How I rebuilt a flagging business
Posted on December 3, 2010 | Author: Archana Raion | View 224 | Comment : 1
Mentoring, or answers to questions that an entrepreneur never knew whom to ask, is widely regarded as more crucial than money in the earlystage ecosystem. In this fortnightly series named ‘Straight From the Gut’, The Economic Times will present real-time insights from leading entrepreneurs on the methods they used to overcome challenges in their entrepreneurial journey. In the first article of this series, Manish Sharma, founder of Printo, a branded retail chain that provides digital printing services, speaks to Archana Raion how accepting mistakes and correcting them helped revive a haemorrhaging company.
Founded in 2006, Printo had a dream run launching a series of eleven retail stores across Bangalore, Hyderabad, Mumbai and Pune in just over a year of operations.
Fuelled by successful rounds of venture capital, including a $4.2-million round of early-stage capital from marquee investor Sequoia Capital and SeedFund, the start-up stepped up expansion before stabilising revenue growth, a strategy that backfired badly when the recession struck in 2008.
Admitting I was wrong
We spotted the recession ahead of the curve and by September 2008, I called an all-hands meet where I told my team that the management had made mistakes, which had put the company and our jobs at risk.
It was the first step in course-correction.We were losing $100,000 a month rolling out stores faster than we were making money.
Perhaps it was investor pressure, but it was finally my fault.
At one point, we had about three months of cash flow in the bank. It was excitement overtaking sensible thinking.
Admitting the mistake was the first step, after which we took stock. We had a successful retail business — every one of our stores was profitable as a unit — so it was a tough call.
We did not have enough bandwidth to support expansion in five cities. So we had to shut down stores and trim the headcount.
That was very hard — we went from 11 stores to six and from employee count of 220 people to 165.
We shut profitable stores, sacrificing unit profit for overall company profitability.
But it was a right call.
By the end of the year, we had half the number of stores, but we had increased revenue and improved earnings.
The team saw the effort that the management was putting into working on the store, facing customers and pulling things around.
By the end of 2009, the tough decisions had paid out. We were back in expansion mode.
But this time, we focused on just two cities — Bangalore and Hyderabad — and added seven new stores and made sure that we were profitable and cash-positive.
One of the big lessons of entrepreneurship is about the time needed to season a business.
You might have a good recipe for a great pickle, but you need time for the flavours to emerge.
Entrepreneurship is a long journey and you need to avoid burnouts as you build a business.