What you can learn from my Startup-Fail
When me and my colleagues first began our start-up journey, we decided to create a service that delivered breakfast – fresh made cereal with yoghurt – to offices and schools. In the beginning things looked promising. We won over 10 awards, including the best business plan in the country. However, after 3+ years of hard work, we had to close down and I had a Startup-Fail story of my own.
That being said, it was an incredible time and I learned so much in the process. Some things I wish I would have known earlier. Here are my biggest learnings from my failed Start-Up, which hopefully helps some out there to increase the chance of building a successful business from scratch:
There’s no such thing as ‘over’-testing
One of the biggest mistakes we made before going into business, was only trailing our service for two weeks, in two companies. Due to our short trial period, we made certain predictions about how successful our start-up would be when it launched, which turned out to be totally wrong.
You should test and sell your product before you launch your business (sell it for the ACTUAL price you’re planning to sell for), as much as possible and in a number of locations; I’d go so far as to say you should ‘over-test’ your concept.
The more you test your product or service for, the more likely you’ll be able to judge how your business is going to do long term, and what kind of changes you need to make before you launch.
Focus on profitability
This seems obvious, but it’s easy to get swept up in making sales, without doing the relevant calculations to ensure that, at the end of the day, your business is producing profit. No customers – no business. But no profit – no long term success and potential to grow.
Don’t get me wrong, we did all our calculations and we had all our numbers together. However, the more experience you gain on how much things actually cost and how much people actually buy (aka real market insights), things can drastically change. For the longest time, we would sell yoghurt after yoghurt without realizing, that we’re almost only covering our costs – without making a profit.
Young businesses often underestimate certain costs and forget to factor these in before choosing the prices they charge, and therefore end up making less money than projected- we certainly did, and it’s a sure-fire way to sink your business before it even has the chance to gain popularity (unless you have unlimited funds to fall back on).
Today, everything I do is focused on having potential to create profit. If a project looks too tight on the numbers it automatically triggers a red flag in me because I’ve been in the “cent” business before, where the margins are simply too small to build something sustainable.
Be (very!) selective about the events you attend
As I’ve said, your one goal is to keep your start-up afloat, and make it as profitable as possible, as soon as possible. One day you spend at an event, working on a competition or accepting an award, is one day you’re not spending on building your business.
At the beginning of my journey, when our start-up was still a baby, it received lots of recognition; we won some of the most prestigious awards in the country, and we were invited to lots of really cool events.
Despite this, after 3 years, our start-up sunk. Awards and events aren’t everything, is what I’m trying to say, and while networking is important, very often you meet the same people over and over anyway. All that time spent on events you could’ve been doing valuable work to ensure the success of your new business. Focus on what really moves the needles! (hint: events rarely move the needle, even if you win first prize of a competition)
Events are definitely not the only way you can connect with people. A much more targeted way is to reach out directly to people you want to connect with either via email or through Social Media – this is often just as effective but much more time efficient.
Don’t make the same mistakes
These are the three most important things I learned from launching my Start-Up and having it ultimately fail. Though this experience eventually helped to springboard me to Silicon Valley, of course I sometimes wish that my Start-Up was still around today living up to the vision we had for the business in the first place.
Hopefully you can use my story to avoid making the same rookie mistakes and increase your chances of truly making it in the business world and increase your chances to grow a sustainable business!
Hi, I’m Alberto Nodale.