In late 2016 – early 2017 my start-up Company “Think ADesign” faced the most challenging phase in its growth, so difficult that we were told by experts at the time that we wouldn’t see up to one month more before we would go into administration or fold.
Truly - bills were rising, delivery partners’ invoices were reaching an all-time high and wages for staff/consultants were due with little to no money in the bank.
In case you are thinking: “…but that is not how most start up stories go”, you are right it is not. You see, we didn’t have an uncle, grandparent or relative’s loan of £5K, or bank loans OR any external investment like most traditional start-ups. We started with my own personal savings; this may seem stupid at the time but here is what we understood. If you hold too much of a creditor’s money i.e. banks or independent loan companies, when there is a financial crisis a start-up business could be forced to make financial decisions against its owner(s) will.
If you secure investment from investors that will be greater than your annual revenue as a start-up, you stand a chance of slaving to your business for a very long time trying to raise enough money to own more shares in your own business. We didn’t like that idea so we decided to grow organically until we stood on a better revenue to borrowing/external investment ratio.
We grew the business with monthly budgets so lean and extreme that sometimes we used the same tea bag twice just to save money. Despite all these efforts we still saw the storm in our bank account every month as the business started growing.
We consulted a few experts who explained that we needed more cash in the bank sitting there for emergency expenses and short falls in cash flow. We took this advice on board and sought funding; little did we know that was just the beginning of another down turn. We were under the supervision of a consultant who led us to believe that they worked closely with a start-up Loan Company and EU funded programme that could help us secure a start-up loan successfully! Unfortunately, after paying for the service our application was declined. We then found out that the consultant was actually a fraud who took advantage of start- ups like us.
At this point I was exhausted, literally at a breaking point. My savings, personal credit cards, emergency funds had been maxed out.
Related article: Three Steps to Overcoming Failure
I remember coming into the office every day, managing my team, dealing with client’s enquiries with the brightest smile on my face and not once did I show any sign of weakness, regret or sadness. I made sure our clients continued to receive 100% customer care and our excellent service was maintained in the quality of work we delivered. I can’t thank my team enough for this, they are my army and I am grateful to have them.
In my efforts to steer the business back into profit, I picked up the phone and started setting up appointments with all of our existing clients to let them know of add-on services that would benefit their sales process. 70% of our customers considered their options with us and as a result we managed to stay in business.
Three life lessons I hold dear to my heart as a start-up co-founder are:
(1.) There are people/businesses out there ready to take advantage of your unfortunate situation to benefit their financial gain. Do your own homework. Seek a second or third opinion - just like you would for your personal health, your business also needs to be at its healthiest to combat any unfortunate and sometimes inevitable viruses.
(2.) When the going gets tough, buckle up your shoes because the race is about to get harder. Keep at it until you reach the other side of success. Always stay alert in the case of dark days, no matter the height of your success!
(3.) Despite all your findings & recommendations from experts, always follow your inner gut if you truly want to be successful. That entrepreneurial spirit within you should be kept alive at all costs, it’s what got you this far!
If you are looking to start your own business or you are already in business and anticipate or forecast cash flow gaps. Here are my lists of funding opportunities, subject to the applicant’s credit score/reference check:
Iwoca: Credit limits are based on your business performance – they can typically lend up to one month’s revenue, or up to £10,000 for a startup business. Interest rates vary from 2% to 6% per month. To qualify, you must be 18 or over and have a UK-based business and operate as a sole-trader, partnership or limited company. Click here to Apply now!
Virgin StartUp: A personal loan ranging from £500 - £25,000 per co-founder, with a fixed interest rate of 6.2% fixed p.a. Repayment terms can be up to five years and there are no early repayment penalties. You must be at least 18 years old, be an EU passport holder (or have a valid UK visa) and your business must be two years old or less.
Timescale from application date to loan approval varies between 3 -12 months depending on what stage you’re at and where you are in the country.
Other Virgin StartUp benefits:
Every funded entrepreneur can access 12 months of free mentoring support, plus discounted access to events, exclusive offers and opportunities from across the Virgin Group. Click here to Apply today!
Disclaimer: I am not a fanancial advisor neither am I recieving any affiliate or referral benefit from the Start Up loan companies mentioned in this content. This is solely based on my personal experience and research.