Closing my company – Post-mortem analysis so you can learn from my mistakes

[windchaser]

After 3 years of activity, I made the decision to shut down my company. Here goes my story, I hope you can learn from my mistakes.

THE IDEA:

On December 2018 I had my second and definitive FTE event (long story short, I was fired when the company where I was working decided to eliminate my role, which apparently was created as an experiment, and I never saw it coming). So I started to look for ideas.

I thought about a friend (my business partner in this venture), who has been designing tailor-made clothes for kids in this niche (where she had clients who said they couldn´t find these types of clothes at an affordable price) and she was always struggling to keep up with demand. We concluded that her issue was scalability, and decided to create a small brand to sell her products in a streamlined and scalable way. We took the leap.

Mistake one: Go all in in an unknown industry without making enough research.

THE BEGINNINGS:

It was December 2018 and we decided that the best plan was to prepare a new collection to launch on fall. We spent months looking for suppliers, making the designs and suitable small batch manufacturers.

Finally, in October 2019, we launched the first collection.

Mistake two: we didn´t test the market. If I could go back in time, I would have made a smoke test with some samples, and even launch a smaller collection in summer just to test the waters.

We got our first clients from friends and people who started following us on Instagram. We also did some paid ads. All in all we managed to sell almost all our inventory in the next months. Then the pandemic hit and we had a lot of delays with the materials we needed to produce the next collection and we were almost with no stock for months (but we kept receiving messages form clients asking for products, especially for the baby collection). We launched the next collection eventually and it was also a total hit, especially the baby collection, our main problem was stock rupture and productive capacity to keep up with demand.

THE RISE:

The fall 2020 collection was when things started to go exponential (In November and December we made 70% of the yearly revenue) and during 2021 the trend continued. Keeping up with demand was still our main struggle.

Mistake three: Instagram was practically our only source for new clients, we were doing so well in Insta that we got comfortable and became extremely dependent on it.

Mistake four: We got a lot of queries from multibrand stores to sell our clothes, but we were so focused on B2C, and going B2B would requiere some changes, that we decided to put all of our eggs in the B2C basket (which at the same time was in the Insta basket….).

Pursuing the B2B route as well would have meant sacrificing a little bit of momentum in the B2C business due to production constrains, but it would have mean a new recurring source of revenue, diversifying our Insta dependency, but at that time, I was so obsessed with the B2C strategy (I was planning to open physical stores of our own, too) that I didn´t see it.

THE FALL:

For the next collection we decided to increase initial production considerably to solve our issue of having enough stock to meet demand, and I put more money in to fuel that growth via inventory (at this point the company was profitable).

We announced our launch via email marketing and it had a great welcoming. However, when we launcvhed on Insta itb wa s atotal fiasco.

Our Insta reach dropped by around 70% and with it the sales. Not only our growth slowed but we start to have negative YOY sales.

We started considering that maybe they didn´t like the new collection that the slight increase in price maybe was excessive, and many other things, but the email marketing was doing great and recurring customers were buying, especially the more expensive products. (I later realized our clients were extremely price sensitive for some products but insensitive for others but not at that time).

We talked to other brands and they told us they were experiencing the same on Insta, I researched about it online and it seemed to be a general trend… The algortithm changed and we were f***ed. We breached the commandment of control and we were suffering the consequences.

THE STRUGGLE:

We seriously considered shutting down at that moment, but we didn´t want to quit without trying enough. We thought we could make it work if we solved that control issue with Insta, also, fall/winter was historically our best sales.

We invested heavily in video content we increased our reach in Insta, but we were still far form our “glorious days”.

We also tried alternative channels and we managed some success with Google, but not enough. We started selling thorugh a physical store in exchange for a comission (which provided some extra revenue but nothing crazy and it is very time consuming).

We also tried the B2B route but we didn´t manage to get to any agreement and we were having production delays.

At the same time, our CAC and production costs were skyrocketing, and our margins suffered to the point any profitability vanished.

Then it hit me, the main problem was not only the commandment of control, it was worse, it was the commandment of NEED. We were selling 10$ bills at 5$ without even realizing it.

Mistake five: We were doomed from the start seduced by a business model and niche that seemed profitable, but it was only due to arbitrage (free Insta organic reach), and like all arbitrages, they fade over time and with them the opportunnity.

So, we decided to shut down the business after we sell all the remaining stock. Then, I will move on to my next venture idea, that I am currently actively searching!

I hope you managed to learn something from my experience and prevent you from making the same mistakes!

 

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[originalMJT]

After 3 years of activity, I made the decision to shut down my company. Here goes my story, I hope you can learn from my mistakes.

THE IDEA:

On December 2018 I had my second and definitive FTE event (long story short, I was fired when the company where I was working decided to eliminate my role, which apparently was created as an experiment, and I never saw it coming). So I started to look for ideas.

