Many businesses in England and Wales are struggling this year, and more are closing down compared to a long time ago, back in 2009 when there was a big financial problem. It’s important to ask if people who start businesses are ready to handle the difficulties that come with it if their business doesn’t succeed.
People used to feel really embarrassed if their business didn’t work out. But nowadays, it’s becoming more normal for entrepreneurs to openly discuss their failures.
It’s actually quite common for businesses to not succeed, especially in the first five years. And that’s even more true now, given the tough economic situation we’re in.
Firms going bust on track for worst year since 2009
There’s a couple named Gareth and Nicola Dean from Oxfordshire who decided to start a business selling eco-friendly products. Gareth had a lot of experience in public relations for cars, and Nicola was a qualified accountant who taught it independently. They had this idea for a special business, inspired by a trip to Mauritius where they saw a lot of plastic pollution in the ocean while they were diving.
They started making and selling products that were good for the environment. Gareth even left his job on his own to focus on the business full-time. Unfortunately, their business, Non Plastic Beach, didn’t work out and had to close this summer. But they’re okay with talking about it because they hope others can learn from their experience.
At first, Gareth and Nicola sold most of their products through their own website, about 60%. The rest, about 40%, they sold to stores they met at trade shows. They even sent their products to stores in faraway places like Portugal and the Falkland Islands.
One of their early achievements was supplying Etihad Airways with a batch of toothpaste tablets for a special flight that didn’t use plastic.
‘Huge challenge’
Gareth says they realized their business might fail when they saw the mini-budget announcement in September 2022. This was a moment when they understood they were facing serious financial problems.
Demand for their products suddenly dropped because even people who were considered well-off started being more careful with their spending. Nicola explains that customers were having to choose between buying an eco-friendly product, which might be a bit more expensive, or a cheaper alternative.
From the beginning, the overall economic situation was really tough for their business, according to Gareth. There were big unexpected events happening one after another, making it very hard for a new business to succeed. For example, in late 2019, a quarter of their business was with the EU, but after Brexit, it almost disappeared.
Then came the war in Ukraine and high energy prices, which made people spend even less. In January of this year, Gareth went back to being a full-time employee, working in public relations for a company focused on electric mobility. Nicola did freelance accounting work to try to keep the business going. Unfortunately, despite their efforts, they had to close the business in June.
Lessons learned
Even though Gareth had experience in marketing, he believes that a big mistake they made was in how they promoted and advertised their business. This means they didn’t do a good job in getting the word out about their products and services.
Gareth admits he made a big mistake in how he advertised the business. He relied too much on Facebook for marketing, and when that stopped working well, he didn’t react fast enough.
This happened because Apple made changes to how their iPhones handle privacy in 2021. As a result, Facebook couldn’t track what websites people were visiting as effectively. This meant that the ads they were showing to customers were less personalized, which wasted money and led to fewer people buying directly from their website.
Looking back, Gareth realizes he should have noticed this problem earlier and stopped spending money on ineffective advertising. He also wishes he had attended more trade fairs sooner. This way, he could have negotiated better deals with the stores that sold their products, which might have helped the business grow.
Running a small business becomes a big part of who you are, says Gareth. So when it fails, it’s really hard to deal with. He and his wife were comforted by the supportive messages they received on social media, which meant a lot to them. Many people were surprised to hear that their business had closed because they usually share positive things on social media.
One of the great things about being a husband-and-wife team, Gareth explains, is that they went through it together and supported each other emotionally.
Nicola says she thinks they might start another business in the future, but they need to recover from this one first. She believes there’s something really special about running your own business, even though it can be really challenging.