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Alas, we were entering the highly anticipated peak sales season again. This was our chance to make bank, or so we thought.

Our brand’s reputation has been growing steadily and our sales were healthy. Customers have been enquiring on our new line of products and we have ample distribution channels to launch them. It only seemed right to place a sizeable order of goods to meet the strong demand.

We were confident of a strong reception and even made arrangements to restock. However, things didn’t work out as planned. The soft economic conditions had a bigger impact than expected.

Not all regulars were keen to get the new products, resulting in extra effort to acquire new buyers. Sales didn’t stream in as smoothly and quickly during the short window of opportunity. Due to limited time to redistribute the stocks, we were stuck with a lot of time-sensitive inventory which became worthless after that period.

Caught Off Guard

It was our first time preparing for the annual sales season. The telltale signs of an impending bountiful harvest were clear based on our data and that boost our confidence to ‘go big’. Little did our team foresee anything going awry and so we treated that one possible future as though it were the most likely.

Unsold inventory tied up valuable capital that could otherwise have been deployed more productively, while also creating the additional burden of disposal.

What We Should Have Done

• Plan for different scenarios

• Stagger production volume based on real-time response

• Do more pre-orders to drive demand and estimate potential sales

• Create membership discounts to increase adoption rate amongst regulars

• Collect data from customer surveys to understand demand better

Our misjudgment of the market came at a significant cost, but the experience surfaced valuable lessons that can inform how we approach future ventures.

Lastly, in case you’re wondering what happened to the excess inventory — we donated them to charities.

Have you been caught in a similar position before? What would you have done? Let us know your thoughts in the comments below!

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A decade ago, I was just a wide-eyed fresh graduate who wanted to start my own business instead of plunging straight into a job. I felt that it was an opportune time as I had no commitments or family obligations to tie me down. What I had were design skills, a macbook and a small amount of savings. I thought the best way to begin is by taking a small step and build from there.

To quote Steve Jobs, “The minute you understand that you can poke life, and that if you push something in, something will pop out the other side. That you can change it and you can mould it…”.

I felt inspired to ‘poke life’ by starting small with my first business — a brand design consultancy.

The Pushback

When I shared my idea of ‘starting small’, everyone around me raised their eyebrows. They were doubtful that my humble start would lead to anything at all and believed that starting a business requires ‘a lot of money’. Some of them started to dish out unsolicited advice about how I ‘should’ rent an office to look professional, spend marketing dollars to get clients, offer my services at $5 on fiverr to secure initial clients and build a portfolio. All these ideas were not wrong, but they were all trying to solve the wrong problem I had — lack of resources.

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My First Gig

My first ever design job came to me organically when I was printing my name cards. I met someone who sought my help to reconstruct a logo for a car distributor. That same person linked me up with several other gigs down the next few months. As time passed, I got more jobs through referrals without spending on marketing. Instead of renting an office, I worked from home the whole time and only left to attend client meetings.

Starting small can lead to beautiful outcomes. My services expanded over the years and projects got more complex. I went from designing small branding materials to advertisements, to building a mobile app, creating full marketing campaign collaterals, publishing magazines and corporate reports — I did them gradually all by staying true to my philosophy of ‘starting small’.

What I Learnt

Look, this isn’t a ‘look how clever I am’ post.

Being ‘small’ has its own set of challenges too. For instance, I dropped an illustration deal for a children’s book due to conflicting schedules as there was nobody I could delegate the work to, but I learnt the concept of ‘trade-off’. I also missed out opportunities with some big organisations who felt that my business too ‘small’ to allocate bandwidth for their projects. My reputation in the industry was also ‘too small’ for higher-end clients.

Despite the limits, ‘starting small’ taught me on a personal level what to prioritise and how to allocate resources in terms of time, money, attention and energy.

Had I started off by renting an office, I’d probably surrendered in no time as the initial jobs were intermittent and revenue was unstable. If I didn’t value my resources as a solopreneur, I might have spread myself too thin instead of conserving energy for higher value projects with clients who pay fairly for my services. The list goes on.

Depending on the business type, you don’t need a lot of resources to get started. I have met bakery owners who started off ‘small’ by baking from their home kitchen and selling them on Instagram. I myself started another product business from home, which later expanded overseas.

It’s easy to be misled by others who have no prior experience or skin in the game so you have to figure out yourself in the process and decide what works for you, not them. Shut out the noise, know your strategy and stay true to your philosophy.