I thought about a friend (my business partner in this venture), who has been designing tailor-made clothes for kids in this niche (where she had clients who said they couldn´t find these types of clothes at an affordable price) and she was always struggling to keep up with demand. We concluded that her issue was scalability, and decided to create a small brand to sell her products in a streamlined and scalable way. We took the leap.

Mistake one: Go all in in an unknown industry without making enough research.

THE BEGINNINGS:

It was December 2018 and we decided that the best plan was to prepare a new collection to launch on fall. We spent months looking for suppliers, making the designs and suitable small batch manufacturers.

Finally, in October 2019, we launched the first collection.

Mistake two: we didn´t test the market. If I could go back in time, I would have made a smoke test with some samples, and even launch a smaller collection in summer just to test the waters.

We got our first clients from friends and people who started following us on Instagram. We also did some paid ads. All in all we managed to sell almost all our inventory in the next months. Then the pandemic hit and we had a lot of delays with the materials we needed to produce the next collection and we were almost with no stock for months (but we kept receiving messages form clients asking for products, especially for the baby collection). We launched the next collection eventually and it was also a total hit, especially the baby collection, our main problem was stock rupture and productive capacity to keep up with demand.

THE RISE:

The fall 2020 collection was when things started to go exponential (In November and December we made 70% of the yearly revenue) and during 2021 the trend continued. Keeping up with demand was still our main struggle.

Mistake three: Instagram was practically our only source for new clients, we were doing so well in Insta that we got comfortable and became extremely dependent on it.

Mistake four: We got a lot of queries from multibrand stores to sell our clothes, but we were so focused on B2C, and going B2B would requiere some changes, that we decided to put all of our eggs in the B2C basket (which at the same time was in the Insta basket….).

Pursuing the B2B route as well would have meant sacrificing a little bit of momentum in the B2C business due to production constrains, but it would have mean a new recurring source of revenue, diversifying our Insta dependency, but at that time, I was so obsessed with the B2C strategy (I was planning to open physical stores of our own, too) that I didn´t see it.

THE FALL:

For the next collection we decided to increase initial production considerably to solve our issue of having enough stock to meet demand, and I put more money in to fuel that growth via inventory (at this point the company was profitable).

We announced our launch via email marketing and it had a great welcoming. However, when we launcvhed on Insta itb wa s atotal fiasco.

Our Insta reach dropped by around 70% and with it the sales. Not only our growth slowed but we start to have negative YOY sales.

We started considering that maybe they didn´t like the new collection that the slight increase in price maybe was excessive, and many other things, but the email marketing was doing great and recurring customers were buying, especially the more expensive products. (I later realized our clients were extremely price sensitive for some products but insensitive for others but not at that time).

We talked to other brands and they told us they were experiencing the same on Insta, I researched about it online and it seemed to be a general trend… The algortithm changed and we were f***ed. We breached the commandment of control and we were suffering the consequences.

THE STRUGGLE:

We seriously considered shutting down at that moment, but we didn´t want to quit without trying enough. We thought we could make it work if we solved that control issue with Insta, also, fall/winter was historically our best sales.

We invested heavily in video content we increased our reach in Insta, but we were still far form our “glorious days”.

We also tried alternative channels and we managed some success with Google, but not enough. We started selling thorugh a physical store in exchange for a comission (which provided some extra revenue but nothing crazy and it is very time consuming).

We also tried the B2B route but we didn´t manage to get to any agreement and we were having production delays.

At the same time, our CAC and production costs were skyrocketing, and our margins suffered to the point any profitability vanished.

Then it hit me, the main problem was not only the commandment of control, it was worse, it was the commandment of NEED. We were selling 10$ bills at 5$ without even realizing it.

Mistake five: We were doomed from the start seduced by a business model and niche that seemed profitable, but it was only due to arbitrage (free Insta organic reach), and like all arbitrages, they fade over time and with them the opportunnity.

So, we decided to shut down the business after we sell all the remaining stock. Then, I will move on to my next venture idea, that I am currently actively searching!

I hope you managed to learn something from my experience and prevent you from making the same mistakes!

Well you have learnt a lesson in business that money cant buy. Now you can use all the experiance to start again, dont give up

 

[windchaser]

Well you have learnt a lesson in business that money cant buy. Now you can use all the experiance to start again, dont give up

Absolutely. That is the idea!
Thanks for the kind words!

 

[fastlane_dad]

After 3 years of activity, I made the decision to shut down my company. Here goes my story, I hope you can learn from my mistakes.

THE IDEA:

On December 2018 I had my second and definitive FTE event (long story short, I was fired when the company where I was working decided to eliminate my role, which apparently was created as an experiment, and I never saw it coming). So I started to look for ideas.

I thought about a friend (my business partner in this venture), who has been designing tailor-made clothes for kids in this niche (where she had clients who said they couldn´t find these types of clothes at an affordable price) and she was always struggling to keep up with demand. We concluded that her issue was scalability, and decided to create a small brand to sell her products in a streamlined and scalable way. We took the leap.

Mistake one: Go all in in an unknown industry without making enough research.

