Small business start-up: Taking The Jump

Darragh29

Just under a year ago, I started up a small business in Dublin. it's a motor trade business and although there have been signs of success, I've run into that many obstacles in the last 9-12 months that I've decided to stop trading and let it go for the time being and maybe come back at it again when I've learnt from the mistakes I've made. Some of the mistakes I've made are obvious looking back at them now (with the full benefit of hindsight), and some of these mistakes and the effects that would spring from them were not easy to see coming on the horizon. The position at the moment is that I'm no longer trading and am in the process of selling my house for two reasons, firstly to pay off the small businesss debt I owe (about 10k) and secondly to be able to start up again with the equity I will get from the sale of my house less the debt payable above.

My gf and many of my friends think I'm mad selling my only piece of real estate to do this, but I'm adamant that I need to do this, I have a dream of running my own sucessful business and I'm a do or die kind of person. I don't fit into PAYE jobs, I think this is something that entrepreneurs experience, I've a sense of non-conformity about me that makes taking authority difficult.

I wanted to see if I could start some discussion here with people who have recently started-up their own small business, what their experience is, if they are finding it difficult or if they have met with better luck than I have???

There are many obvious pitfalls out there, in my own case, a major one was relying on Golden Pages advertising for sales leads. It is obvious to me now that my customers don't use the golden pages for the services that I offer.

I know I want to be my own boss again, the thoughts of being stuck on the M50 and being 10 minutes late for work and not having to panic, or being able to make positive decisions about myself and my job were worth more to me than anything else. I found the ease at which I could improve things in my job and business to be addictive, I didn't have to convince some twat of a boss that it could be done better this way or that way, I could just do it, no need for politics, back slapping or bull****, I could just do it there and then.

My experience has been that it's an awful lot harder than I thought it would be. It proved harder to get the work than it was to do the work, I could certainly have tried a lot harder to get work in, but I was also doing the work so I couldn't do both. When people ask me to dscribe where it all went wrong, I say it was like trying to take a fully loaded aircraft off on a very short runway, and you're half way down the runway and there are birds flying into engines, bolts of lightening shooting across you, but the trick is that once you get off the ground (if you get off the ground!), these factors play significantly less of a part in your flight. If I had more money available to me, I'd say the runway would have been longer, and if I started up the business a bit smaller, (got a smaller premises for example), I'd say the airplane would have been a lot lighter, and I could have used a lower risk model to start up my business but that's all very well with the full benefit of hindsight.

I'd love to hear stories from others about their experiences and how they faired or are fairing??? I'd be especially interested in hearing anyones experiences of the Golden Pages, if they have much sales volume from them after advertising???

dahamsta

Your post looks quite interesting, but I won't read it unless you align the text back to the left where it belongs.

Darragh29

Ken Shabby wrote:

Your post looks quite interesting, but I won't read it unless you align the text back to the left where it belongs.

How's that for you now Ken???

dahamsta

Thank you.

I looked into the Golden Pages when I was starting out, laughed at them when they told me their pricing, took a small ad the first year to see the result, found the result to be zero enquiries from the ad, told them to stick it where the sun don't shine when they came back. I think that about sums it up in one sentence. It's really only suitable for particular trades, and even with that there's an awful lot of luck (or big money) involved.

You appear to have made a significant investment in the Golden Pages, and while that may have been ill-advised, particularly in hindsight, making mistakes is all part of business. Recovering from them is the trick, and more importantly learning from them. Try not to make the same mistake twice; never make the same mistake three times -- you're in the wrong business or simply not cut out for it if this happens.

I don't know what your plans are and I'm not going to advise you based on a vague assessment, but I would recommend that you sit down before you go an inch further with selling your house and seriously consider what you're doing. If you still feel gung-ho at the end of it, maybe consider talking to a financial expert about other ways of finding the money, from third party investors or grants for example. It sounds to me like you may be setting yourself up for that second mistake, and a big one at that. You may not have the opportunity to make a third.

