Why Small Businesses Fail

 

Big Lessons From My First Little Business’s Failure

The number of articles, blogs and soothsayers ready to give you tips on starting your own business is INFINITE.  So there is no harm in my producing a few more.  (This is one of a series.)

While in 5th grade, Denise Joyner and I were directed by our teacher to complete an elaborate science project.  We made custom perfume from tinctures.

Using feedback from friends and family (this was the marketing research), we developed individual fragrances for ladies.   Mrs. Rowland (our teacher) kept us focused during the R&D phase.  We mixed and measured alcohols, herbs and spices.  We let them steep and tested them on blotter paper.  We packaged and gave away MANY samples. The products got excellent feedback, and we were featured in Ebony Jr. magazine!

Alas, our little perfume empire was not meant to be.  Here is a summary of lessons learned from this fabulous life experience.

Things that went very well:

The business concept was sound and well ahead of its time.  Stores abound with firms trying to perfect the personal perfume/individual fragrance business.

We had good, personal relationships with our customers.  We knew what they liked because we asked them directly, and they told us. Our product was often made–to-order.

Our business was featured in Johnson Publishing Company’s Ebony Jr. Magazine.  This exposure provided product buzz and stimulated interest in our custom perfume business.

We had a financier with a deep pocket book.  My mom never said no to any of our financial requirements related to product or production.

We launched the product close to Christmas so we had customers.

Things that went wrong:

Our execution of this project as a business enterprise had flaws.

Our idea was more Mrs. Rowland’s and my mothers – not ours. Entrepreneurs are visceral about their work, and unfortunately we were easily distracted, 10-year-old, little girls.

Our business planning process was non-existent. We had no pricing strategy, no pro forma financial statements or targets, no capital assessments, and no ability to expand production after the magazine article hit.  Further,  we had no succession plan or exit strategy for the business.  When my mother/best friend lost a short, vicious fight with cancer the business collapsed.

In my book, selling the family business is a far better exit strategy than ruining the family business because there is no plan!  Entrepreneurs often put succession planning/exit strategies on the back burner.   Heirs may not be capable or desire running the family business.

Conclusion – 

I have very fond memories about my perfumery.  The production cycle was short; but the value of the experience is still evident.   I use this experience to help clients visualize and understand key concepts including: startup capital, breakeven sales, market awareness, pricing policy, and production capability.

What a joy this article was to write more than 30 years later.

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