THE BEGINNINGS:

It was December 2018 and we decided that the best plan was to prepare a new collection to launch on fall. We spent months looking for suppliers, making the designs and suitable small batch manufacturers.

Finally, in October 2019, we launched the first collection.

Mistake two: we didn´t test the market. If I could go back in time, I would have made a smoke test with some samples, and even launch a smaller collection in summer just to test the waters.

We got our first clients from friends and people who started following us on Instagram. We also did some paid ads. All in all we managed to sell almost all our inventory in the next months. Then the pandemic hit and we had a lot of delays with the materials we needed to produce the next collection and we were almost with no stock for months (but we kept receiving messages form clients asking for products, especially for the baby collection). We launched the next collection eventually and it was also a total hit, especially the baby collection, our main problem was stock rupture and productive capacity to keep up with demand.

THE RISE:

The fall 2020 collection was when things started to go exponential (In November and December we made 70% of the yearly revenue) and during 2021 the trend continued. Keeping up with demand was still our main struggle.

Mistake three: Instagram was practically our only source for new clients, we were doing so well in Insta that we got comfortable and became extremely dependent on it.

Mistake four: We got a lot of queries from multibrand stores to sell our clothes, but we were so focused on B2C, and going B2B would requiere some changes, that we decided to put all of our eggs in the B2C basket (which at the same time was in the Insta basket….).

Pursuing the B2B route as well would have meant sacrificing a little bit of momentum in the B2C business due to production constrains, but it would have mean a new recurring source of revenue, diversifying our Insta dependency, but at that time, I was so obsessed with the B2C strategy (I was planning to open physical stores of our own, too) that I didn´t see it.

THE FALL:

For the next collection we decided to increase initial production considerably to solve our issue of having enough stock to meet demand, and I put more money in to fuel that growth via inventory (at this point the company was profitable).

We announced our launch via email marketing and it had a great welcoming. However, when we launcvhed on Insta itb wa s atotal fiasco.

Our Insta reach dropped by around 70% and with it the sales. Not only our growth slowed but we start to have negative YOY sales.

We started considering that maybe they didn´t like the new collection that the slight increase in price maybe was excessive, and many other things, but the email marketing was doing great and recurring customers were buying, especially the more expensive products. (I later realized our clients were extremely price sensitive for some products but insensitive for others but not at that time).

We talked to other brands and they told us they were experiencing the same on Insta, I researched about it online and it seemed to be a general trend… The algortithm changed and we were f***ed. We breached the commandment of control and we were suffering the consequences.

THE STRUGGLE:

We seriously considered shutting down at that moment, but we didn´t want to quit without trying enough. We thought we could make it work if we solved that control issue with Insta, also, fall/winter was historically our best sales.

We invested heavily in video content we increased our reach in Insta, but we were still far form our “glorious days”.

We also tried alternative channels and we managed some success with Google, but not enough. We started selling thorugh a physical store in exchange for a comission (which provided some extra revenue but nothing crazy and it is very time consuming).

We also tried the B2B route but we didn´t manage to get to any agreement and we were having production delays.

At the same time, our CAC and production costs were skyrocketing, and our margins suffered to the point any profitability vanished.

Then it hit me, the main problem was not only the commandment of control, it was worse, it was the commandment of NEED. We were selling 10$ bills at 5$ without even realizing it.

Mistake five: We were doomed from the start seduced by a business model and niche that seemed profitable, but it was only due to arbitrage (free Insta organic reach), and like all arbitrages, they fade over time and with them the opportunnity.

So, we decided to shut down the business after we sell all the remaining stock. Then, I will move on to my next venture idea, that I am currently actively searching!

I hope you managed to learn something from my experience and prevent you from making the same mistakes!

Thanks for sharing your story - I don't know much about the clothing business, or what were the specifics you were operating under BUT I would imagine there are more / additional ways of going about generating sales and interest vs INSTA alone ?

Is there any room in your product pricing for an advertising budget? It seems like you even built up a following and had some track of repeat customers (which is great!).

I imagine if these are 'collections' you were putting out, these were custom and different then other items sold on the market? Did you ever figure out why the customer went with your specific products?

Was your value skew 'affordable price' ? Custom design ? It's not clear from your posts exactly what your offering was.

Was this your full time business? What prevents you from trying out different outlets for sales, looking more into B2B or looking for other ways to expand?

You said your production costs skyrocketed - could you have raised your prices further? Marketed your brand as a more premium choice? Maybe offer nicer packaging to go along with it?

Just appears that a lot of potential was left on the table, especially with products that were sometimes / constantly 'sold out'.

Many of your so called 'mistakes' are fixable and in no way a final doomsday to the business.

It seems like you just barely started operating it before you let up?

 

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[windchaser]

@fastlane_dad
Many thanks for your reply. Those are excellent questions.

I would imagine there are more / additional ways of going about generating sales and interest vs INSTA.

