This is the business maxim of Chris Forbes, co-founder of The Cheeky Panda, who explains how the company has grown from humble beginnings.
It’s fair to say my feet have hardly touched the ground during recent years. With a feeling of great personal pride, I have watched The Cheeky Panda become a leading UK business, while collecting plenty of positive recognition along the way. We’ve made it into the Sunday Times Fast Track 100 list and, for the past three years, been among the UK’s top 100 start-ups.
From scratch we’ve built a business that’s now valued at over £50m and we’re trading in more than 25 countries. Over the next few months I’ll be a regular contributor to this website, offering tips for small businesses everywhere, as well as budding entrepreneurs.
When starting out, we didn’t have a huge bottomless pit of cash to delve into, so every decision we made with regards to deployment of capital was critical. You won’t enjoy long term success by wasting money ‘ especially if the pot is limited to start with.
Capital management is probably the most frequent killer of new businesses and the biggest risk is salary. How are you going to pay yourself when attempting to get a new venture off the ground? The banks are unlikely to lend you any support unless you put your house on the line. Start-up loans are hard to secure until you are actually trading, by which time the debt is probably beginning to accumulate.
I firmly believe it’s best to ‘fail fast and move on,’ rather than prolonging the misery. I also feel the best way to get a business off the ground is by employing a side hustle. When we started our bamboo tissues business, myself and my partner were able to tap into income from our other companies. This meant we didn’t have to take money from The Cheeky Panda, in order to get it off the ground.
Many successful entrepreneurs run businesses outside of their normal hours of employment, such as evenings or at weekends. They have an alternative revenue stream, so if the venture fails to succeed they are still able to pay the rent or mortgage. In other words, their ‘day-job’ keeps them ticking over financially, putting food on the table, clothes on their back, while keeping the bank manager happy.
Learning how to manage money from day one, when you have limited funds at your disposal, is vital for creating long term growth. Turning ideas into profit is tough but when you understand how to achieve this, it will help you to scale up in the future. If you can turn £1k into £5k, with as little wastage as possible, then it’s possible to turn £5k into £25k, or £25k into £125k ‘ and so on. But if you start from scratch with £50k, you are more likely to waste it as you haven’t learned the value of that capital.
The problem with experts!
When I started Cheeky Panda there were many ‘experts’ offering advice on how to grow my business. And the services they were offering weren’t cheap. They would ask £5k or £10k for the benefit of their knowledge or some ‘tried, tested and trusted’ business strategy. Yet, I knew from experience, that these individuals are convincing sales people but are not very good at being accountable if things turned sour. Therefore, I quickly discovered that the best option was to hire marketing or sales companies on a strict results-led arrangement. Don’t pay up-front, but pay when they deliver what they are promising.
This bootstrapped approach to business has served us very well and even though we now have a company valued at over £50m, it remains the blueprint to this very day. We are now able to do things on a larger scale but we are still thinking about every penny we spend. And if we sign up with a third party, they remain accountable for either the success or failure of the initiative.
Next month I will discuss how you can discover if there is a market for your products, and whether it’s scalable.
The Cheeky Panda is an eco-friendly bamboo household goods company.