Before an entrepreneur’s business becomes the huge success we often hear about, there’s a time when life as a start-up can be a little tough.
While they might have a genius idea, money isn’t always flowing, meaning budding entrepreneurs are forced to make things work with what they’ve got.
Below, four entrepreneurs share some of the lessons learnt on their road to success:
Abigail Forsyth, CEO, KeepCup
After starting a café in Melbourne called Bluebag, Forsyth quickly discovered that it takes time to get a good understanding of how your own business works and where it will and won’t make money – something she says she’s still learning as she goes in her latest venture, KeepCup.
“I’m not sure we had much of a strategy but in order to survive, the important thing is to make a very, very clear distinction between business funds and personal funds,” Forsyth says.
“Also, pay yourself something and make it achievable so it’s a salary you know you’ll be able to afford to pay – even if it’s very, very low – so you’ve got some reliable income coming in.”
Recalling the early days of Bluebag, Forsyth describes the importance of understanding the triggers of your business and what will and won’t bring money through the door.
“We had this absolutely fantastic product that people loved and we had queues out the door for our juice bar, but in that time, we didn’t make any money,” she explains.
“We didn’t have the pricing right and we didn’t have an understanding of our business to really get momentum behind that. Things can look fantastic but you really have to keep your eye on the numbers.”
Kate Kendall, founder and CEO, The Fetch
Kate Kendall, the founder and CEO of The Fetch – an online community for professionals to share and discover what’s happening in their city – is a big believer in lean start-up methodology.
“We’ve had a minimal viable product for the whole time … It’s all very much bootstrapping so I can code a bit myself from the front end … but it was more about how can I do it in the leanest possible way to test it,” Kendall told Women’s Agenda last year, shortly after starting The Fetch.
For Kendall, the leanest possible way meant working as a “digital nomad” for two years, selling everything she owned and living in an Airbnb sublet while she got The Fetch off the ground.
“When you believe in something, one of the biggest challenges is to push through. It’s about trusting your gut, believing in yourself and persevering.”
Georgia Beattie, CEO, Single Serve Packaging
When Georgia Beattie launched Single Serve, a packaging company that delivers wine in PET plastic single serves to suit the Australian outdoor lifestyle, she started by raising capital from a few key shareholders.
“My goal has always been to deliver on their investment. I did significant planning so I had a buffer there if something went wrong,” she says. “It had to be smart money to contribute to the business. We were resource poor, as every start-up is. In the early days it was about short-term loss for a long-term goal.”
For Beattie, while she didn’t strictly follow any lean start-up methodology, she put any money she made straight back into the business, paying herself just enough to get by.
“We are growing at such a rapid rate so we’re feeding working capital back into the business. I pay myself a minimal amount – I have no time for holidays anyway!”
Nikkie Durkin, founder and CEO, 99dresses
Nikki Durkin, the founder of 99dresses – an online “infinite closet” allowing people to trade clothes with each other – was lucky enough to receive funding from her parents.
But despite having the backing of her family, funding a start-up has been a tough learning curve for the 20-something entrepreneur.
“The most challenging thing is figuring out you’re going to run out of money before you’re going to take off. It’s frustrating; it’s a tough feeling. You feel like you’re drowning a bit, but I got very lucky,” Durkin says of her decision to enter a $10,000 business competition, which she won, followed by her admission to Y Combinator – an organisation that provides seed funding to a select number of start-ups.
While she has no regrets, if Durkin had her time again she says she would have “skilled up” on the technological side of things so she could have done some of the coding herself and saved some money.
“The technological side of things is what’s really expensive,” she says.
Having learnt from her mistakes and after receiving valuable advice from mentors such as Matt Barrie, the CEO of freelancer.com, Durkin says she’s managed to make things work.
“If you want something, there’s always a way. I thought when I was running out of money, ‘This is going to die’. Then I figured it out … I made it happen when it all seemed impossible.”