There are lots of people with lots of money out there. Many of them will consider the amounts you're talking about far less of a risk than they are to you. If your business plan is solid, they'll want to invest. Let them take the monetary risk, you're taking enough risk with the investment of your time and ideas.

adam

Darragh29

Ken Shabby wrote:

Thank you.

I looked into the Golden Pages when I was starting out, laughed at them when they told me their pricing, took a small ad the first year to see the result, found the result to be zero enquiries from the ad, told them to stick it where the sun don't shine when they came back. I think that about sums it up in one sentence. It's really only suitable for particular trades, and even with that there's an awful lot of luck (or big money) involved.

You appear to have made a significant investment in the Golden Pages, and while that may have been ill-advised, particularly in hindsight, making mistakes is all part of business. Recovering from them is the trick, and more importantly learning from them. Try not to make the same mistake twice; never make the same mistake three times -- you're in the wrong business or simply not cut out for it if this happens.

I don't know what your plans are and I'm not going to advise you based on a vague assessment, but I would recommend that you sit down before you go an inch further with selling your house and seriously consider what you're doing. If you still feel gung-ho at the end of it, maybe consider talking to a financial expert about other ways of finding the money, from third party investors or grants for example. It sounds to me like you may be setting yourself up for that second mistake, and a big one at that. You may not have the opportunity to make a third.

There are lots of people with lots of money out there. Many of them will consider the amounts you're talking about far less of a risk than they are to you. If your business plan is solid, they'll want to invest. Let them take the monetary risk, you're taking enough risk with the investment of your time and ideas.

adam

I dunno, I have no problem risking my own money, I'm not living in the house I'm selling and nobody else is, it's just sitting there doing nothing, so I'd rather get it out of my way, get my start up capital out of it and go at it. The thoughts of having to lick up to some smarmy investor to get money makes me feel sick. I've already been to the bank and before I even got a chance to present my business plan, the bank manager told me, "come back in 2 years when you have a set of accounts!". I firmly believe when you are starting up in Ireland you are on your own in a wilderness. The County Enterprise board will not even talk to you if you are a "services" business, especially in the motor trade. They will only help you if you want to set up a mushroom farm or a digital hub or get involved in research projects, etc. Getting a suitably small industrial unit to start-up in is next to impossible. This is something that was a factor in my start-up failure, ultimately having to get a premises that was too big for current needs and not being able to get it loaded to a break-even capacity quickly enough.

Darragh29

I'm furious with myself over the Golden Pages, we signed up for 10k of advertising across a variety of catagories, on the clear understanding that we would have a substantial number of sales leads. To put it in the words of the rep, "you are going to absolutely clean up with these ads". It transpired that we hardly got any sales leads from the book. One lesson I've learned is that some businesses are "word of mouth", no matter what a rep from an advertising company might tell you. This is my first project like this and I have to say I was very naiive at times, I couldn't say NO at times or do more research before committing to something. With experience now, I've learnt to challenge in detail assumptions given to me by others and say no to sales people if I am not convinced we absolutely need what they are selling. This can only come with experience I guess, but at least I can say I have learned these lessons.

jrey1981

If I was you I would complain to the Golden Pages and ask for at least a partial refund.

Then again, I would have thought that these days having an ad in the Golden Pages is not money well spent anyway. There is alot more you could have done with it.

DublinWriter

Hi Darragh,

Glad to see someone making a go of it. The best advice ever given to me when I told my last full-time boss that I was going out on my own was "you'll never get rich working for someone else".

The best pieces of advice I could give anyone starting up is watch the cash flow like a hawk, do three-year budgets, and keep a good clean set of accounts.

Rather than sell your house, have you considered remortgaging it to raise capital?

Your experience with the Golden Showers rep is not unique. This forum can be a great place to get advice at certain times in the life of your business. And it's free!

Darragh29

DublinWriter wrote:

Hi Darragh,

Glad to see someone making a go of it. The best advice ever given to me when I told my last full-time boss that I was going out on my own was "you'll never get rich working for someone else".

