The history of mistakes: how we built and lost a business with a turnover of 500,000 dollars a year
In 2009, I told you how we build our small family business with a turnover of $ 1,500 per month . Four years have passed. The business grew to a turnover of 500,000 dollars a year, and we lost it. It's time to tell about the mistakes made.
The publication on Habré allowed us to meet different people, many people liked our business. So in 2010 we sold 50% of the company to private investors. After a successful three-year life together in September 2013, our partners overcame the business. We are left with nothing.
As Franklin said, “Experience is a wonderful ability to recognize a mistake that you make again.” Perhaps, for someone, everything written below is familiar and understandable. For us it was the first time and, looking back, I see a lot of mistakes that led to this situation. I will be glad to share them with you.
Initially, the flower bed was written in Parcer. This is what happens when an English teacher and professional designer chooses which programming language to learn for his startup.
')
For those who are not in the subject - it's like Esperanto in programming languages. I was held hostage to my choice. Flowerbed grew rapidly, she needed development. I realized that I could not write it alone anymore. Finding a programmer on Parcer who would definitely stay with us was unreal. Rewriting to php is expensive, the Flowerbed hasn’t earned much yet. Therefore, when there were investors who were able to solve the problem of development, we gladly agreed to sell.
When choosing a platform for business, think about the future. Support and development are much more expensive and more important than initial development.
By the time investors appeared, Klumba had no problems other than the problem of technical growth. We didn’t need money for marketing or anything else. The project was growing rapidly, it initially had an excellent monetization model. Then we did not understand that it would be cheaper and less risky to take a loan for development than to attract investors to the project.
In many situations, it is better to risk your property and take a loan from a bank than to attract an investor and risk your future business.
We thoughtlessly reacted to the deal. By signing the documents, we did not think with what we would go to court in case of a conflict. We did not even think about possible conflicts, because everyone liked everyone.
So we had 2 documents on hand. One is essentially our relationship, but not legally binding.
The second is the charter of LLC, with which it is pointless to go to court, because there is nothing on the LLC except for the domain, the charter is standard and it can be argued over it, especially with the 50/50 scheme, for years.
We lacked the advice of a person who is familiar not only with local laws, but also with local reality.
Look for a lawyer who not only knows the laws, but also understands how they are applied. Consultation of such a person will save you a lot of energy in the future.
When we sold half of the company - there was nothing to divide. The profit was small and there was no question what to do with it.
When the company grew, a money management strategy was needed. It turned out that we are differently looking at the strategy of the product itself, therefore, we want to spend the company money in different ways.
We were not satisfied with their plan for spending money, they were not satisfied with our product development plan, but they did not want to offer theirs. We wanted to make a profit. They resisted. In such matters it is very difficult to find a compromise.
Share the skin of an unkilled bear. Most conflicts occur on the basis of profit distribution. And the more it is, the more problems.
I encountered a rare case. The programmers of partners who were in another city began to develop the flower bed. On the one hand, all the time they devoted only to the Flowerbed and were mine. On the other - I did not hire them and could not dismiss them without quarreling with partners, so they were not mine. Not to mention that I myself managed to do everything faster and the pace of development killed me.
Among other things, the partners made claims to me about the demotivation of the team, which I did not hire, did not encourage or consider as my own.
You can outsource some of the work, but never lose control over people and processes. Even if it seems to you that they are covering you up.
We were friends with partners. I could not admit that they would break the agreement under any pretext. Therefore, calmly trusted them all: servers, databases, software. It seemed to me that I knew them and would be able to agree in any situation.
Therefore, they managed to commit the capture of the company ridiculously easy.
At the critical moment I did not have access to the servers and the technical part of the project. They quickly changed the payment details on the site, passwords to everything, including domain management, server, database, statistics.
People get divorced after 30 years of marriage. What to say about the business? Do not trust anyone.
Before the seizure, our conflict lasted 6 months. All this time, it seemed to us that it was dishonorable with respect to our partners to wash rubbish from the hut. We were wrong. In a stalemate situation, a third party is needed who can mediate. Obviously, this third party must be neutral. Therefore, you can find it only by telling someone else about the problem.
We began to make a fuss when it was too late to do anything. Therefore, they could only sympathize with us, but no help.
Acknowledge your weakness in time and seek help. Sometimes an agreement within the company simply will not work.
All this happened, of course, due to lack of experience. Not only with us, but also with our partners.
Experience is not universal. There is no book or list of articles, reading which can avoid all problems. In some other company may be its own chain of errors, which leads to collapse.
I wrote this note primarily for young startups who are willing to take the investor's money. There, at the very beginning, it seems that the investor and his money will solve all the problems. But it may happen that if you decide not to have such significant problems starting a business, you will encounter much more serious problems further.
