Setbacks can be detrimental but in many circumstances they can actually breed financial success
Not everyone who has failed will become successful – not by a long shot – but anyone who has made a success of themselves has probably experienced a lot of setbacks in their career. Take Steve Jobs. The legendary entrepreneur and genius behind Apple is the most influential business person of our time. However, at the age of 30 he was left unemployed, devastated and deflated having been abruptly fired from the company he founded when a series of not-so-spectacular products flopped. And the rest, as they say, is history.
Many SME owners experience similar reversals of fortune, especially early in their careers. Failure is just another part of business but it’s what you do when you’re down that makes the difference between becoming a Steve Jobs and a Steve Jobless.
The founder of self-tanning brand TanOrganic Noelle O’Connor has a story which many accomplished Irish entrepreneurs who rose to prominence during the county’s Celtic Tiger period will find familiar. In 1995 she opened her first beauty salon behind a friend’s hairdressers with a £2,000 credit union loan. In 2000, she moved into her own premises and revenues tripled overnight. Between then and 2004 she opened more salons and had revenues of £3m. “This was with no debt at all from that first loan,” she says.
It was around this time that she also set up a distribution company, supplying goods to around 1000 beauty salons, and was the first to bring mineral makeup to Europe. Everything was going really well – O’Connor owned ten salons and was preparing to franchise – but then the 2008 crash happened. It would seem that no matter how good a contingency plan you have, there are some problems you just can’t prepare for. “Our revenues dropped 80% and they just wouldn’t go up again,” she says. “It was like someone had switched off the lights.”
She kept her salons open and, while trading continued, it was nowhere near the levels that it was during the boom. As a result she burnt through around £500,000 in cash reserves and things were looking pretty bleak. But you can’t keep a good entrepreneur down and with a firm support base around her, O’Connor got back on her feet. “They convinced me I could get up and do it again,” she says. “Without them, I would have thrown in the towel.”
Licking her wounds, in 2009 she set about developing her own product. Frustrated by the absence of a 100% natural sunless tan lotion on the shelf, O’Connor spotted a gap in the market and came up with TanOrganic. “I’ve always enjoyed finding new concepts and being the first to market,” she says. A year later she took her creation to the Irish Dragons’ Den and secured support from Gavin Duffy, who has made his fortunes in the media and communications sector. “It’s a very simple product and he liked that,” says O’Connor.
Despite one or two minor setbacks – the cork popped on the entire first batch of glass bottles sold during one of the warmest summers on record and it took a lot of calling around and apologising to customers to prevent disaster – O’Connor is now well on track to getting back on her financial feet.
Getting back on your feet is one thing but finding your feet in the first place can be much more difficult. Stuart Miller is a serial entrepreneur and set up his first company, Octopus Information, with Steve Huxter back in 1993, aged 26. The idea behind Octopus was to provide busy professionals with a telephone-based concierge service to call for absolutely anything. Stuart spent six years trying to make the company work, however, it turned out to the the “mother of all niches” and after lurching from one financial problem to another – “it was difficult to price a service that was so nebulous,” – he sold the firm in 1999.
Miller and Huxter used the money to start his next venture ByBox in 2000, which was aimed initially at consumers as a locker delivery solution (consumers can have an online purchase delivered to their nearest locker bank for collection of a time that suits them). “We were smack bang in the middle of Silicon Valley because that’s where everything internet was emanating from,” says Miller. Two weeks later the Nasdaq crashed and the internet bubble burst.
“We hung around Silicon Valley for a while trying to fix the mess and make ByBox work but we finally had to accept our losses,” says Miller. “I was then literally back to the dining room table.” Not wanting to give up, he continued with ByBox in Europe as opposed to the US, and redirected focus to offer a b2b arm – the idea being that businesses can have spare parts delivered out to field service engineers.
“One of the biggest problems for a start-up is to be overfunded, and we experienced this first hand,” he adds. “If you raise money, one way or another you know you’re going to spend it and so you can go for quite a long time, rolling your plan out and doing whatever you’re doing without necessarily realising what you’re doing isn’t quite right.” One thing ByBox got wrong was that it hadn’t worked out exactly who its customers were. Once they eventually did run out of money, the pair then realised there were successes to be made in a different market and in offering a slightly different service and through Miller’s perseverance and a re-defined offering, success soon followed.
ByBox is now in its 15th year with revenues of £75m, offering more than just a delivery network; it also saves clients millions by revamping and streamlining their entire supply chain processes. The ByBox Group has received numerous accolades, including listings as a Sunday Times International Track 200, Sunday Times Tech Track 100 and Deloitte’s Fast50 business, thanks to its focus on perfecting the logistics technology involved in nationwide in-night delivery. Today the company provides locker-based solutions, not just here in the UK but for businesses across France, Benelux, the US, Israel, South Africa and New Zealand.
We’re not sure how many people can say that Facebook’s Mark Zuckerberg nearly sent their business under, but we’re sure that very few can say that he nearly sent them under twice. “I can’t wait to meet him,” says Richard Jones, founder and CEO of EngageSciences, the digital marketing company.
The first time Facebook nearly put the company under was right at the inception. “What we started off trying to build was a platform that allowed marketers to create interactive experiences like polls and surveys that they could drop across their website,” says Jones. “Due to Facebook’s rising popularity, no one was really interested in using their website as their main focal point for marketing and so everything we created for websites was not used.”
The company very quickly changed tact and began creating apps for Facebook and helping brands engage with consumers through the social media platform. However, the social networking platform that we all know and love changed its algorithm in late 2013 which meant organic posts from brands were squeezed and ranked less highly than posts from family and friends. The organic reach of brand pages dropped from reaching 16% of their Facebook fans to an average of 3%. Facebook focused instead on encouraging paid media from brands.
This meant EngageSciences had to change its business model to survive. In the first quarter of 2014, very shortly after the algorithm changed, EngageScience’s directors, led by Jones, agreed to re-position the business away from creating apps to helping brands transform their own websites into powerful social hubs by discovering, curating and publishing the best user-generated content featuring their brand. Through creating social hubs it found it could deliver on average a 300% increase in the amount of time visitors spend on their clients’ websites and an 11% increase in web traffic. “I can honestly say I’m now glad that Mark Zuckerberg nearly killed my business,” says Jones.
Admitting failure is never easy – especially in business, where people are lauded and rewarded for their success. As a result, we may be living in a culture where people don’t learn from failure. However, as the above examples demonstrate, this doesn’t have to be the case. By facing up to your mistakes or the whims of outside forces, there is no reason you can’t turn it around and get right back on your feet. In the words of the late, great Irish playwright, Samuel Beckett, in one of his more coherent moments: “Ever tried. Ever Failed. No matter. Try again. Fail again. Fail better.”