The best pieces of advice I could give anyone starting up is watch the cash flow like a hawk, do three-year budgets, and keep a good clean set of accounts.

Rather than sell your house, have you considered remortgaging it to raise capital?

Your experience with the Golden Showers rep is not unique. This forum can be a great place to get advice at certain times in the life of your business. And it's free!

Thanks DW, I've tried the remortgaging option but the bank won't run with it because as I'm working for myself, my income is uncertain. I could have done better watching the cash-flow and I could also have been more disciplined about how I ran the business. People keep asking me why I'm not completely depressed at having tried to start-up and having now failed. I know I've failed because I've made mistakes, some of them obvious. I'm determined to go at this again, I don't know whether it will be the same business model or something very different but I've had a bite of the cherry and I don't see myself working in a PAYE job again as a career option. I'll do it for a few months until I get back on my feet again and get on top of the bills, but one thing I've learnt is that it is not for me. I just don't want to make another big mistake selling my house because I won't be in a position to buy another one in the near future. I've been in a PAYE job for the last 10 years and all I have to show for it is a house. I don't see where else I'll get the capital from though, my mind is at selling the house and doing it properly the next time...

DublinWriter

Darragh29 wrote:

I don't see where else I'll get the capital from though, my mind is at selling the house and doing it properly the next time...

Well, it's that auld risk vs. reward thing isn't it?

There's not such thing a sure-bet, but if you've done the figures *AND* feel it in your bones that it's a runner, then go for it.

Just imagine how you'd feel at 65, getting a gold-watch and thinking to yourself 'what if?'.

I've a couple of friends with businesses here, in the UK and in the States. The big difference is that in the states, banks are prepared to give you a second-chance, because if you've failed the first time they know that you've learnt valuable lessons and won't make the same mistakes again.

Here and in the UK, if you've failed once then you might as well have leprosy as far as the banks are concerned.

I know it's a bit of a lot shot, but have you heard of those "First Monday" clubs that meet around Dublin? Mainly investors and people willing to put money in new ideas, a bit like the Dragon's Den but in more of a pubby environment and without TV cameras!

Most of it is around I.T. based schemes, but you might find an investor willing to put money into your particular venture.

You might also consider putting a small ad in the back page of the Sunday Business Post.

Best of luck dude.

fintan

Get a website and use google ad-words, ca be a very cost effective way of advertising a business*****


****
It should not be the only way you advertise business!

Also go back to existing customers and see if you can sell them other products / services (without knowing what business you in I can't be more specific).

As for the golden pages, if your not a plumber / solicitor / electrican / carpenter its an absolute waste of time, only calls we got from the golden pages was people trying to sell me things

Savman

Hey Darragh, interesting post. In a similar situation meself and have to say its tough but I know what you mean about the reward of not having to work for some tosser who'll jump on yer back if yer 10mins late or whatever.

Straight off I'm not that surprised your Golden Pages experience had no happy ending, you don't need a Marketing Company to tell you very few people use that anymore and a lot of businesses are indeed "word of mouth" based.

I've advertised in a few different local papers and also the Hot Press Yearbook. I have to say each ad was money down the drain, after a while you really develop a hard neck for these Telesales agents who promise the world to get you to buy advertising with them so they can get their commission.

I don't know much about the motor trade and you didnt make clear what your actual business was but off hand I'd say that the motor industry in Ireland is booming and if you have a service people will pay for you are right to give it another go as long as you've learned those costly lessons. Sounds like it could be an earner but be prepared for 3 years of personal hell while you worry about every small financial detail leaving yourself below the national poverty line to maintain a business and your faith in it you will come to question when the hard times REALLY hit (that's the self-doubt kicking in and usually the point where most new business fail, people realise "oh crap this aint gonna work" and pack it in)

It's really about working yer arse off, it's more than a 40hr week you have to think about your next move virtually 24/7 and keep re-investing on the little things to improve the service you offer. Its also worthwhile to do extensive research on your competitors...what are they offering? Can you offer more? More importantly, can you offer more for less? You basically have to evaluate what your business competitors are doing and look for holes in their service, something you can possibly exploit/expose to your benefit. They won't like you for it but you have to have a brass neck when stealing customers and at the end of the day thats whats it all about for the big multinationals (Tesco V Aldi & Dunnes, Burger King V McD's etc etc)

