Last week I had to sit in on the unfortunate board call in which the CEO told us that his UK business needed to go into liquidation. After 3 years of investment in developers, the business was still not able to generate clients that were willing to pay enough money to keep the business functioning. The money had run out, and based on UK law, it needed to go into liquidation where the business assets would be sold at a discount in order to pay off outstanding creditors. Unfortunately for me, I am their largest creditor, having provided a loan for the business a year ago.
As an investor, lender, advisor, and board member, I developed a close relationship with the CEO in which I helped him reduce his costs and refocus his brand to find paying customers over time. However, his initial strategy of raising funds to develop unproven technology had burned too much cash and had not gained enough paying customers. Most start ups follow the same business plan. Come up with an idea, raise money around projected growth, and be the first in the market. This is a recipe for failure in most cases.
When we work with startups at Sumus, we focus on spending very little money and finding a customer that will buy or share the risk of doing business. Once a customer has been acquired, it becomes much easier to raise money needed to take the business to the next level. Investors usually invest in the owner/CEO who can execute the plan. Why not validate the plan with a paying customer?
Before you begin, please contact Sumus. We can help you find your way and avoid the risks of disappointed investors, employees, and customers, avoiding the mistakes of most start-ups.