How I failed - My first business

This is off my old Laptop, and was a open letter to my closest friends, I wrote this at 3am a few weeks after I was declared bankrupt, I haven't edited it at all, so some of the stuff may not make any sense, but bear with..

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In the U.S they celebrate failure, you guys have groups where failed businessmen and women can meet up and share their experiences, you understand that failure is only temporary and by sharing your experiences you’re contributing to eventual success. But in the U.K it’s different, we frown upon it, we are more in the ‘Once bitten twice shy’ way of thinking so I thought I’d share this with you all.

So it’s been some weeks now I’m ready to tell my story

This is what happened

Starting out in my working career I was broke, I mean seriously broke, I’d catch a half hour train to work every morning and would take sandwiches me, if I left my sandwiches at home I’d have to go hungry until I got home, because I couldn’t afford to eat out. I remember going to a friends birthday meal with my wife and only having a starter myself because I knew if we both ate it’ll put us in an awkward position when the bill came. Lots of you people won’t appreciate this but they’ll be a few that have experienced this type of poverty.

I had a young family and was the only one working, we didn’t have or know about benefits and survived on what we made. It took us a while to get to a position where we could afford our rent and general living expenses, but once I could my career took off, we went from being borderline, to being well off, within 3 years I had managed to buy us a house, 2 cars, we went on holidays and didn’t have to look at prices on any menu, our lives were comfortable, I was in my early 20’s and was earning 6 figures a year, but there was something inside missing.

My mentor was my late uncle who I lived with for most of my life, he was successful and happy in his life, constantly building, I always loved the stories he told me about how he came to the U.S with $20 in his pocket and a piece of paper that said ‘74th street’ on it. I wanted the same thing and I thought I was ready.

It was 2am in the morning, I couldn’t sleep, my legs felt restless and my brain was ticking, I woke my wife up and spoke to her, I told her I felt unfulfilled at work and wanted to start my own business. She was supportive and asked me what I wanted to do. I always loved consumer electronics and told her something to do with electronics CES in Honk Kong was coming up and I wanted to go.

I handed my notice into work and flew to Hong Kong to attend CES, I made some makeshift business cards and spoke to manufactures there. I really decided what I was going do while giving some bullshit spiel to one of the Vendors at CES.
“Hi I’m from ‘ blah blah company ’ we’re distributors in consumer electronics and looking for new dynamic brands that are looking to get into the UK market, we have a large network of retail stores that we sell to and need something new to show them” oops, I knew nothing about distribution nor did I have any contacts in large retail stores. I went out for dinner with a lot of the vendors at CES and developed good relationships with them.

I didn’t see it as lying, because I knew I was going to go back to the UK and and start this ‘make-believe’ company, I already had a name for it and in my mind chosen where I wanted to be based.

I made the connections and came to back to the UK and it was all hands on deck, I brought back some samples and opened a Ltd company with no employees apart from myself as Director and my wife become company Secretary with 100 shares. I worked from the office in my home. I spoke to my cousin who brought me a domain name and created me a holding page. I hit the phones on my own, made 3 different email addresses, only one with my real name the other two were Kelly.foster@ and Lewis.sharp@ I did this so I looked bigger then I was (didn’t want people thinking I was a one man band)

I really don’t know how I did it but I managed to make appointments with some of the largest retailers in the country, I walked into these meeting like ‘I was the fucking man’ and sold my ass off, I quickly realized I was seriously in trouble when they started asking me about Sku’s and shipping means etc, I learnt from each meeting and after around 3 bad meetings, I became competent with what was expected of my company. I learnt about SKU’s when asked by DSG, I learnt about the 3 month invoice process when told by Tescos, I figured out what tendering was when Karen at Woolworths approached the subject with me, I was getting better but with no success.

I was 7 months in and was living off my savings the cost of going back and forth to China running my house, daughters schooling and wife’s post grad course was draining me, I sold my BMW and brought an old Volvo estate, I downgraded everything including the Wife’s car, I was nearly out of money and was seriously considering going back to work I needed a breakthrough and it came in the form of the worlds largest shopping channel QVC.

I’d approached QVC and they loved the products, I got a Purchase order from QVC via fax the next week it read 10000 x Units, I jumped for joy, this was it, this was the start of it. I contacting a factoring company freed up the money losing 6% but I didn’t care, I employed two people and brought my brother in law in as a partner. We were rocking and rolling.

We started getting in cheaper products for sme’s and even cheaper products that we could sell in the market on Sundays. The money started flowing, within a year we had most of the major retailers on board and life was good, I upgraded the cars, brought a bigger house and was planning on buying a block of flats to add to my investments, we worked off debt and factored most of the deals that came in.

Each time a major deal came in I would expand our product range, against the advice of everyone, including my accountant and kept pushing to expand the company, I employed more sales staff and moved to larger offices.
Two things happened in this time. The first being, the price of memory went up by 500% which was our core business, the next thing that happened was ‘The Recession’ we’d seen it coming and were advised to hold back on the trade that we were doing, but I was head strong and didn’t care about anyone else’s opinions, what did they know anyway? I’d built this company from scratch so I knew best. We had a monthly pipeline that could only go up as we were getting better at what we did, how on earth were we going to lose business? It wasn’t going to happen!

Then it did! Companies cut back, they called us and negotiated to lower the prices of our products again, we needed the business so we agreed and kept them on board, our profits fell by 60% month, my suppliers had put their prices up which didn’t help either. Then came the visit from HMRC, they demanded that we clear our account and they wouldn’t give us any leeway. Companies were closing up shop and not paying their VAT and now the HMRC were getting on top of it. In the end we couldn’t make the payments, they pad locked our warehouse and took hold of all our assets. I’d personally signed guarantees on the loans that we had and had to call foreclosure on everything.

It’s hard to describe the feeling of losing everything, It’s a type of mourning, you miss it like a person, it’s just weird. It’s an emotion like no other, I built this company up from scratch, it was my baby. I remember going to court to make it all official, I went alone and after I walked home, I thought about my life as I walked home, I felt like a failure, I had to tell my wife that we had to vacate the house within 60 days, that we had nothing left, we were back to square one and completely broke.

Breaking the news to my Wife was the hardest thing in the world and the effect it had on our relationship was damning, we moved in with my brother. My daughter and Wife slept in the bedroom while I slept on the sofa.

As I write this memo to you guys I’m planning, planning on what I’m going to do next, I made it big, next time I’m going to make it bigger…

Live the Dream… Lipton