Yes, indeed they are, but they were not profitable for us. We have tried paid ads on magazines, influencers, tik tok, pinterest, seo, google ads, brand collaborations, marketplaces (both b2c and b2b) and selling through multibrand physical stores. A of course email marketing, which worked very good, but just with repeat customers.

Is there any room in your product pricing for an advertising budget? It seems like you even built up a following and had some track of repeat customers (which is great!).

Yes, we have an advertising budget, and we generally get good ROAs but lately it was not bringing us new clients, it was working great for retargeting, though. In any case, not enough to sustain the business.

I Imagine if these are 'collections' you were putting out, these were custom and different then other items sold on the market? Did you ever figure out why the customer went with your specific products?

Yes they were, we had a particular style, we even had some copycats, but still affordable price is key in the value proposition, because of the type of product and client. Even if it is a dofferent design, fashionable clothing is a nice to have more than a need and there are good enough substitutes. We didnt do custom styles. We created, produced and sold our own designs.

Was this your full time business? What prevents you from trying out different outlets for sales, looking more into B2B or looking for other ways to expand?

Yes and I bootstrapped as well with proceeds fron the sale of my previous business (in a totally different industry). We tried B2B but we couldnt reach an agreement as they wanted little amounts at a very high mark up. And for bigger players it would require a big investment, that, even if ut could work, I do not think is worth it in terms of opportunnity cost.

You said your production costs skyrocketed - could you have raised your prices further? Marketed your brand as a more premium choice? Maybe offer nicer packaging to go along with it?

We tried to negotiate with suppliers but we didnt have enough bargaining power, we have made a/b tests with higher prices and there are some thresholds clients stop buying for most products. We are kind of premium in the industry actually, but still affordable and we have nice packaging already. In fact, there was a premium brand (close competitor in the higher price range) that shut down this year with millionaire losses. Also, the macro is not helping, there are headwinds coming.

 

[David Fitz]

I failed at an ecom store that sold gym clothing. Clothing is a tough a$$ business to make money.

 

[Andy Black]

A of course email marketing, which worked very good, but just with repeat customers.

Have you loaded those emails into Google and Facebook and run ads to similar audiences? (Not my speciality but I've heard it can work.)

 

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[windchaser]

Have you loaded those emails into Google and Facebook and run ads to similar audiences? (Not my speciality but I've heard it can work.)

Yes! Actually those audiences generally work very well, so great tip!

You reminded me of a segmentation hack useful for ecommerces that have different audiences depending on the year (those who buy "in season" and the ones who buy during sales.
I make different lists with clients who buy during those months and use it for similar audiences depending on the moment of the year.

 

[windchaser]

I failed at an ecom store that sold gym clothing. Clothing is a tough a$$ business to make money.

100% agree, too many moving pieces and super high competition.

 

[Practic]

After 3 years of activity, I made the decision to shut down my company. Here goes my story, I hope you can learn from my mistakes.

THE IDEA:

On December 2018 I had my second and definitive FTE event (long story short, I was fired when the company where I was working decided to eliminate my role, which apparently was created as an experiment, and I never saw it coming). So I started to look for ideas.

I thought about a friend (my business partner in this venture), who has been designing tailor-made clothes for kids in this niche (where she had clients who said they couldn´t find these types of clothes at an affordable price) and she was always struggling to keep up with demand. We concluded that her issue was scalability, and decided to create a small brand to sell her products in a streamlined and scalable way. We took the leap.

Mistake one: Go all in in an unknown industry without making enough research.

THE BEGINNINGS:

It was December 2018 and we decided that the best plan was to prepare a new collection to launch on fall. We spent months looking for suppliers, making the designs and suitable small batch manufacturers.

Finally, in October 2019, we launched the first collection.

Mistake two: we didn´t test the market. If I could go back in time, I would have made a smoke test with some samples, and even launch a smaller collection in summer just to test the waters.

We got our first clients from friends and people who started following us on Instagram. We also did some paid ads. All in all we managed to sell almost all our inventory in the next months. Then the pandemic hit and we had a lot of delays with the materials we needed to produce the next collection and we were almost with no stock for months (but we kept receiving messages form clients asking for products, especially for the baby collection). We launched the next collection eventually and it was also a total hit, especially the baby collection, our main problem was stock rupture and productive capacity to keep up with demand.

THE RISE:

The fall 2020 collection was when things started to go exponential (In November and December we made 70% of the yearly revenue) and during 2021 the trend continued. Keeping up with demand was still our main struggle.

Mistake three: Instagram was practically our only source for new clients, we were doing so well in Insta that we got comfortable and became extremely dependent on it.

Mistake four: We got a lot of queries from multibrand stores to sell our clothes, but we were so focused on B2C, and going B2B would requiere some changes, that we decided to put all of our eggs in the B2C basket (which at the same time was in the Insta basket….).

