Fifteen Lessons that I Learnt From my First Business Setback - 1 Identify Critical Success Factors

My first attempt at business was catastrophic, in fact it almost broke not just me but my whole family. It was one of the most painful, demoralising, ego crushing events in my life yet in retrospect I would not have had it any other way because it has also turned out to be the most inspiring and educating experience in my life.

In 1997 our family secured a loan from the Small and Medium Enterprise Development Corporation to establish a button mushroom cultivation business. At the age of nineteen, fresh out of high school I was tasked with carrying out the necessary research, developing the business plan and then by virtue of the fact that I was the one that had acquired all the technical knowledge head operations.. Our application was successful and my parents secured the loan by taking out a $240,000.00 mortgage on our only house. The business opportunity was solid so was the business model and the financial projections were to die yet six months down the line we had shut down operations, and three years later after holding of the inevitable for as long as possible had lost all our household property as well as our beloved house. We were devastated, I more so because this business had been my brainchild.

So what went wrong?

Over the years I have revisited these events in my mind and have been privileged enough with the good sense to learn from this most heart-breaking but educating experience of my life. The lessons that I have drawn from t it have provided the foundations and inspiration for Crowd Fund, the Enterprise capacity Building Centre and the Entrepreneurship Orientation Program which I have developed and delivered in different forms over the past six years.

1) Identify Your Businesses Critical Success Factors

2) Always take what the experts say seriously

3) The Best Business Opportunities Have High Entry Barriers as well as High Risk

4) If you are going to apply for a loan never ask for or accept less than what you need

5) Take your time and make sure that that you have considered all your start-up costs

6) If you can avoid loan finance for you start up costs

7) Treat your financial projections as if they were done by someone else

8) Unless it’s unavoidable stick to industries that you have a solid foundation in

9) If you are venturing into strange territory take someone that has been there before with you

10) Always pay your creditors what you owe them as soon as is feasibly possible

11) If you are having problems servicing your debts talk to the people you owe and ask them for help

12) Don’t be afraid or too proud to ask for help

13) Build a strong support network of people and organisations that you can depend on in times of need

14) Follow the river until it runs dry

15) There is no such thing as failure only hard lessons learnt or ignored.

Today I will talk about critical success factors and what happens if you do not pay enough attention to them.

Lesson Number 1- Identify Your Businesses Critical Success Factors

The first mistake we made was to fail to identify and acknowledge the factors that could make or break our venture or as others would say “critical success factors”.

In our case it was a steam boiler. You see button mushroom can only grow in a controlled environment and one of the things that they a finicky about are competitor organisms, these can range from worm, aphids, bacteria or other fungi and it so happens that the cultivation process encourages the growth of all of these life forms. The most effective way to get rid of all these bugs is to sterilise both the facility and the substrate in which the mushrooms grow with steam. In our preparation of our capital expenditure budget the quotations we got for a professionally manufactured steam boiler were beyond our expectations so we decided that we would buy some metal sheeting and contract someone to one for. The cost savings at that time were more than 95% and we congratulated ourselves for our innovation, but oh how wrong we were. We soon found out that our makeshift boiler could not produce enough steam to achieve the require temperatures and after six harvest we began to have disease problems that at first affected our yields and eventually wiped out whole batches. In the meantime we were falling behind on our loan repayments. I will be the first one to tell you today that the one thing that we decided to ignore as important turned out to be the most critical to the success of our project.

So how do you identify critical success factors? Easy, speak to those that have gone before you, the experts and get as much information on your proposed venture and be brutally honest with yourself. Better still get hands on experience in the field in which you want to venture into. There is no better teacher than experience.