AlldayPA was established in 1999 and provides a 24-hour a day customer service for small businesses. Reuben Singh, it’s CEO, reveals his mistake in all its glory.
Business mistakes example
Initially, like all new businesses, we thought we needed to raise a lot of money, so we did. However, we then made the mistake of spending too much money on advertising and marketing. We were also bringing a new concept to market, so a lot of the money was spent on educating the industry, rather than just promoting our brand.
Impact it had
This had a significant effect on the business and, as a result, we had to borrow from the banks. They didn’t understand the business and exerted undue pressure, which ultimately meant we had to restructure and refinance the business.
I definitely should have seen it coming. It was wrong to trust some of the people we did as they had little knowledge about our business, but were good at raising money. It put us into a position where we were committing to growth that deep down I knew we would find hard to achieve and thus couldn’t deliver the results proposed.
I would not have trusted and borrowed from the bank. Instead, I would have either reduced the rate of growth, or capitalised the business with more external equity investment, which wouldn’t be on a “repayment and demand” basis.
We had to restructure the business, which presented challenges at the time. On a personal level, I had to admit to myself and others that I should not have trusted the people I did.
Everyone is out to make money. Money is a product to a banker, just like a car is to a car salesman. Sometimes it’s hard, but you need to resist taking money that is being thrown by those who will profit from the loan and ask yourself whether it’s the best thing for the business long term.
It was tough, but I had to slowly get back the confidence. Very much like falling off a horse and then getting back on as quickly as you can. In the same way, entrepreneurs who take a knock or a set back in business need to learn from it and then rise even higher and stronger.