Pursuing the B2B route as well would have meant sacrificing a little bit of momentum in the B2C business due to production constrains, but it would have mean a new recurring source of revenue, diversifying our Insta dependency, but at that time, I was so obsessed with the B2C strategy (I was planning to open physical stores of our own, too) that I didn´t see it.

THE FALL:

For the next collection we decided to increase initial production considerably to solve our issue of having enough stock to meet demand, and I put more money in to fuel that growth via inventory (at this point the company was profitable).

We announced our launch via email marketing and it had a great welcoming. However, when we launcvhed on Insta itb wa s atotal fiasco.

Our Insta reach dropped by around 70% and with it the sales. Not only our growth slowed but we start to have negative YOY sales.

We started considering that maybe they didn´t like the new collection that the slight increase in price maybe was excessive, and many other things, but the email marketing was doing great and recurring customers were buying, especially the more expensive products. (I later realized our clients were extremely price sensitive for some products but insensitive for others but not at that time).

We talked to other brands and they told us they were experiencing the same on Insta, I researched about it online and it seemed to be a general trend… The algortithm changed and we were f***ed. We breached the commandment of control and we were suffering the consequences.

THE STRUGGLE:

We seriously considered shutting down at that moment, but we didn´t want to quit without trying enough. We thought we could make it work if we solved that control issue with Insta, also, fall/winter was historically our best sales.

We invested heavily in video content we increased our reach in Insta, but we were still far form our “glorious days”.

We also tried alternative channels and we managed some success with Google, but not enough. We started selling thorugh a physical store in exchange for a comission (which provided some extra revenue but nothing crazy and it is very time consuming).

We also tried the B2B route but we didn´t manage to get to any agreement and we were having production delays.

At the same time, our CAC and production costs were skyrocketing, and our margins suffered to the point any profitability vanished.

Then it hit me, the main problem was not only the commandment of control, it was worse, it was the commandment of NEED. We were selling 10$ bills at 5$ without even realizing it.

Mistake five: We were doomed from the start seduced by a business model and niche that seemed profitable, but it was only due to arbitrage (free Insta organic reach), and like all arbitrages, they fade over time and with them the opportunnity.

So, we decided to shut down the business after we sell all the remaining stock. Then, I will move on to my next venture idea, that I am currently actively searching!

I hope you managed to learn something from my experience and prevent you from making the same mistakes!

This type of business does not solve painful problems to consumers so strong competition can kill such business.
Standard advertising and marketing methods work well in normal economy, but not well in bad economical conditions. Modern methods like referral marketing, profit sharing programs, etc. work better in such situations.

 

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[Andy Black]

I know someone spending nearly $1M/mth on Facebook Ads selling printed t-shirts on demand. Not my type of business but just saying some folks can make it work.

 

[windchaser]

This type of business does not solve painful problems to consumers so strong competition can kill such business.
Standard advertising and marketing methods work well in normal economy, but not well in bad economical conditions. Modern methods like referral marketing, profit sharing programs, etc. work better in such situations.

Thanks for the reply!
Referral marketing and profit sharing are interesting as well, and can bring amazing sales. But in my case, they still don't fix the the key point of the issue, that is we were not solving an actual need, we were solving a nice to have.

I do not know what my next business will be, but I have one thing very clear, I am going for a need, a "medicine" business more than a "vitamin" one.

 

[Johnny boy]

I know someone spending nearly $1M/mth Facebook Ads selling printed t-shirts on demand. Not my type of business but just saying some folks can make it work.

The ones that don’t quit

 

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[Practic]

Thanks for the reply!
Referral marketing and profit sharing are interesting as well, and can bring amazing sales. But in my case, they still don't fix the the key point of the issue, that is we were not solving an actual need, we were solving a nice to have.

I do not know what my next business will be, but I have one thing very clear, I am going for a need, a "medicine" business more than a "vitamin" one.

"I am going for a need, a "medicine" business more than a "vitamin" one."

This type of business is strongly regulated by governments and require some good connections.

"they still don't fix the the key point of the issue, that is we were not solving an actual need, we were solving a nice to have."

I agree with you that a business based on a strong need has higher chances for success. But even businesses with moderate needs can survive in competition with big corporations. For example, when a small business compete with big retailer as Amazon by selling similar products, the competition is on price only, therefore Amazon win.

But some smart business owners implement referral, revenue sharing, etc. programs to win the competition. Now the price alone is not a critical factor in customers decision making. When customers get some sort of income from one business, but not from the other then price is the secondary factor.

 

[windchaser]

I know someone spending nearly $1M/mth Facebook Ads selling printed t-shirts on demand. Not my type of business but just saying some folks can make it work.

That is impressive!

"I am going for a need, a "medicine" business more than a "vitamin" one."

This type of business is strongly regulated by governments and require some good connections.

"they still don't fix the the key point of the issue, that is we were not solving an actual need, we were solving a nice to have."

I agree with you that a business based on a strong need has higher chances for success. But even businesses with moderate needs can survive in competition with big corporations. For example, when a small business compete with big retailer as Amazon by selling similar products, the competition is on price only, therefore Amazon win.

