The measure of insolvency in businesses across England and Wales is projected to reach all-time highs this year, a peak not seen since the economic recession of 2009, inviting the question: are entrepreneurial spirits ready to grapple with the potential aftermath of failure?
In recent times, the fear and disgrace that often walked hand in hand with business failure appear to be fading away. Today, entrepreneurs are far more resilient, engaging in open discussions about their failures.
The reality is that the world of business is laced with failure, it’s an integral part of the journey. Statistically, over half of start-ups meet their end within the first five years and this doesn’t even account for the adversities brought on by the current economic landscape.
Take Gareth and Nicola Dean, for instance, a husband and wife duo who launched Non Plastic Beach, a green retailer. Now, after their business collapsed this summer, they are willing to share their experience to provide wisdom for others.
Both Gareth and Nicola, 42-year-olds from Oxfordshire, established their business back in 2018. Gareth’s background was in PR for the automotive industry, having invested two decades of his life into it, while Nicola was an accomplished chartered accountant offering freelance services. Despite their distinctly different professional realms, they held a mutual dream and believed that their skills would be harmoniously interwoven.
Holidaying in Mauritius, familiarizing themselves with the marine life, they were dismayed by the sight of plastic bags littering the reefs. This experience catalyzed their decision to produce and source goods that were both manufactured and packaged in an ecologically responsible manner. Gareth would even volunteer for redundancy to devote himself full-time to their new venture.
At the outset, they managed to sell a significant 60% of their products directly through their website, while the remaining 40% found their way to customers through retailers across various trade shows. This eco-friendly venture sent their products to clients based in Portugal and even the Falkland Islands. Their early milestones include a collaboration with Etihad Airways, supplying the airliner with toothpaste tablets for their inaugural plastic-free flight.
However, the tide began to change with the mini-budget of September 2022. An unexpected fall in demand from both website and retailers struck at the same time that people, even those of considerable means, refrained from unnecessary expenses.
Nicola reflects that customers were caught in a bind between shelling out a few more bucks for eco-friendly alternatives versus purchasing the most affordable options.
The economy had been turbulent, unfavourable from the outset, Gareth admits. Such shocks, consecutive year by year, hamper the progression of any fledgling venture.
A notable blow was Brexit. The exit event brought their EU clientele of 25% down to a mere 0.5%, a number which failed to bounce back. The upheaval in Ukraine and the consequent soaring energy prices also played a significant role in curbing consumer spending.
In an attempt to salvage their brainchild, Gareth decided to resume full-time employment, pursuing PR for an e-mobility company. Meanwhile, Nicola flexed her accountancy skills, freelancing once more. Despite their best efforts, they had to cease trading in June.
In retrospect, Gareth realizes their heavy reliance on Facebook marketing was a mistake. When Apple’s introduction of new privacy settings limited Facebook’s tracking ability, it adversely affected their targeted advertising, escalating costs and lowering sales. Gareth laments not identifying this pattern earlier – swift reactions are crucial when managing small operations on stringent budgets.
Participating in more trade shows earlier could have improved margins, allowing for growth, Gareth adds. When owning a small business, it becomes an inseparable part of your personal identity, making a business failure all the more arduous to face.
Nevertheless, the couple found solace in the supportive messages they received on social media upon announcing the business resolution. Nicola affirms that despite the setback, she wouldn’t refrain from embarking on another entrepreneurial journey, as owning a business had a unique charm of its own. After a period of recovery, it is almost inevitable for her to venture into it again. But for now, they are reassessing and preparing for their next step.