The hardest decision you will have to make is when the going gets tough,
a) quit before you run up more debt cos the business aint workin OR
b) weather the storm cos your service is sound and custom will come eventually

Only you can really tell if its worth the risk, but if you think you have something good to offer then the end justifies the means :cool:

Darragh29

fintan wrote:

Get a website and use google ad-words, ca be a very cost effective way of advertising a business*****


****
It should not be the only way you advertise business!

Also go back to existing customers and see if you can sell them other products / services (without knowing what business you in I can't be more specific).

As for the golden pages, if your not a plumber / solicitor / electrican / carpenter its an absolute waste of time, only calls we got from the golden pages was people trying to sell me things

You hit the nail on the head there Fintan, Google Adwords was the one campaign that outperformed any other advertising we were doing, which was Golden Pages and also a radio campaign. It is also excellent value for money, I think we spent about 30-60 Euro a month on Google Adwords but the Golden Pages cost us close to 1000 Euro a month and our radio campaign was costing us about 700 Euro a month. We had a better return on the Google Adwords than the other two campaigns put together. I have really learnt some lessons and as <B>Savman</B> pointed out, you quickly develop a very hard neck for sales people trying to sell you sh*te. Some people would have a natural ability to do this, but for me it was something I had to learn, but sadly not before I had wasted a considerable amount of money.

I know now that I didn't spend nearly enough time or energy on advertising, I thought I could basically "outsource" my advertising and marketing to the Golden Pages, Google and a radio station. When I'm going back at this, I'm going to do a more local campaign with cleverly thought out promotional campaigns and go out delivering leaflets myself in the evening or at weekends. I didn't have a clear marketing strategy, instead I just threw money at advertising companies just hoping that what I was buying would work but this hasn't happend and I've learnt the lesson from it.

I don't mind the long hours and the hassle that comes with running your own business, I've never been happier, although it took me a few weeks to adapt to the new challenges...

One thing I have done is I've become good friends with a guy who runs a sucessful business directly opposite me. Our businesses are different, they are only similar in that we both offer "services". We are similar in age but this guy is running a sucessful business that has been trading a few years and he is out of the start-up danger zone in terms of running a business. Recently when I told him that I had stopped trading, he sat me down and we had a long chat one evening over many coffees and he said he could see some problems on the horizon months ago, (he would be popping in and out of my place as we were basically next door neighbours), but didn't feel like he knew me well enough to discuss them with me or to give me a heads up, as he thought I might take offence or I might think he was lecturing me. I asked him would he be a business mentor to me next time I go at this and he said he would be delighted to, so if I need a fresh set of eyes to guide me before I made a bad decision, I can ring him up or call in and he can give me guidance. This would have been a huge help if I had done it earlier but I suppose we didn't know each other until recently.

I'm a real beliver in "the only time you must not fail is the last time you try"...!

Savman

I have to say that although expensive, Google Adwords was by far the best advertising option I've used. The good thing is that you mostly get folks looking specifically for your service, the bad thing is that if you set your max daily budget too high it costs a fair bit for say 2-3 weeks of constant advertising (especially if you're bidding to get into top 3 or 4 ad spots)

Would defo use again though

homeOwner

Have you tried setting up a basic web site with details of your service. It doesnt cost that much if you do it yourself and is a good investment.

Also did you try very simple advertising like putting flyers on people's cars, or handing out flyers in town or sticking up a flyer in the local supermarket. You'll be surprised how many people read ads in the supermarket bulliten boards.

I think you could be looking a "free" ways to get your business out there.

