This is a follow on from my earlier article, why my first business failed.
In a nutshell, my first business failed because:
- I was too slow to get a working product to market.
- I was not receptive enough to feedback (and I was over committed).
About my second business
My friend Rory had developed a mobile solution that recorded time and attendance on large construction sites. He hired me to take it to market.
I addressed the issues from my first business failure and we quickly got a working product into the hands of our potential customers. We even had two early sales to wet our appetite for our early retirement. However…
The problem was that we had ‘niched’ ourselves out of the market
- The good news was that we knew exactly who our ideal customers were and where to find them.
- The bad news was there was only 5 of them in the country and we had already sold to 2 of them (at a reduced cost to trial the solution and provide feedback).
The growth potential was limited and we’d begun supporting two companies that would use our service for 2 years each!! We were committed to continuing the business even though the potential wasn’t there.
There were much larger opportunities overseas (and we made a trip to Australia) but we were simply too short on cash to really give the Australian market a good crack. We had a virtual office and an Australian phone number but it wasn’t enough.
What I would do differently next time
- I’d spend a day or so estimating the size of the opportunity/market before diving in head-first.
- When looking internationally, I’d seek outside investment to ease cash pressure and validate the idea.
- I wouldn’t start supporting a long term customer unless I was certain the business model (and opportunity) stacked up or there was a way to stop the business if we decided to call it quits.
But it didn’t fail completely
- We both learnt far more than we could have working a 9-5 job.
- We had heaps of fun. One of the sites that used us was the Mount Eden Prison in Auckland so that was entertaining!
- The initial sales where enough to cover costs so it wasn’t a complete flop.
- The software that was created is still used today (and it may be sold in the future)
What learnings have you had from your start-up business?