But some smart business owners implement referral, revenue sharing, etc. programs to win the competition. Now the price alone is not a critical factor in customers decision making. When customers get some sort of income from one business, but not from the other then price is the secondary factor.

Absolutely, but even if it is a smaller one it is not the same as a nice to have. I am thinking need in that terms. A need could be a productivity tool that saves you time and makes your life easier or a something that helps you make more money. That is more on the lines I was thinking of need, as something that solves an actual problem.

 

[Practic]

That is impressive!

Absolutely, but even if it is a smaller one it is not the same as a nice to have. I am thinking need in that terms. A need could be a productivity tool that saves you time and makes your life easier or a something that helps you make more money. That is more on the lines I was thinking of need, as something that solves an actual problem.

FDA issues warning as women abort healthy babies due to false positives on prenatal genetic screening tests
FDA issues warning as women abort healthy babies due to false positives on prenatal genetic screening tests

There are many solutions available, but majority of people are not aware about these solutions. Is it suitable problem?

 

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[windchaser]

FDA issues warning as women abort healthy babies due to false positives on prenatal genetic screening tests
FDA issues warning as women abort healthy babies due to false positives on prenatal genetic screening tests

There are many solutions available, but majority of people are not aware about these solutions. Is it suitable problem?

I don't know. I have zero knowledge of that industry and I am not familiar with the problem, but, it seems it could be an example of a need.

 

[Andy Black]

Sell what people want to buy. They may or may not need it.

 

[Albert KOUADJA]

After 3 years of activity, I made the decision to shut down my company. Here goes my story, I hope you can learn from my mistakes.

THE IDEA:

On December 2018 I had my second and definitive FTE event (long story short, I was fired when the company where I was working decided to eliminate my role, which apparently was created as an experiment, and I never saw it coming). So I started to look for ideas.

I thought about a friend (my business partner in this venture), who has been designing tailor-made clothes for kids in this niche (where she had clients who said they couldn´t find these types of clothes at an affordable price) and she was always struggling to keep up with demand. We concluded that her issue was scalability, and decided to create a small brand to sell her products in a streamlined and scalable way. We took the leap.

Mistake one: Go all in in an unknown industry without making enough research.

THE BEGINNINGS:

It was December 2018 and we decided that the best plan was to prepare a new collection to launch on fall. We spent months looking for suppliers, making the designs and suitable small batch manufacturers.

Finally, in October 2019, we launched the first collection.

Mistake two: we didn´t test the market. If I could go back in time, I would have made a smoke test with some samples, and even launch a smaller collection in summer just to test the waters.

We got our first clients from friends and people who started following us on Instagram. We also did some paid ads. All in all we managed to sell almost all our inventory in the next months. Then the pandemic hit and we had a lot of delays with the materials we needed to produce the next collection and we were almost with no stock for months (but we kept receiving messages form clients asking for products, especially for the baby collection). We launched the next collection eventually and it was also a total hit, especially the baby collection, our main problem was stock rupture and productive capacity to keep up with demand.

THE RISE:

The fall 2020 collection was when things started to go exponential (In November and December we made 70% of the yearly revenue) and during 2021 the trend continued. Keeping up with demand was still our main struggle.

Mistake three: Instagram was practically our only source for new clients, we were doing so well in Insta that we got comfortable and became extremely dependent on it.

Mistake four: We got a lot of queries from multibrand stores to sell our clothes, but we were so focused on B2C, and going B2B would requiere some changes, that we decided to put all of our eggs in the B2C basket (which at the same time was in the Insta basket….).

Pursuing the B2B route as well would have meant sacrificing a little bit of momentum in the B2C business due to production constrains, but it would have mean a new recurring source of revenue, diversifying our Insta dependency, but at that time, I was so obsessed with the B2C strategy (I was planning to open physical stores of our own, too) that I didn´t see it.

THE FALL:

For the next collection we decided to increase initial production considerably to solve our issue of having enough stock to meet demand, and I put more money in to fuel that growth via inventory (at this point the company was profitable).

We announced our launch via email marketing and it had a great welcoming. However, when we launcvhed on Insta itb wa s atotal fiasco.

Our Insta reach dropped by around 70% and with it the sales. Not only our growth slowed but we start to have negative YOY sales.

We started considering that maybe they didn´t like the new collection that the slight increase in price maybe was excessive, and many other things, but the email marketing was doing great and recurring customers were buying, especially the more expensive products. (I later realized our clients were extremely price sensitive for some products but insensitive for others but not at that time).

We talked to other brands and they told us they were experiencing the same on Insta, I researched about it online and it seemed to be a general trend… The algortithm changed and we were f***ed. We breached the commandment of control and we were suffering the consequences.

THE STRUGGLE:

We seriously considered shutting down at that moment, but we didn´t want to quit without trying enough. We thought we could make it work if we solved that control issue with Insta, also, fall/winter was historically our best sales.

