My First Business Flop: Learn From My Mistakes In 10 Steps

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Before this blog I held a tiny company called Pink-Gore. I work in corporate finance but art has always been one of my favourite interests. Pink-Gore was an art and design online magazine, a web TV and an event planning agency to promote local artists.  The idea was to fund editorial activities through events and eventually launch a paper magazine. I gathered a team of about ten volunteers grouped in 3 teams: Editorial, Marketing and Event planning. After filling up the website with regular content, we organized our first exhibition, we printed our first catalogue and we shot our first Web TV show, all in less than a year. However my money started running out quickly, then team members resigned one after the other and I got caught up in my day job requirements. I suspended activities temporarily and that break lasted 2 years during which I was already thinking about my next business idea, based on other interests I had developed. I eventually shut down the project. After making a detailed and honest post-mortem on this experience, I realized there were several issues that led to its ending. I still meet a lot of people today with business ideas that I am sure will end up just like this one, so I hope the following advice will help you avoid the mistakes I made:

  1. Start with ONE product: Most people get excited about their business ideas because they imagine it at its final stage. My mistake was to think I could launch the magazine, the web TV and the event planning activities at the same time. Instead of focusing on one thing and doing it right, I got caught up in an unsustainable rhythm.
  2. Target a specific market: When people asked me what was Pink-Gore’s audience I used to say “everybody who loves art”. That was just the end right there. Today if you ask me what Bobby Finance’s target audience is, I will answer “Non-finance professionals and students in the range 19-34 years old who are aspiring to be entrepreneurs or to improve their money management skills”. Even such a description includes a wide market. For example, I could narrow my target audience further by geographic location, cultural affiliation or income.
  3. Challenge your business model: I thought I could make enough revenue from events to finance the other activities, but it was unrealistic. Indeed, organizing an event in itself requires a lot of money and effort, and I was never able to breakeven.
  4. Put some money aside: A big challenge for any young company is working capital. You start with a fund, and then money runs out because of all the expenses you have to meet to reach your clients. Try to avoid this issue by setting a cushion for hard times and by looking for startup financing options.
  5. Stay grounded: You may want to launch a clothing line because you imagine your name on buildings downtown, people lining up for your fashion shows, stars wearing your brand and you swimming in a pool full of money, Tommy-Hilfiger-style. However, we seldom think about the long and hard steps we may have to go through like struggling with money or dealing with the naysayers.
  6. BEING good is better than LOOKING good: Many startups want to appear bigger than they are in order to attract their first clients (fake it till you make it right?). For example, they might prematurely spend money on expensive marketing before having a working product. Instead, they might be better served by ensuring the product is ready before going after clients.
  7. Partner Up: Partners help if you are starting a business while working full-time or if you need validation for your business model and market strategy. Unfortunately I missed that component. Instead, I got a team of followers who had problems of their own, eager to get eventually remunerated instead of volunteering for a small company like mine.
  8. Get some “street cred”: I was not an artist, I just loved art. Unfortunately it was not enough for me to get the community’s support. Artists agreed to work with me because I came in with money to promote their work, but it was hard to establish a mutual trust because we came from two different backgrounds.
  9. Re-assess:  Periodically you should play devil’s advocate, step back from your emotional attachment and assess your progress objectively. Ask yourself if you have attained your objectives. If no, how far are you from reaching them? Did any external factors affect your ability to continue? Does the idea sound as viable as the first time? What kind of feedback are you getting from your circle? Did you generate any revenue? Did you grab the interest of potential investors?
  10. Be ready to change: If most of the answers to the questions above are negative, then you may need to make adjustments. You may even consider shutting down the business. Sometimes it`s better to fail and use the lessons learned for your next venture, than to lose extra time and money on a product that does not sell.

 

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