets the eye :)