We invested heavily in video content we increased our reach in Insta, but we were still far form our “glorious days”.

We also tried alternative channels and we managed some success with Google, but not enough. We started selling thorugh a physical store in exchange for a comission (which provided some extra revenue but nothing crazy and it is very time consuming).

We also tried the B2B route but we didn´t manage to get to any agreement and we were having production delays.

At the same time, our CAC and production costs were skyrocketing, and our margins suffered to the point any profitability vanished.

Then it hit me, the main problem was not only the commandment of control, it was worse, it was the commandment of NEED. We were selling 10$ bills at 5$ without even realizing it.

Mistake five: We were doomed from the start seduced by a business model and niche that seemed profitable, but it was only due to arbitrage (free Insta organic reach), and like all arbitrages, they fade over time and with them the opportunnity.

So, we decided to shut down the business after we sell all the remaining stock. Then, I will move on to my next venture idea, that I am currently actively searching!

I hope you managed to learn something from my experience and prevent you from making the same mistakes!

Thank you for sharing. I learned a lot of things in a short period of time.
Me, what motivates me to continue working on the idea of creating an e-commerce website is this: People want to sell but are stuck in physical stores. not just business or store owners but also ordinary citizens. For example, several of my contacts are selling their products on their WhatsApp status. Which would mean they want to be seen on a grand scale. which is impossible with only a WhatsApp account. Since no one can stay from home and type on Google to find their WhatsApp account. They need a site.

now, as they will not be ready or able to create online store so i am doing this work (e-commerce) for them.

The job I would have to do would be to find suppliers and Once suppliers found ,it's all over.

 

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[windchaser]

Sell what people want to buy. They may or may not need it.

Good point! That is the key. If they are not willing to buy it, it does not matter if they need it!

 

[windchaser]

Thank you for sharing. I learned a lot of things in a short period of time.
Me, what motivates me to continue working on the idea of creating an e-commerce website is this: People want to sell but are stuck in physical stores. not just business or store owners but also ordinary citizens. For example, several of my contacts are selling their products on their WhatsApp status. Which would mean they want to be seen on a grand scale. which is impossible with only a WhatsApp account. Since no one can stay from home and type on Google to find their WhatsApp account. They need a site.

now, as they will not be ready or able to create online store so i am doing this work (e-commerce) for them.

The job I would have to do would be to find suppliers and Once suppliers found ,it's all over.

Ecommerce is here to stay for sure. And I still belive it could be an excellent business, they key issue is what you sell and the size of your niche (not only number of people but average ticket and recurrence).

Best of luck in your venture! Let me know if you need some advice! I made some mistakes but I also made a llt of things right!

 

[Albert KOUADJA]

Ecommerce is here to stay for sure. And I still belive it could be an excellent business, they key issue is what you sell and the size of your niche (not only number of people but average ticket and recurrence).

Yes exactly.

Best of luck in your venture! Let me know if you need some advice! I made some mistakes but I also made a llt of things right!

The most important thing with errors is that they educate better than advice. So I'm really glad to have learned from your mistakes and I won't hesitate to ask you if I need to know more. Thank you for your answer.

 

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[MakeItHappen]

Love the thread and your transparency.

Some things came to my mind (btw I haven't read all the replies so maybe some points were already made):

• Have you thought about hiring an expert marketer that has experience in your industry?
• How much $ have you invested in influencer marketing? What is your ROI% atm? Have you tried influencers on multiple platforms or only on one? Have you tried micro-influencers who don't need to get paid but would be happy if you ship them your products for free?
• It seems like you can market to your existing customer base with a good ROI%. What is your lifetime customer value? If you could be able to break even on customer acquisition you could have a profitable and stable business with enough repeat buyers down the line.
• As you have nothing to lose (if you close the biz anyways) have you thought about partnering with an influencer who has a huge reach? Instead of money give him X% equity in the business. If you close the business the equity in the biz will go to zero anyways.

 

[windchaser]

• Have you thought about hiring an expert marketer that has experience in your industry?

Many thanks for the reply! Yes, I have, in fact I hired an agency but they did not deliver (I was getting better results than them), and I kept looking but could not find anyone that convinced me. I was getting good ROAS (average 7) and I didn´t prioritize it. However, later I realized that, despite good ROAS, I was not acquiring enough new customers. On other platforms, I wanted to understand them first before delegating, and probably that was a bad call as well.

• How much $ have you invested in influencer marketing? What is your ROI% atm? Have you tried influencers on multiple platforms or only on one? Have you tried micro-influencers who don't need to get paid but would be happy if you ship them your products for free?

Good question, I never paid for an influencer, I mainly worked with microinfluencers, I can not measure exactly the return, but the ROI has been very good in terms of brand and in terms of sales. I also tried revenue sharing with another one and it was ok. I only tried on Instagram, I was aiming for TikTok but have not find anyone yet.
I searched for a professional influencer, but they were out of budget, that is why we went the other route of microinfluencers.

