I started micro-business which over time failed. What were my reasons for starting it – and what did I learn which I can share with you?
I had always had a burning ambition to start my own business and then one day, the timing just seemed right.
I had quit my job and was disatisfied with traditional employment finding it very limiting, narrow and narrow-minded and ultimately a bit spirit-crushing.
Whilst I was still working for someone else however, I was working on my website during the evening and weekends. When I quit my job I had more time on my hands and could fully focus.
I commissioned a website agency, an SEO agency and an analytics agency to undertake some online marketing optimisation for me. That cost me a small subscription and a few hundred pounds.
I had a business plan in my backpocket and I knew my breakeven point and when I was expected to breakeven during the course of the tax year. I needed a certain number of bookings a month just to stay afloat.
In hindsight the portents didn’t look good. I had zero marketing budget. The customers I gained were through a combination of referrals and just being lucky by being found online. Work was sporadic and so therefore was the cash. The business month after month was in negative territory, and whilst this is normal for a small start-up it means you have to hold your nerve whilst your business becomes profitable. The horizon for doing so varies according to the director’s confidence, available resources and ambition.
As a director I was in control and I loved the autonomy. I was learning new things all the time and challenged daily to use the best of my smarts. I guess a lack of marketing firepower, hardly any marketing budget and going after the wrong customer, and giving away some of my most valuable ideas and heavily discounting others – were my key mistakes. They literally cost me.
Operating alone as sole director and having no-one to turn to for advice made me seriously question my faith in the longevity of the business and if I could stay the course.
Ultimately, with cash going out each month and very little coming in there comes a point where you think is this worth it? It’s a diffcult call to make because you are walking away from your creation, and walking away from a lifestyle you enjoy. After a few years I chose to walk away. It simply wasnt paying me my time and being in negative territory each month with outgoings and commitments to pay for was very discouraging.
The key thing for me would be if I were to do it again I’d try and get a mentor. Someone experienced in entreprenuership and has been round the block a few times. A go to person, a confidente, an advisor. Secondly, I’d rethink the whole conversion funnel.
Mindlessly creating social media posts just for the sake of it isn’t going to win you any business, and you can spend hours optimising your online presence for little return. Anecdotally, I’ve heard that 98% of your website visitors never convert and it takes many emails off a back of an organic list before a micro percentage are ready to buy from you.
So you can see already, that you’re spending a lot of overhead in terms of time spent – your time – with no cash is coming in – if anything it’s going in the other direction.
If I were to start another micro-business I’d rethink conversion entirely, and try to short-cut the process from initial lead to close. I’d try to run more test and learn experiments and learn from fails and iterate forward for succcess. I’d also try and have at least a small but reasonably sized budget behind me for marketing and promotion purposes to buy the initial attention. Secondly, I’d seek out affiliate businesses who could recommend my services to others. Thirdly, finance.
Personally I’d be reluctant to have an investor on board as I’d like to own 100% of the business and the kind of business I am thinking meets two needs – income and lifestyle. For me, it’s not necessarily about scalability on a massive level but should have the expansion potential.
In place of finance I’d go with a mentor, preferably somesort of small business veteran. Lastly, I’d join an enterprise hub or real-life entreprenuership network to promote the brand, acquire customers and stay cutting-edge. I found I was a member of the wrong kind of networks which didn’t drive referals and I think one of the single biggest other factors I underestimated was the competition.
In the digital space it can be quite saturated with substitute providers on a global scale so I would try and reconsider my niche and proposition to make it stand out from the rest. Looking back I think the differentiation was there however the established competition in my space just had more marketing firepower, slick branding, more customer support and simply more people and money at their disposal.
On reflection, I’ve enjoyed the experience and would recommend anyone to have a go but if you can, have a go the “right” way and make sure you have plenty of support – both business and emotionally to succeed. You’ll need all you can get.