Try to think about it in advance.
What happened?
The publication on Habré allowed us to meet different people, many people liked our business. So in 2010 we sold 50% of the company to private investors. After a successful three-year life together in September 2013, our partners overcame the business. We are left with nothing.
As Franklin said, “Experience is a wonderful ability to recognize a mistake that you make again.” Perhaps, for someone, everything written below is familiar and understandable. For us it was the first time and, looking back, I see a lot of mistakes that led to this situation. I will be glad to share them with you.
Incorrect choice
Initially, the flower bed was written in Parcer. This is what happens when an English teacher and professional designer chooses which programming language to learn for his startup.
')
For those who are not in the subject - it's like Esperanto in programming languages. I was held hostage to my choice. Flowerbed grew rapidly, she needed development. I realized that I could not write it alone anymore. Finding a programmer on Parcer who would definitely stay with us was unreal. Rewriting to php is expensive, the Flowerbed hasn’t earned much yet. Therefore, when there were investors who were able to solve the problem of development, we gladly agreed to sell.
When choosing a platform for business, think about the future. Support and development are much more expensive and more important than initial development.
Sometimes better loan
By the time investors appeared, Klumba had no problems other than the problem of technical growth. We didn’t need money for marketing or anything else. The project was growing rapidly, it initially had an excellent monetization model. Then we did not understand that it would be cheaper and less risky to take a loan for development than to attract investors to the project.
In many situations, it is better to risk your property and take a loan from a bank than to attract an investor and risk your future business.
Hire a pragmatic lawyer
We thoughtlessly reacted to the deal. By signing the documents, we did not think with what we would go to court in case of a conflict. We did not even think about possible conflicts, because everyone liked everyone.
So we had 2 documents on hand. One is essentially our relationship, but not legally binding.
The second is the charter of LLC, with which it is pointless to go to court, because there is nothing on the LLC except for the domain, the charter is standard and it can be argued over it, especially with the 50/50 scheme, for years.
We lacked the advice of a person who is familiar not only with local laws, but also with local reality.
Look for a lawyer who not only knows the laws, but also understands how they are applied. Consultation of such a person will save you a lot of energy in the future.
Share the skin of an unkilled bear
When we sold half of the company - there was nothing to divide. The profit was small and there was no question what to do with it.
When the company grew, a money management strategy was needed. It turned out that we are differently looking at the strategy of the product itself, therefore, we want to spend the company money in different ways.
We were not satisfied with their plan for spending money, they were not satisfied with our product development plan, but they did not want to offer theirs. We wanted to make a profit. They resisted. In such matters it is very difficult to find a compromise.
Share the skin of an unkilled bear. Most conflicts occur on the basis of profit distribution. And the more it is, the more problems.
Keep your team with you
I encountered a rare case. The programmers of partners who were in another city began to develop the flower bed. On the one hand, all the time they devoted only to the Flowerbed and were mine. On the other - I did not hire them and could not dismiss them without quarreling with partners, so they were not mine. Not to mention that I myself managed to do everything faster and the pace of development killed me.
Among other things, the partners made claims to me about the demotivation of the team, which I did not hire, did not encourage or consider as my own.
You can outsource some of the work, but never lose control over people and processes. Even if it seems to you that they are covering you up.
Do not trust
We were friends with partners. I could not admit that they would break the agreement under any pretext. Therefore, calmly trusted them all: servers, databases, software. It seemed to me that I knew them and would be able to agree in any situation.
Therefore, they managed to commit the capture of the company ridiculously easy.
At the critical moment I did not have access to the servers and the technical part of the project. They quickly changed the payment details on the site, passwords to everything, including domain management, server, database, statistics.
People get divorced after 30 years of marriage. What to say about the business? Do not trust anyone.
Seek help before it's too late
Before the seizure, our conflict lasted 6 months. All this time, it seemed to us that it was dishonorable with respect to our partners to wash rubbish from the hut. We were wrong. In a stalemate situation, a third party is needed who can mediate. Obviously, this third party must be neutral. Therefore, you can find it only by telling someone else about the problem.
We began to make a fuss when it was too late to do anything. Therefore, they could only sympathize with us, but no help.
Acknowledge your weakness in time and seek help. Sometimes an agreement within the company simply will not work.
Total
All this happened, of course, due to lack of experience. Not only with us, but also with our partners.
Experience is not universal. There is no book or list of articles, reading which can avoid all problems. In some other company may be its own chain of errors, which leads to collapse.
I wrote this note primarily for young startups who are willing to take the investor's money. There, at the very beginning, it seems that the investor and his money will solve all the problems. But it may happen that if you decide not to have such significant problems starting a business, you will encounter much more serious problems further.
Try to think about it in advance.
Source: https://habr.com/ru/post/198868/
All Articles