Sandra Hastings: Is your startup ready to handle success?
Sandra Hastings is the founder of Silverline Memories, a company which provides reminiscence activities for older people and those living with dementia. Before this she ran a swimming school – but she was unprepared for the level of rapid growth that hit it. Most entrepreneurs dream of runaway success without thinking about what it entails: but as Sandra explains, a business that grows too quickly can easily become an unmanageable nightmare.
"My first serious business venture began in 2007. I say first serious venture, because my first ever business was way back in 1998 when, aged 22, I bought a coffee shop in a dying seaside town. Financed to the hilt, it went spectacularly bankrupt and took me with it. With youth and resilience on my side, I recovered relatively unscathed.
Skip ahead a few years, and 2007 saw me looking for something to occupy my mind while on a year's adoption leave. Having been a qualified swimming teacher since the age of 18, I once again began teaching at a small pool close to home. After quickly recognising the demand for lessons was both insatiable and not being met by my employer, I resigned and set up my own Swim School. I began with four clients in pool space rented to me by my local gym. This seemed ideal to me - a low-effort way to earn some pin money and get me out of the house doing something I enjoyed.
Within two weeks word had got round about the lessons, and the enquiries starting flooding in. Within one month my hours had increased to 12 per week - 24 clients. I was charging £15 per half hour lesson - £5 to the pool, £5 for me and £5 to cover insurance, mobile call charges and swimming badges and certificates for the children. With no other overheads, my bank balance was looking very healthy, and after only three months I felt confident enough to employ a second teacher to help meet the demand.
We were now teaching 7 days a week and had 56 clients on the books. Having exhausted all the available pool time available to me, I sought and secured a second venue. With a seemingly unending waiting list, I was soon able to employ more teachers and seek out more venues. By the end of our second year trading, I had a turnover of £120k and employed five teachers.
This was where it began to go wrong. My overheads had naturally increased. Increased pool hire charges and staff costs took their toll, and accountancy costs appeared too as I began to struggle to manage bookings, staff diaries, invoicing, book-keeping and payroll alone. I also had to introduce a debt management process to handle late payers, and slowly it all became an unmanageable machine.
I moved out of my dining room and into office space in 2009, and six months later I moved into a bigger office to accommodate the two part-time administrators it had become essential to employ. In 2010 we were presented with the Swim School of the Year Silver Award by the Amateur Swimming Association. The press attention that followed increased both demand and turnover, and in early 2011 we reached the threshold for VAT. Unable to pass the cost onto our clients I attempted to increase turnover by moving into a new geographic area - and it bombed.
By now I was trying desperately to make more money just to balance the books, but I was haemorrhaging it instead. By the time I could reverse out of the contracts I had signed, the damage was irreparable. I closed the office and moved back to my dining room, let go of my admin support, and tried to take the business back down to pre-VAT threshold levels. It was too late, however, and the bank foreclosing on my overdraft saw me borrowing from family in order to pay my eleven staff members their final salaries.
It is true that you learn from your mistakes, and I hope that others can also learn from my experience with the Swim School. Whenever anyone asks for my advice in setting up a business, be it a Virgin Start-Up Mentee, a friend, or just someone at a bus stop, the first thing I always say to them is to make sure they are as prepared for success as for failure. I had no plan to deal with the growth of the Swim School - and therefore had no means for controlling it.
Starting any business is a step that requires nerves of steel, but our anxieties are usually focussed upon the potential for failure - not success. In fact we hear the phrase "runaway success" and dream of experiencing it, without thinking of the consequence. My advice is that if something is running away from you, it needs bringing back to heel. By the end I did not control the business; it controlled me.
After the closure of the Swim School I swore I would never work for myself again, but like most entrepreneurs there is a fire that burns inside me that, despite my best efforts and protestations, I’m unable to ignore. Within two years I had registered a new venture. Incorporated in January 2014, I launched Silverline Memories in May with the help of a Big Lottery Awards for All Fund grant. I am now involved in a number of very exciting and worthwhile projects; but for every project I have in the pipeline, I have two on the shelf. In business we are told that when opportunity knocks we should grab it with both hands, but sometimes real test of an entrepreneur is knowing when to say no, and only taking on a project we know we are fully able to see through to its very fullest potential."