In my first year of going full time into business I went bankrupt and ended up desperately struggling with my family for months in Johannesburg, South Africa. The business, my family and I ran out of “money”, because we ran out of “advertising money”, which meant that we couldn’t get new clients to generate the sales required to sustain the business. We had not yet built a strong loyal or repeat customer base to give us sufficient business in the absence of new customers. We depleted resources both in the business and at home. Fortunately, “but not so much”, the business was running from home, which meant that fixed costs were centralized.
I didn’t start the business with a lot of money and I didn’t have savings when we started but I had a lot of faith. I had a lot of faith in myself, in the business and that God was going to back me up all the way through my journey.
I knew that I had a dream that was going to work and I was willing to sacrifice for it. I believed that I knew how to get clients and win them over and that the more time I’d spend building the business the bigger I’d be able to grow it.
We were totally dependent on marketing and advertising for getting new clients. From the beginning, I had decided that we’d always prioritize strategies that would give us the widest and broadest geographical reach and exposure in our operating field and geography while targeting mainly those who were already looking for our services. It was at the rise of the digital age and I had a practical edge in the understanding and expertise of digital marketing strategy and methods over most of my competitors.
I banked on a few things as I was setting out:
1. Superior sales strategy
2. Superior client acquisition strategy
3. Superior image building capacity
4. Superior employee and stakeholder relations
5. Superior financial management characterized by adopting and maintaining a lean expense structure, tight cash collection systems and cash flow management and a commitment to consistent reinvestment
6. Superior customer experience strategy
7. Minimum investment in non income generating assets
8. Good technical understanding of the business, and good execution control and oversight over service delivery teams
Notwithstanding all these pluses, the reality of trying to build a business from zero was quite challenging. With very little cash resources on hand, the approach we adopted was to seed and re-seed as much as possible as soon as we got paid for any work done. However, as we know, every business and life has fixed costs, and the challenge that business people will always face before they gather enough reserves is the decision whether to use available resources to cover fixed costs or to allocate funds to marketing and production, or to other expenses.
With diminished resources and new client enquiries, we found ourselves failing to cover fixed costs, marketing and production and other expenses as well. Things got really desperate as all accounts ran out of money.
We had not yet created a strong enough banking profile to qualify for ready bank assistance. We asked friends and family for help, and the general feeling was, “Why don’t you just go back to work and do business on the side or build the business while working?”
I had always valued relations and growing up and made a lot of connections and helped plenty of people in various ways along the way. Doing this, I felt I was seeding, and that if a rainy day came I could always draw from my relationships. Going bankrupt showed me a different outcome. I couldn’t get the help I needed from my huge list of friends.
We didn’t even know what we were going to eat every day. Everything in our house finished, from prepaid electricity to food, soap, toiletries, and for a good three or so months, we literally lived on the edge. Eventually, we got locked out of our apartment for being a two months behind on rental. We made all negotiations to try and get our place opened up, but the agents of the landlord wouldn’t budge, even though we had stayed in the unit for over two years.
My wife, my young brother and I were left outside the flat and we believed that the crisis would be resolved the same day that we were locked out. I went to a second hand shop and sold my phone and laptop, but that didn’t give us enough money to cover the outstanding home bill. I spoke to the agent in charge of our property, and informed them that I had a part-payment, and the unkind lady told me to deposit the money that I had, which I did, and then they still wouldn’t open the doors for us, insisting that we pay the full payment outstanding before they would do so.
We had to up and leave with no change of clothes or utilities in hand, everything locked up. We headed to a friend’s place, where we eventually spent the next few weeks without a change of clothes, just surviving. Determined, we worked even harder and harder to unlock markets and opportunities, going to internet shops every morning as we didn’t have an office or computers, and spending the days there working until evening or night.
The results of our efforts and this pain was the creation of various digital marketing campaigns that started giving us work, and became the bedrock on which the second generation of our business was founded and today is still anchored.
Our apartment was eventually opened up to us after a month and we elected to move out and start a new leaf, a month and half after becoming “homeless”.
About The Author
Desmond Mapfumo is a Mindset Coach, Startup Builder and Consultant. He is the Founder and Contributing Editor For Inspiration Media Publications. Inspiration Media is member of the Rebirth Group, which he also founded and leads as the Chief Executive Officer.