AD

Seven incredible business mistakes that nearly meant shutting up shop

They say business mistakes are a big part of the entrepreneurial journey, but how do you recover from spectacular ones that threaten all of your hard work?
AD
Custom Planet Team[2] copy

It took some trial and error for Andrew Dark to perfect his offering

Custom Planet started as a business selling slogan badges and now moved into t-shirts. Andrew Dark, the company’s founder, answers our questions.

Business mistakes example

We had very high trust in people with regards to credit terms and payment. We used to offer everyone 30 days no matter who they were. We were owed so much money that it crippled our cash flow and nearly put us out of business. Things became really serious when some of the companies that owed us money went bust and didn’t pay at all.

- Advertisement -

Impact it had

We didn’t have enough money to pay our suppliers so they stopped supplying us which meant we couldn’t do any more work. We had to cut our own wages and put more money into the business to get things moving.

In retrospect

Yes we should have seen it coming, it was just a completely unsustainable way to run a business. We should have recognised this a lot earlier and put procedures in place to avoid it. We had many people we could have called upon for advice but were too busy concentrating on sales and production to care about our cashflow and finances.

Avoidance technique

I would have our payment procedures and processes in place from the start, made sure we asked for advice from accountants and other businesses to see how they manage that side of things.

Resolution effort

We signed up to a credit scoring software and created account applications that anyone who wanted credit terms must fill out. We now take the advice of the software in terms of the credit terms we can offer specific clients and stick to them as close as possible. We also put in procedures for chasing payment and what happens when people don’t pay.

Mistake learnings

I think you must be honest with your customers and suppliers when it comes to money. If customers know from the start what your payment terms and credit position is they are generally happy. If you don’t have this understanding and try to change the goal posts down the line it can have a negative effect on customer relationships.

Next steps

We learnt from this mistake as it was such a big one that nearly cost us the business. We are now much more proactive in every other area of the business in making sure we apply the same procedures and processes whether it’s in sales, production or finance.

Keep reading to learn about an ill-fated expansion into the US, which led to a drastic shut down.

1 2 3 4 5 6 7

Share with your network

Follow Real Business:

About Author

Hunter Ruthven

Hunter Ruthven is the editor of Real Business. He is also the editor of Business Advice, a title focused solely on a section of the business community currently underserved – micro companies. Alongside this, he is part of the team that hosts the Growing Business Awards, First Women Awards and Future 50 initiative.

Real Business