Starting small can be beautiful.

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Let’s Build a Factory Together

A company approached me to distribute my products overseas. Let’s call them W. Upon learning that I outsource production to a manufacturer, they suggested that I switch to their friend, M’s factory to do it. I’m well aware of M’s business since years ago as he sells a line of products which are in direct competition with me. W was upfront enough to share that M was struggling to keep his business alive and she wanted to save it through exports. Her proposal was to pool our (W, M and me) resources together to start a factory overseas and export directly from a cheaper country. She saw it as a win-win scenario for all parties involved and wanted to know if I’m interested in this partnership.

The Uncertainty

As I sat in W’s conference room listening, I immediately identified so many red flags in this proposed deal. On the surface, it seemed rosy as my brand quickly caught the attention of a potential collaborator who is willing to partner me for the setup of a factory to bring my business to greater heights. You know, if I were younger (read: more gullible), I probably would have gone for it.

Though I had ambitions to scale the business, the deal felt wrong from multiple angles:

🚩Red Flag 1: My brand was a substitute

The deal was not mine to begin with. My brand was not their top choice. Their overseas clients wanted another brand but they couldn’t reach the owners so they used mine as a substitute to seize the overseas deals. I’m not raising this issue out of my own ‘ego’ or ‘insecurity’ but since I’m not the preferred choice, my products were not aligned with their clients at all so why pursue further?

🚩Red Flag 2: Their long-time friend was struggling

M’s business was struggling and W was trying to salvage it but admitted that the overheads were too high. M was someone skilful but lacked business sense. He would likely fall in line with any decision made by W. If the deal were to go through, with 2 of them outnumbering me, I would obviously have no say in any business matters. Moreover, I was the ‘outsider’ in their long-term friendship. Will W and M plan anything shady behind my back given their relationship? If that happens, do you think I have any leverage?

🚩Red Flag 3: I was the ‘chosen one’ to share the risks

I never intended to setup an overseas factory so quickly into the game. Timing is crucial in business. If you establish one too early and the sales aren’t consistent, you effectively run into losses very quickly. Look at this real life example:

A notable competitor in the industry built a big manufacturing space with brand new equipment when their sales were still unstable. They also expanded their production team, who ended up with nothing to do as demand for their products waned. They sought investors’ funding to keep the business alive but lost all their money. In desperation, the owners sold a lot of equity away to a bigger competitor and ended up moving overseas to work for them.

Setting up an overseas factory in today’s conditions can cost up to $1 million. Even if we split the costs evenly, it’s at least ~$300k each. My business was just starting to gain its footing and I was starting to recover my investment. If I proceeded with the deal, I had to get into debt somehow through a bank loan or get investors’ money through the sale of my company’s equity. W already mentioned that overhead costs of M's production facility were too high for them to undertake. This is as good as saying that she lacks funding and needs external partners to co-share the costs for this new project. Am I the convenient ‘scapegoat’ in this deal for them to distribute the risks?

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🚩Red Flag 4: They wanted full control over my business

Given their long-term relationship, it is an unspoken understanding that if this tripartite deal goes through, both parties would end up being the major partners with the biggest say in any matters. I was outnumbered.

Besides, when W heard that I’ve my own set of overseas contacts with big name retailers, she immediately asked for them and kindly offered to negotiate on my behalf. Do I really need a middleman to share my profits?

I already had existing revenue streams both locally and overseas. Partnering means sharing my client base and resources with M, a direct competitor. As the most skilled person in this partnership, he would take over production. I would inevitably have to give away my trade secrets for him to manufacture my products, compromising my intellectual property. What if they create a new brand of my products to compete, run with my clients and cut me out of the deal one day?

🚩Red Flag 5: They know nothing about the industry

Through my interactions with their team, I understood that they were new to the industry and in fact, has yet to export anything yet. It’s fine not to have an in-depth knowledge as such things can be picked up quickly. But it also means they won’t be able to comprehend some of the risks, such as:

• Underestimating the difficulties in securing trained workers

• Ability to ensure deal pipelines to ensure profitability

• Adaptability to overseas business customs, industry standards and export requirements

This lack of in-depth understanding is likely also why they would even suggest having a factory in the first place.

