Lessons from A Failed business venture essay
While I was enjoying some time away from my studies I decided to start a bakery business to supplement my income and keep busy at the same time. I enjoy baking and I thought with that business, I could do something I love and make money while I was at it. I opened a small bakery shop where I would bake small cakes and specialty cakes. Unfortunately for me the business only lasted four months. I closed the business. I had started the business from an old office that I turned into a small bakery. I had planned to start the business with the key product as cakes and then find out if I could extend it to make more baked foods. What led to the failure of the business were severe financial losses, no running cash and lack of adequate labor. Today although I consider the business venture a failure, I gained a lot in terms of starting and running a successful business.
One of the things I learnt from the experience is the importance of having adequate funds and means of acquiring additional funds as need arises. Because my mother had run a bakery before I got most of the equipment from her. This seemed like a saving and I planned to spend even less to start the business. I had the start up capital but did not realize how quickly additional costs would come in. One of the ovens broke down in two weeks time and I had to look for additional funds which I had planned on so soon into the business. The cash I raised could only be used for in expensive repairs which led to the problem occurring time and again. I also had other expenses I had not anticipated and thus I was borrowing from my personal cash reserve. From the experience I realized that even with good planning, a business needs some money on the side or a way to acquire fast cash when unforeseen or emergency expenses appear. If I had had that I would have been able to replace the broken oven.
The second thing I gained was importance of planning for time. Because I only had one helper (a cousin who was staying with me at the time) I had to leave her alone at the bakery shop every time I needed to attend to some thing during business hours. Sometimes I sent her. I started my days late because I wanted to take it easy during my school vacation and would usually be torn between serving the customers and baking. Sometimes I would be impatient with customers who took long to order or make up their minds. Sometimes orders would not be ready for pick up when the customers came in. As a result we lost some customers. If I had known how to plan my time well I believe I would have made the shop successful. It was not that we could not have managed between the two of us, it is just that we got less done in a day than we needed to. Sometimes my cousin and I would chat or take longer at lunch as we were more of friends than co-workers.
The fourth thing I learnt was that importance of financial budgeting and maintenance of financial records. Because I felt I could trust my cousin I did not bother to keep strict financial records. We rarely used money while we were at the shop other than for business expenses. Still I was surprised when I compared the money left over (meant to be profit) to the money at hand. Because I did not have all the money at the same place and properly documented, it was hard to plan for anything. I often did not know whether we could afford something because I did not know the financial state of the business. I found this quite disorienting. I did things with a lot of guess work and could not prioritize the items that the business needed. I realized this much later in the business when I could not make amends since a lot of transactions had been conducted and there was no way of knowing how much had been spent.
In business I now realize that every financial transaction has an impact on the business. It is not enough to spend the money wisely. Every business should pay attentions to its financial records with the same importance that is accorded other documents like legal documents and permits. Without the information provided by financial records a business does not have an effective way of knowing how it is doing or making strategic financial plans. If I had kept financial records I would have been able to see the progress of the business, keep the expenses in check and anticipate the losses that occurred in time. However, by the time I tried to reconcile my finances the damage had been done and the business was in red.
The fifth lesson I got was on the importance of advertising for a new business. The shop that I set up in had been an old office. However, my business was on the same street that my mother had run a bagel and muffin shop before. Because I used the same name as my mother’s (Antonina) I had assumed that it would save us some money on advertising. People who frequented her shop would be attracted to my shop since it was at close proximity to my mother’s former shop and word of mouth would soon send customers our way. Unfortunately, many of the customers did not even recognize the similarity in name though my mother had only closed the shop about six months before I opened mine.
I faced stiff competition from other shops to which my mother’s customers frequented. Even when some of my mother’s earlier customers dropped by they did not show particular cases of loyalty and they would be infrequent. This was a big blow to acquiring clientele. However, I realized that a business needs to market itself especially in the initial stages of existence. If I had invested more on advertising instead of expecting to save on advertising, I would have had better results. In an era when business competition is rampant and aggressive not making enough advertising can kill a business before it starts. For my business not advertising led to small customer base. Those who frequented the shop were more incidental than anything else. It was important for my business to make an impact on its own as a new business so that customers would be aware of our products and services.
Also read: Importance of communication
The last thing I gained from my failed business venture was experience. Going into the business I had seen my mother run her shop and thought it would be easy to do. Although she was far when I told her about starting the business she gave me advise which I did not pay too much attention to. I figured I knew most of what I needed to know and since I would be starting a small scale business I could not fail. In addition there are so many things that my mother had gotten used to over the years and thus she knew them by heart. Even when she didn’t keep some records she probably knew the business so well that she couldn’t make fatal mistakes. Starting my business was nothing like running an old business. Now having gone through the failed business there are so many things I understand that I had no way of knowing before even when helping my mother at her shop.
Personal responsibility is something I acquired. I had to be the one to look at my business and declare that it had failed. That required a lot of courage but it was my responsibility and I needed to end it. If I had lingered on it would have led to even more losses. I now have the experience of running a shop all on my own and know the common mistakes that can lead to the failure of business. This is the most valuable of all that I gained as I would still like to make a try for the business again. If successful I could sell the shop to concentrate on my career.
All in all my experience proved to me that life has a lot of lessons. Only by looking closely at failures and successes can someone make every experience worthwhile. Although sometimes it might be too late to make changes when undergoing a failure like in the case of my business, every lesson learnt is not a waste. My business did fail but I have not failed to learn from that experience and make my next business experience a great success. Even if I do not get to open a bakery shop again I know that the lessons in planning, time management, effective record keeping, responsibility and sound business management will help me in any other field that I join and am grateful to my failed business venture.
Submitted by: Rickey Moss