Being a first time entrepreneur is fun and exciting, but nothing prepares you for the day you finally realized that things aren’t working out. My partner and I ran a tech business for about two years before we decided to shut it down. We worked hard, but despite our efforts we just couldn’t make it work. These are some of the things we did wrong.
Trying to serve everyone
Our service was to provide business owners an easier way to sell gift certificates and vouchers online.
My partner built the software with the intention of serving every type of business. However, we realized early on that most people interested in our services were from the beauty industry. We should have taken that insight and rebranded our site, our services and our marketing towards that industry. Instead we got stuck with the idea of satisfying everyone.
This cost us deeply. We should’ve just niched down our services and focused solely on the beauty industry. Expansion could have come at later date once we were successful enough to expand.
Tip: Start small, focus on a niche market before expanding.
Choosing the wrong business model
This was a big one for us. We simply couldn’t figure out the right business model for this particular platform. The choices were either a “subscription base model” or a “pay per transaction model.” In the end, we chose to charge customers per transaction, and charged a very small dollar amount for every gift certificate sold.
Unfortunately, this didn’t work too well. Since most of our customers were new business owners, their sales were very low and in most cases were nonexistent. And since we would only make money if they sold something – we made no profit.
Poor customer service
Even as a first time business owner I know how important customer service is. I should have probably listed this as number one, because looking back now; I can honestly say that I did a poor job serving our customers. We were so busy focusing on reaching a mass market; we didn’t take good enough care of the people who were already using the platform.
We were gaining and losing customers at the same time. I am not entirely sure if we lost so many users because of poor customer service, but we certainly didn’t do a good to find out the cause of it.
Tip: Focus more on the customers that you do have, even if it’s just a few.
Not updating the product
Our gift certificate platform was very basic. We built the minimum viable product and got people to pay for it. The problem was we kept it basic for the entire time we were in business. We almost never updated the software. People were emailing us asking for all types of features, but we felt that it was good enough for what we intended it to be. Our users felt like we weren’t listening and that they weren’t being taken seriously.
Tip: Your product/service will never be perfect. So continue to work on it and don’t be afraid to make changes.
Lack of funds
The company was built from the ground up without any outside funding. I know you’re thinking that’s good, right? And I agree, but the lack of funds made it harder for us to grow the business. We couldn’t afford the smallest things; every penny had to be counted for. And because of it we had to do every single task ourselves, when we could have hired professionals to help us do the things we didn’t know how to do. Not only did we do a poor job of completing those tasks, we also loss momentum of our productivity.
Tip: Hire professionals: stick to what you do best – outsource the rest
Starting a business is always a great idea, but if you’re really going to start one, make sure you’re doing it for the right reasons. Make sure that you’re teaming up with the right person – and be ready for the ups and downs. Lastly, make sure you’re in it for the long run and give it all the focus that it needs to succeed.
Herby Fabius is the founder of the startup interview blog/podcast BilliionSuccess.com and web design services StartupTab.com. He interviews successful founders to help education a community of newbie entrepreneurs. You can reach him on Twitter @BillionSuccess
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