• It seems like you can market to your existing customer base with a good ROI%. What is your lifetime customer value? If you could be able to break even on customer acquisition you could have a profitable and stable business with enough repeat buyers down the line.

My CLTV is 88€ and my CAC is 25€ (it was 9,81€ a year ago), acquisition is still profitable. The problem is that we do not have enough repeat customers. Another thing I realized is that the niche is smaller than I thought, especially internationally speaking. The international market we could serve (EU (ex southern Europe) and US), which is less price sensitive, does not have appettite for our products (I tried, especially B2B). Even inside Spain, the niche is smaller than I expected.

• As you have nothing to lose (if you close the biz anyways) have you thought about partnering with an influencer who has a huge reach? Instead of money give him X% equity in the business. If you close the business the equity in the biz will go to zero anyways.

I haven´t, but it could be a very interesting solution, I will certainly look into it! Thanks for the tip!

 

[Practic]

Sell what people want to buy. They may or may not need it.

This work well in normal economic conditions.

It does not work in recession, inflation, etc., because people do not have enough money to buy what they want and spend first on what they need.

 

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[Practic]

I don't know. I have zero knowledge of that industry and I am not familiar with the problem, but, it seems it could be an example of a need.

The problem is that 95% of people (including 60% of medical doctors) interpret results of medical tests incorrectly.
This leads in some cases to incorrect diagnoses and in some cases to fatal results.

If you want to learn more about this and related problems in medicine, here are some books to read:

[1] Top Screwups Doctors Make and How to Avoid Them, Joe Graedon, MS, and Teresa Graedon, PhD, Graedon Enterprises, Inc., 2011.

[2] Misdiagnosed: One Woman’s Tour of and Escape from Healthcareland, Jody Berger, Published by Sourcebook, Inc., 2014

[3] When We Do Harm: A Doctor Confronts Medical Error, Danielle Orfi, MD, Beacon Press, 2020.

[4] Epidemic of Medical Errors and Hospital-Acquired Infections: Systemic and Social Causes, Ed. By William Charney, CRC Press, Taylor & Francis Group, 2013.

[5] Catastrophic Care: Why Everything We Think We Know About Health Care is Wrong, David Goldhill, Vintage Books (a division of Random House LLC), 2013.

 

[Andy Black]

This work well in normal economic conditions.

It does not work in recession, inflation, etc., because people do not have enough money to buy what they want and spend first on what they need.

What I'm saying is...

People buy because they want to. Because the pain of not buying is greater than the pain of buying.

If someone needs something bit isn't aware of it then we can't sell it to them.

If they're aware they need it but don't want it then we still can't sell it to them.

It's only when they *want* to buy that we can sell it to them.

And people buy stuff they don't need even when money is tight. I bought a Starbucks coffee today which I didn't need but I wanted.

Of course, we can help people want to buy things they do or don't need.

I just prefer selling what people already want to buy, and to the people who already want to buy it.

 

[Practic]

What I'm saying is...

People buy because they want to. Because the pain of not buying is greater than the pain of buying.

If someone needs something bit isn't aware of it then we can't sell it to them.

If they're aware they need it but don't want it then we still can't sell it to them.

It's only when they *want* to buy that we can sell it to them.

And people buy stuff they don't need even when money is tight. I bought a Starbucks coffee today which I didn't need but I wanted.

Of course, we can help people want to buy things they do or don't need.

I just prefer selling what people already want to buy, and to the people who already want to buy it.

"And people buy stuff they don't need even when money is tight. I bought a Starbucks coffee today which I didn't need but I wanted."

Andy, you bought a Starbucks coffee because you have enough money to do this, even so money is tight.
If you will be in conditions when you need to make a choice to pay for basic needs (food and shelter) or to buy a coffee and do not pay a rent or mortgage payment (and risk to be evicted) most likely you will not buy a coffee (until you are a risk taker). Most people (about 97%) are risk averse that is why when they make such type of choices they select a choice that minimize their risks.

 

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[windchaser]

What I'm saying is...

People buy because they want to. Because the pain of not buying is greater than the pain of buying.

If someone needs something bit isn't aware of it then we can't sell it to them.

If they're aware they need it but don't want it then we still can't sell it to them.

It's only when they *want* to buy that we can sell it to them.

And people buy stuff they don't need even when money is tight. I bought a Starbucks coffee today which I didn't need but I wanted.

Of course, we can help people want to buy things they do or don't need.

I just prefer selling what people already want to buy, and to the people who already want to buy it.

That is a good point. In any case, within the range of products that people want to buy, in my case, I prefer to focus on need for this one instead of nice to have!
But the focus on willingness to pay is certainly important!

 

[windchaser]

This work well in normal economic conditions.

It does not work in recession, inflation, etc., because people do not have enough money to buy what they want and spend first on what they need.

I agree, although, it is also important to focus on willingness to buy. There are many things people need but they still do not want to pay for them, (we humans are irrational creatures), or sometimes they don't even realize they actually need them.