Another approach is to do up a business plan to prove to yourself that the idea has merit, I know you think it does, but banks etc... like to see business plans before helping out with loans etc....below is the name of a book I have found really useful. I am in the early stages of trying out a new business idea and this has really helped focus my mind.

check out:
The New Business Road Test: What Entrepeneurs and Executives Should Do Before Writing a Business Plan by John Mullins

Savman

homeOwner wrote:

putting flyers on people's cars

Illegal

democrates

:eek: DON'T SELL YOUR HOUSE !!!

It's the one investment that's appreciating month on month, without lifting a finger you're getting wealthier, you're on the golden escalator others would give limbs to be on, but if you sell, in two or three years how much would it cost to get back to where you would have been?

My jaw dropped when you said it's just sitting there vacant, rent it out man, you could do with the funds, use a LARGE professional letting agent, they'll charge 10% but will collect rent etc, be careful about tenants, if it were me I'd insist on having a say in who gets in, there are wrecking scum out there but plenty of good tenants too. This is a house you're ready to sell so I imagine you wouldn't be blousy about a few scuffs!!

My heart goes out to you, I went through hell in the last few years of being a paye battery-hen because I'd decided I wanted to be in buseness but was in no financial position to do it. Several times I resisted the temptation to storm out in a blistering rage and reminded myself it was only temporary, and in fact a good means to an end. So I scrimped and saved, paid down debt, did an Eddie Hobbs on my finances and built up savings so when I left I could keep afloat while waiting to get the business revenue rolling in.

PAYE employment is 'Open Sesame' to an Alladins Cave of bank loans too (so long as they think you're staying that way), I'll give it that, as you said you're going back for a few months, that's totally the way to go in my opinion. Knowing that it's only temporary takes the sting out of it because you know where your life is going for the long term, and that used to cheer me up no end. The other thing I used to do was genuinely not give a sh1t about the office politics, that takes a load of stress off. "I know where I'm going" I used to think, and smile as the rest ran around like headless chickens. Each evening I researched, learned, and drew up my diabolical plans for freedom... MWAAA HA HA HAAAAAAA!

If fact if you think about the financials, that temporary job is a critical part of your business strategy as well as nailing down your key personal property asset - your future childrens security. It is hard to be patient, but there's a wise saying: people overestimate what they can achieve in a year, but drastically underestimate what they can achieve in ten.

Start small too when you get into business, and I mean financially small. I'll continue to make Ebineezer Scrooge look like a wreckless spendaholic until I've got it secured. What's the absolute minimum you can spend to get profitable. Many big outfits started in back-streets, the glamour was there in the profitable accounts though and so they slowly but surely accumulated profits and grew into giants.

So what if you start in a kip doing bargain-bin work? All that matters is getting the cash in to keep afloat. And get photos of your humble beginnings too, this is the rock 'n' roll story of entrepreneurship goddamn, "you gotta know how to nickel 'n' dime". I'll be totally nostalgic about these scrimping days in the future, and I fully intend to thoroughly enjoy each stage in the growth of the business.

Are you a mechanic by trade or is it buying and selling cars? If you're a mechanic maybe offer your services to showrooms, that can be a steady stream if not as lucrative as ordinary punters. Hit local industrial estates and put fliers into reception offering discounts, team up with someone who offers a complimentary service and split the flier costs, send work each others way, offer a free service as a local radio competition, offer discount rates to unions and let them tell all their members. There are lots of ways to get wider coverage on the cheap.

And if things get tight I'll deliver pizzas, work in McDonalds, anything to get the money to keep my home and the business. Confident as I am that I'll succeed no way on God's blue marble would I risk my home. "It's the land Tara!".

So good luck, keep the faith and make a million!

homeOwner

democrates - really good post. I hope your business takes off. I too have gone into PAYE employment to get a steady income while trying to get a business together in my spare time.

Its amazing how I can be so unmotivated in work during the day (what a complete waste of 8 hours of my life every day) and then come home and work for 3 hours on my business idea and be totally consumed and enjoy it so much because it is for myself.

The only thing that keeps me going is the thought that hopefully in a few years time, if things go well I can give up the day job and work full time on my business.

Oh and op - you'd be mad to sell the house, its the only asset you have and its making you money.