A Business Lesson That I Learnt The Hard Way
By: Glyn Bawden
Tags: Entrepreneurship, Business, Self Employment, Failure, Success

You’ll encounter problems all along the way. It’s how will you deal with them that counts.

Photo by Joshua Earle on Unsplash

About 30 years ago I had a job in recruitment and back then, recruitment wasn’t the huge lumbering behemoth that it is now. I worked for a small start-up with about 4 other consultants and we recruited people into the construction industry.

Now, I don’t know how many of you are aware but, in the early 90s, in the UK we suffered a serious rise in mortgage interest rates. They went as high as 15% in some cases and many people ended up losing their homes as a result. One of the other knock-on effects of this was that the bottom fell dramatically out of the building market and the company I was working for almost went bust.

I jumped ship and went on to work in a succession of other jobs.

But, remember that company because I’ll come back to it later.

How it began

In the mid 2000s, my wife and I, who had just moved in to a 5-bedroom detached house, with a big mortgage, to house our four children ( 2 each from our our previous marriages), had the bright idea of starting our own business.

Now let’s look at the facts here;

I’d never run a business.

Neither of us had any idea of how to do it.

We’d just moved into a new house.

We had debts galore.

I am normally the most risk averse person ever.

So, what exactly happened?

How The Business Grew

The business was in providing supply ( substitute) teachers for schools in our area. We’d seen what we thought was a gap in the market and so we thought it would be a good idea to start the business.

I was utterly convinced that it would work. It never crossed my mind that it wouldn’t. It was such a brilliantly simple idea, why hadn’t anyone else done it?

Well guess what?

It was a success. We built up a business that was a recognized and respected brand in the field of supply teacher recruitment and placement.

We had a fantastic lifestyle. We enjoyed lovely holidays. We had a nice car. We could afford to give the kids money and gifts as and when we wanted to. We ate out at nice restaurants.

But then the competition started sniffing around, seeing that there was a fast buck to be made in supply teaching. And the competition wasn’t pleasant. They used underhanded, pushy and unfair tactics to take business away from us, but things were still ok. We’d been going for 9 years, so we had a strong core of schools that were loyal to us and we prided ourselves on the personal touch. We were never going to be a faceless corporate business where money and targets meant more than anything else.

Things Fall Apart

But, after 9 and a half years our then chancellor, George Osbourne, announced two changes he was going to make to businesses that would make a crucial difference to us.

Firstly, company directors were no longer allowed to take dividends from the company on an irregular basis. The dividends had to be monthly. Now, because our business was in teaching and everyone knows that for at least 13 weeks of the year, you earn nothing because there are no teachers working, our cash flow was irregular to say the least. We didn’t have the funds to allow us to pay ourselves monthly.

Secondly, he put a stop to agency workers claiming for travel and subsistence expenses. This was a real hammer blow. It meant that all our teachers ( about 150) would have no reason to be employed through the umbrella company we used, which allowed them to claim travel and subsistence costs. It also meant that we, as we weren’t the employer, didn’t pay employer’s national insurance. That one simple announcement meant that all our staff would now be employed by us, so we would be liable for employer’s national insurance costs which would be about £4000-£5000 per month.

We had a long discussion about the future of the business and thought that, all things considered, it was better if we just closed it. Taxes were crippling, the competitors had stopped it from being enjoyable. We couldn’t see how things would improve. So, with heavy hearts and with no idea of what the future held, after 9 and a half years we closed the business.

That decision was probably the biggest regret of our lives.

The Lesson We Learnt

Do you remember at the beginning, I spoke about the construction recruitment business I worked in?

Well, the owner was faced with the same dilemma. He could give up or do something else. So, what he did was he started doing recruitment in the hospitality trade, chefs, waiters, hotel staff and he’s been running that successfully for the last 30 years.

He found a way round the problem and he made it work.

Looking back, what we should have done is looked for ways to make it work. ask around, see a solicitor, get some advice, do anything….but MAKE IT WORK.

The easiest thing anyone can do is give up. This applies not just to business owners, it applies to everything you do, writing, running, fitness, whatever it happens to be.

DON’T GIVE UP

Find a way to make it work. It may not be the same, but you can adapt. If you’ve put your heart and soul into building something, don’t walk away without a second thought. Put all your efforts into keeping it going, look for ways to make it work.