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What I’ve learnt

We should welcome business opportunities but not jump at every deal that comes our way. Yes, I know that it’s tempting to expand the business quickly and make lots of money but it’s equally important to exercise judgement. Not every deal works in your favour. Know your worth, evaluate and walk away if the deal is too good to be true. There’ll always be another one coming up. With experience, you’ll naturally improve in decision making.

The last I heard, M’s business closed shortly after this deal fell through and W didn’t have any other new business partners to continue with. Imagine if I went ahead with it, I would probably be drowning in debts amid this shaky economy. Meanwhile, I was still doing my own thing and have diversified my product line with minimal risks. Not a shred of regret walking away from this deal.

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SOS

A former colleague texted, “What are you doing these days?”. “Doing my own thing.”, I replied. “Would you like to work with G again?”, Y continued, before letting on that their sales are declining and asked what solutions I had in mind.

Another one texted, “How’re you lately?”. “Doing my own thing.”, I replied. Knowing that I’m really good at figuring out hidden intentions, she pretended to catchup on life but stopped at probing any further about ‘working with G’ as she knew that I loathed him.

Clearly, both of them were sent by my former boss to suss out my availability. The company was in turmoil and they needed me back.

The Torture Chamber

Flashback to 6 months ago, I emailed to resign on a Saturday morning after an eventful work week. Right after quitting, the stubborn tension lodged in my shoulders finally relieved. Can you imagine the ordeal I went through?

I was then hustling at a startup with a mission to ‘change the world’. It had the usual formula of an ‘almost-unicorn’ — a charismatic figurehead, ‘movement’, strong investor support, glowing press reviews and celebrity fanfare. As a millennial who strives for roles with a sense ‘purpose’, I thought it was a great place to both stretch myself and contribute to a good cause, but I couldn’t be more wrong!

The local office was led by a classic narcissist, G, who made the workplace extremely toxic. Under G’s charge, ‘work’ was more about pandering to his personal whims and fancy instead of actual stuff required to grow the business. Despite pulling in record sales through my efforts, he tried to fire me as I didn’t want to ‘play the game’. G shortly built a team with his own people and things got increasingly chaotic on the political front so I left. I imagine things got worse after my departure as sales nosedived and voluntary employee turnover rate got overwhelmingly high.

Refusing to Face Reality

At this point, you can tell that the startup would eventually sink. The signs were all there and complaints were filed but the management kept mum to protect their own interests. After all, they liked the fact that G had a salesman persona, was well-connected and formerly held management positions at ‘reputable’ companies. Surely, he couldn’t be that bad? G’s ‘tough love’ management style may be unpopular with the team but he brought in sales (ahem, it was by yours truly).

G on the other hand took the silence as permission to continue his antics, so the vicious cycle ensued for nearly 2 years until they were at the brink of bankruptcy. That was when they sought my advice.

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Wear Shoes that Fit

Y probed further and I said, “He can’t even manage himself and yet you allow him to manage the office? He needs to be replaced with someone decent and capable.”. With that, I ended the conversation.

Imagine wearing a new pair of shoes. Shortly after walking in them, they give you blisters. You tolerate it and continue your journey. Then, the blisters burst, your skin tear and start to bleed. You stop to put bandaids on the wounds to relieve the pain. As you tread on, the bandaids peel off and your feet hurt even more. The suffering continues until the end of the day, where your feet are all swollen and bruised. In this case, would you not replace them with a pair that’s more comfy?

Now, of course I’m not talking about shoes here. I refer to the judgement required to place the correct people in positions of power. A company goes down really fast when the wrong person leads and especially so for a startup still finding its footing. If you discover that you’ve a hiring problem, why don’t you nip it in the bud before things get worse? The more you procrastinate, the greater the opportunity cost.

The Resolution

Half a year later after our call, I heard that the management replaced G and their business began to improve. Had the management exercised better judgement in the first place during the initial hiring stages and implemented corrections quickly, wouldn’t they be in a far better position today?

How to Deal With a Potential Wrong Fit?

To minimise risks and disruption to your business with a wrong hire, consider the following in times of uncertainty:

1. Ensure that there’re candidates in the pipeline to replace them (especially for critical roles)

2. Distribute the role’s responsibility with other team members so that work goes on in case of departure

3. Involve the person’s projects with others so that nobody hoards any exclusive info or contacts

Have you faced a similar situation? What would you have done? Comment below and let me know!

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