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Thread on how this picture almost got me bankrupt twice.
Most people see this picture as an inspiration, and as much as it does, it can create a situation where an entrepreneur stays in a failing business too long that it ends up destroying them, their confidence and morale.
Picture follows the popular saying "Winners never quit, and quitters never win", but I'm sure some of you have seen gambling adverts/warnings that say "Winners always know when to quit". I can tell you right now that, business is a gamble, thus, its better we follow the caution
I've had 5 failed businesses, and whenever it was time to let them go, I'd be so crushed. But I learnt a great lesson from their failures. There are several reasons why a business may fail under your watch, these include:
1. Not having the right skills to take it off the ground
2. Change of the business landscape, making the idea outdated
3. Business climate of the country of operation
4. Wrong team for the right business, or right team for the wrong business
5. Unlucky.
With the company that I had grown to finally make a more than a million Pula in revenue, I realized that I wasn't learning and growing as fast as the company was. I got to a point where I was making reactive and not proactive decisions. I was the weakest link
Banks and funding institutions believed in the company, however, things were just not working out. And because I was in school, it was a difficult time for me. I had school showing flames, and business showing me flames, and was lonely. I shut out every thing and one
Ideally people thought money had changed me, and they were right, losing money will make you panic and have anxiety. Until I met a guy who walked into my office one afternoon after crying so much that I fell asleep. He came in with an offer, a great one
He's presentation was brilliant. My company seemed to have a bright future, although this future didn't include me in it. Like how an ex partner starts glowing immediately after y'all break up, my company looked great, really, really good
I knew that in order to ensure that my company has a future, I needed to use my head instead of emotions, because, more often than not, we use our heads to put together a company, thereafter, rely on our heart to make future decision that affect the company
He told me how two financial institutions were prepared to come together and settle majority of the debt I had gotten the company in, and that there'd find the last partner, although that would ideally mean I lose ownership. They had me in a corner. Inexperienced and pressured
In the hindsight, I should have asked that the loan, be split into several debt instruments rather than equity, however, they seemed to have other ideas on how they'd get it back in shape, thereafter, sell it to one of my raw material suppliers
Another business I was involved with was a milk producing company based here in Botswana. It was a marvel. The company started off with 2nd-hand machines, and grew to be a company worth close to 69 million, but there was just one small problem.
The biggest client was a retail giant in the BW space, and were ruthless when it came to business. First mistake was that even though there were products we produced, their order made it very difficult for us to package our product, thus, margins were always low
We always had enough to pay expenses, and repairs and not growth. And with every extension of contract discussions, they'd ask that we reduce the charges, otherwise would take their business elsewhere. This was one of the company's where pure emotions we in charge
I had on several occasions warned the investment team that we were the wrong firm to own such an operation. Distribution was our biggest problem, so the company needed to be sold to a retailer. I kept saying this so much that at times weren't allowed to make a comment on it
The CVCF (CEDA Venture Capital Fund), came to it Fund life, and the company was handed over to the investor, who then immediately shed it off to a retail group.
Lastly was one firm I owned in DRC that was in media. It was a satellite provider in DRC with a subscription base of 5000 people each paying between $10 and $12. It was my pride and joy, because just like Tidal, had planned to grow it and get it to that 600 million valuation
But things got difficult, No amount of inflating numbers would help the operation. The TV platform just was lucrative, however, I felt that a mobile network would be interested in it, so I knocked from one door to another. Vodacom, Airtel, MTN Africa, BTCL, Orange Africa, nothing
Every month, the firm would require a top up of some kind, and it didn't help that on two occasions, the banking system collapsed and accounts were reset to nil. But I had hope, maybe I'm this close to striking diamond
I started to doubt my abilities, maybe yet again, the firm would grow if I wasn't in it. So I started engaging investors on whether they'd be interested in such an entity, and none had the appetite for it, even approached AfDB.
Until this year end of March when I sat down and went through a formula I created that helped me during my VC/PE days on whether or not a company was worth the resources it was being given. Here we go:
1. Business model. When customers are expensive to acquire but don't stay long enough to return the cost it took to acquire them, that's unsustainable. I am not referring to a startup or new market entry here, I mean for those established company's that have been operational
2. lock out six months and set three goals for the business that, if not achieved, would compel you to close down the business
3. If you stopped taking funding, would your business still grow? If the answer is no, then you have a problem. Just because you're a successful fundraiser doesn't mean you run a successful business.
(cont). The fundamental goal is always to make a profit. Too much borrowing can keep you from achieving it. Sure a Series D round may sound good, but, that's a fundamental flaw. Relying on funding to grow the business, forsaking organic growth, can distort a business's value.
4. Personal life. No business is worth losing yourself over. If you are engaged in a business, activity or relationship, but don't recognize yourself anymore, you need to cut your losses.
Kathryn Minshew, Founder and CEO of The Muse, left her former company to get peace
Last but not least:
5. You love your products more than your customers. Always consider the needs of the customer. It should always be customer before yourself. Even if you have a good idea, the target audience might not like or approve it.
When such a situation happens, try to make it worthwhile for both the parties. In this day and age where technology is getting advanced day by day, sometimes the market strategies and assumptions that you made when you launched your product may not be working anymore.
You should try to assess the current trend that is happening in the market and study the needs of the customer so that you are able to upgrade your products and services and make them successful.
Remember, sometimes deciding on calling it quits might feel like you're admitting defeat, but what you're really doing is stopping the bleeding and giving yourself the chance to work on something far more productive with your time and money.
Other entrepreneurs that I read about who became successful after failure include:
1. Akio Morita, co-founder of Sony. Failed with his first 3 products
2. Bill Gates. Dropped out of Harvard after also failing to launch Traf-O-Data
3. Evan Williams. Co-founder to Twitter after Odeo became obsolete
4. Richard Branson. If there's anyone with many failed projects, its him.
5. 5. Arianna Huffington, Co-Founder of The Huffington Post. Her 2nd book was rejected by 36 publishers after her 1st was published & made millions
Lastly,
6. Ben Lerer, Co-Founder and CEO of Thrillist Media Group
He is an interesting Entrepreneur in that his company Thrillist evolved so many times to become the company it is today. In one interview he said,
“During the last 9 yrs building the company, of course there were times when I realized pieces of the business or certain strategies weren’t working. My approach is always to admit as early as possible that the approach is failing &
(cont). work to resolve the situation, without letting it drag on.”

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