Lessons I learned from my failed business
You might have read about the early failures of some successful entrepreneurs. And why not? The modern world has started appreciating failures more than success. Some good failures can even make success more inspiring than an easily achieved success. Moreover, failure always comes with one or more lessons to learn, that ultimately pave the path towards success.
I’m writing this article to share my own failure in business and the lessons I learned from that. So, here’s the story.
I started my business selling t-shirts almost a year ago. These were printed t-shirts on the technology theme to target the geeks in the country. Obviously, I had done some research and had my calculations to support the idea at that time. Unfortunately, as soon as I started, the government of my country imposed a nationwide lockdown due to increasing covid-19 cases and I had to wait for almost 3 months to restart the selling.
After the country was reopened, It took me almost a month to figure out how to generate sales. Once I started selling, I realized the need to figure out how to make profits. But, even after 3 months and selling more than 500 t-shirts, I couldn’t figure that out and had to shut down my business with huge losses.
So, here are the five important lessons I learned from this failed business.
1. Never use social media to generate direct sales
I started my business with an intuition that if I do it carefully, at least 10% of the geeks from my Facebook and Instagram targets would instantly purchase my t-shirts as soon as they see them. It made me waste a lot of money as well as time on Facebook and Instagram ads. In the end, I didn’t get any sales. Because people don’t come on social media with an intention to buy.
The right way to do this is to target people who are actively searching for the t-shirts from Amazon and Google search engines and then finding out the keywords that actually convert into sales. When you start selling, intent-based targeting is the only and the cheapest way to generate sales.
2. Never enter into a high competition market
The biggest mistake I made was choosing the wrong market. Selling t-shirts is a highly competitive and saturated business. A highly competitive market is driven by price wars and cuts down your profits. Even if there weren’t many ‘t-shirts for tech geeks’, it is difficult to sell them at a high price.
3. A business with low-profit margins is equal to a low paying job
A business needs a lot of effort. You may sometimes find yourself working more than 12 hours a day. Hence, in my opinion, any business having less than a 15% net profit margin is not worth pursuing. It is even better to have a low-paying job than selling a product/service with a low-profit margin or in my case ‘negative margins’.
4. A business can’t succeed without the use of ‘Leverage’
Now, when I say leverage, it’s not just the financial leverage. In a broader sense, leverage means using someone else’s resources to rapidly grow your business. These resources could be time, money, skills, or all of these.
In my case, I used to buy limited units of t-shirts because of my limited capital. If I somehow had managed to get someone to fund my inventory, I could have been able to buy the t-shirts in a large quantity to decrease the unit cost of procurement. Although, this couldn’t have saved my business, but would definitely have helped to shut down the business with some profits.
5. Don’t fall in love with your idea
One must know when to stop or pivot. If it is not working today, it may not work tomorrow. Don’t fall in love with your idea. Doing business is tough and it’s always wise to pivot or stop if things are not working as per your initial plan.
In my case, I stopped selling t-shirts, learned my lessons and started a second business! This time I have made sure to incorporate all my learnings into this new business.
The catch here is to fail fast, learn faster and never stop trying. One day you will definitely succeed!