After recognising a gap in the market for coffee machine distribution and servicing in Australian offices, Mark and Carmelina Pascoe didn’t hesitate to put their previous entrepreneurial experience to use and start up My Coffee Shop.
The business was founded in 2003 and is now a thriving company with revenue of more than $1.5 million. However, this success masks a ‘near death’ experience suffered by the company in its formative years.
After making what Carmelina calls “some very poor business decisions”, the company ran into trouble. The issue? It had been too geared towards its product rather than its market and lacked detailed planning.
Rather than throw in the towel, the Pascoes decided to call upon their family to help them ride out the tough period.
“We were preparing to sell our family home to pay off business debt and trying to work out a way to explain things to the kids,” Carmelina explains.
“We had one month to turn things around or lose the business and our family home, remove the children from their school and start from scratch.”
“The hardest part was finding the strength to keep going every day when we didn’t seem to be gaining any ground. We needed to make a decision – either dig in or get out.”
Get SmartCompany FREE to your inbox every weekday.
“We explained to the children and our extended family the situation and asked for their support over the next 18 months while we devoted our time and efforts to turning the business around.”
Although the Pascoes’ children didn’t like the fact that their parents wouldn’t be around as often, the family agreed to spend more time together once the business was turned around. Grandparents were drafted in for babysitting duties, the Pascoes lived rent free in the family home and an accountant was deployed to help the recovery.
The company recovered, but the problems were then to return in the opposite extreme. Carmelina says the business grew by 100% which “nearly killed us.” Profits were healthy but cashflow was a problem, leading to several key changes in order to stay afloat.
“We learnt about cashflow, getting money in the door and putting in place shorter credit terms,” she says. “We also made companies fill in account application forms agreeing to terms which helped get money in the door on time. We send statements and also reminder letters mid-month. We also accept credit card payments, which makes it easier for our clients to pay.”
So what are Carmelina’s tips for other budding entrepreneurs?
- Get advice! If you are going to take advice, get it from someone who knows what they are talking about, not from someone who thinks they know!
- It’s never too late to get help.
- Plan, plan, plan.
- Allow for growth, even if you don’t think it will happen, factor it in.
- Don’t confuse profit with cashflow.
- Accept that you can’t do everything yourself.