Hardest lessons: raising equity and getting cashflow wrong. We see this all the time! That's why our customers love our product.
A good read from last year's BRW Fast 100 list.
BRW Fast 100 and Fast Starters companies share their hardest business lessons
Hindsight is 20/20 but if they had their time over the entrepreneurs on this year’s BRW Fast 100 and Fast Starters lists would do a few things differently. Here they share their biggest mistakes in business.
1. Giving away equity to the wrong people
“In raising money we took too much of a piecemeal approach. We should have run a formal process rather than talking to anyone who expressed interest. We raised money and then returned it within three months. The managers and board took up the investment rather than raising capital externally.” – Suren Chandrajit, LEDified (Fast Starters).
“Poor choice of initial shareholders that over-promised yet under-delivered their part of the capital. We battled so hard to keep our heads above water, yet we paid all our bills and have kept our reputation intact.” – Stewart Koziora, Retail Savvy (Fast 100).
“We have attempted several times to raise capital and wasted a lot of time and energy talking to investors who were not a good fit for our business. It is important to identify up front the right type of investor with aligned goals and interests to the business – such as exit plans, board structure, board control, dividend policy etc.” – Stuart Elliott, Planet Innovation (Fast 100).
2. Getting cash flow issues wrong
“We looked at budgets in way too much detail. If you’ve got a great idea and know it’s going to work in your gut then don’t worry about how much a pack of staples costs. You’ll find a way, so don’t lose that good stuff in spreadsheets.” – Marcus Smith, Genii (Fast Starters).
“We were growing fast and several times in the early years we almost ran out of cash. Also, in the beginning we didn’t have the experience in how best to raise capital – what type of capital/mix. We were very highly geared in the early years.” – Sean Teahan, Nimble (Fast 100).
“We should have been more frugal when setting-up the business. It cost twice as much as what we expected to set up and it took twice as long to see our invested capital come back.” – David Barlow, Flat Planet (Fast Starters).
“We should have been more stringent on supplying customers whose accounts were not kept up to date [and] in full, particularly large companies. We suffered losses when Retravision South went into receivership on the basis that they would say ‘we are Retravision you cannot put us on stop, we are too big!’ From that day on any account overdue went on hold – irrespective of the perceived size of the company, and debt collectors were used. We could not afford another cash write off due to bad debts.” – Robert Harris, Mann & Noble (Fast Starters).
3. Hiring the wrong staff or not hiring at all
“The main mistake I have repeatedly made is putting faith in others to drive the growth of the business, be it sales growth or efficiency gains. Each time that I have taken my hands off the wheel or foot off the pedal, results have immediately followed suit.” – Tony Simmons, The Full Circle (Fast 100).
“Get support earlier – your time is the most valuable commodity in the business – don’t spend it booking your own flights, emptying bins and sorting out stuff you’re not good at doing anyway. Top class business support pays for itself immediately – it’s not a cost. Took too long for me to work that out.” – Marcus Smith, Genii (Fast Starters).
“I definitely would encourage all fast growing businesses to ensure they have a strong devoted management team so all the work is not left to the director if a key person leaves the business. This also would allow more time to be spent with the family. Be ready to make a lot of sacrifices in the early years and during the peak times so you can enjoy the quiet times.” – Mark Orr, Assess Orr (Fast 100).
4. Getting growth strategy wrong
“Hindsight is a wonderful thing. We would have been more aggressive on growth targets at an earlier stage.” – Nicki Bowers, Kloud Solutions (Fast 100).
“React to change quickly. Trust your judgement with growth opportunities, we tend to know the market is changing one to two years before it does, but acting on it at the time takes confidence.” – Luc Pettett, Punters.com.au (Fast 100).
5. Over-spending on marketing
“There are a few things that we have tried in the last few years that were a waste of time and finances. We put $30,000 into a radio commercial that was a big flop. I would not do that again if I had our time over. We also went through a BIG re-brand about one year ago. If we had our time over, I would have liked to have had more consulting around our business brand when we launched.” – Marc Levin, JasonL (Fast 100).