I had a business set up that went terribly wrong after too many thousands spent and too much heartache as well.
Already owning a successful turn-key operation (I go in on pay day once per month), I thought it was time to set up another.
We were awarded the distribution rights to the whole of the UK for an established range of hair care products. I had an uncle knocking about who had just been made redundant, and we got on well, so I invited him to be a part of it too (big mistake).
After the market research period, I got the warehousing sorted, pickers and packers, shipping agents, contracts signed, premises, sales agents. Brought over £10K worth of stock, and life looked really rosy.
There were a few things that weren't quite right with the English translations on some of the products, so I spent a bit of time working with the manufacturer fixing these. In the meantime, I sent my Uncle and my sales agents out scouting for business with their newly designed sales folders and pilot's cases. I also brought my uncle's daughter in to do a bit of telesales and lead generation on a performance related pay schedule.
Within no time, we had over 100 new accounts.
Now, as you know...when you're in business for yourself, you generally don't think about a wage in the early days. You just survive on whatever you're earning outside of the business as you plow every single penny profit back in to expanding what you already have.
My uncle failed to understand that.
He started grumbling that he was finding it hard to live. He started saving his petrol receipts and putting them in the safe, exchanging them for cash.
"Ehm...hello...the money in that safe hasn't even been reconciled yet, and the sales staff are expecting some commissions next week too. We can't afford to take money off the top for ourselves until after we've paid everyone else".
The next thing I know, he tells me one morning that his daughter came around to his house the previous evening complaining that she can't manage on this performance related pay for telesales - she needed to know how much she'd be earning for each day she came in (she was doing this on the side by the way). So he agreed that we'd give her £40 a day.
WTF? £200 a week guaranteed for a girl who rings up for leads for initial sales appointments that have a £10 gross sale (the sample kit)? This was her PIN money. I had previously had her on £2 per lead gained, and like I said, leads were quite easy to come by from the Yellow Pages for these products.
Well, sure enough, her success rate went down to 1-2 per hour from 5-6. Her call frequency dropped as well. The carrot was gone.
Meanwhile, my uncle was absent more and more from the office. He seemed to be "closing" on a specific account for an awfully long time. One night I called in an emergency to ask him if he could come help at the office, but he reluctantly told me he was otherwise occupied having lunch with this particular account i.e. a date. I was livid to say the least. A date? So that's where his boot stock had gone...trying to impress her with his powers as "the director of the company". The following week, he turns up to work with her and actually brings her into the office! Can you believe it? We're trying to work, getting sales, talk about stuff, and we have a customer sat there listening to it all?
Things went from bad to worse. By the time my third shipment arrived, I noticed that a few of the products were labeled as "new improved technology". Now we're talking hair products here, including hair dyes, so "new & improved" is usually good. Not so this time. Our existing accounts complained that the products were now performing dreadfully on certain hair types.
We had so many complaints (and lost accounts) that we took it up with the company, who denied there had been reports from any other worldwide distributors, and suggested our customers were using the products incorrectly.
By the time it came to making my fourth order, I was in a position that I hated going to work. I dreaded it. I hated my uncle. I hated having to call customers who were furious that the products were suddenly failing them. I hated having to sit and listen to the £40 a day call girl waver and vary from the script that had proved so successful. I hated the fact that my Uncle couldn't see that him bringing his new GF to the office 3 times a week wasn't acceptable when we were trying to get this thing off the ground.
And then finally, the Euro plunged from 1.44 to 1.17.
Someone in the universe was trying to tell me that this wasn't going to work no matter what I did. Later that day, my uncle arrived in an agitated state with his new GF in tow. He asked if he could see me in the meeting room. "Sure", I told him. "I'll just finish these commission calculations for the reps tomorrow and I'll be in."
You'd think I had told him to go shag himself!
He started screaming the place down, telling me that his card was refused at Asda and did I know how embarrassed that made him feel? The previous night he had opened his food cupboards to discover they were bare. What was I going to do about it as I was allegedly the one in control of all the money.
Despite my best efforts to move into another area, he just kept going off on one. I knew there and then that this business, for me at least, was finished.
Later that night, I told my partner and OH (who was doing this with me) that I was finished/done/over.
"What about the stock?" "What about the distribution rights?" "What about the staff?"
I said I didn't care. I'd hold a meeting with them all and explain that due to the problems with the products, we'd be ceasing all activity until they were resolved. I told my uncle the same and suggested he go out and get a job. I emailed the suppliers and told them the same. They replied stating that they actually did have other complaints from some distributors and would look into it, but did we want to take the "non-faulty" products and continue selling those?
NEVER AGAIN! NEVER EVER AGAIN!
So there you go. I've actually enjoyed writing this. It's been a few years since all this happened now, but I still know on reflection that I made the right decision to fold that business and cut my financial losses.
