At 16, as soon as I realized I had a lot of spare time for extracurriculars in my first year of college, I decided and managed to borrow a wholesome amount of money from my mother for a business venture. I came up with a merchandising business where I imported goods from overseas and sold them locally through an online shop. The business had good demand, good market, good sales, and few competition. However, the venture lasted for only a month and I didn’t really get to pay my debt to my mother at the end. Ruminating what went wrong from 6 years ago, I realize the following faults:
- I didn’t maintain a concept of the “Entity Theory” back then. This must be a very common mistake among many amateur sole proprietors as well. Basically, the Entity Theory of Accounting assumes a distinction between the transactions of a business and the personal transactions of its owner. While yes, the proprietor technically owns the business, it would still be most ideal for her not to mix personal cashflow with the business’s as it is only by this way that the latter’s progress can be effectively monitored. In my case, since I was working alone on the venture, I didn’t really feel a strong urge to be strict about this. As a result, despite the business having strong sales at that time, I didn’t get to realize how much it earned at end because I often prematurely disbursed its earnings to attend my personal needs and wants. A piece of advice for first time entrepreneurs out there: don’t treat your business’s earnings as your own just yet until you’re sure it’s the perfect time to disburse it. Ideally, also keep a ledger and place the business’s earnings in a separate bank account from your personal bank account. Lastly, it helps to just keep a passbook and not get an ATM card for your business’s bank account so that you don’t get tempted to impulsively withdraw your business’s earnings.
- Even my personal cashflow was chaotic! I took and paid for music and language classes at that time and they were expensive. Reflecting from an expenditures notebook I kept occasionally, it appeared that I actually spent more than I earned. I failed to practice a concept of the business entity theory, I ended up mixing up my personal cashflow with my business’s.
- I worked alone. A wise mentor once mentioned to me that for a business to work very smoothly, there must be at least 3 people manning it. I find this very true in a sense that when one stops working for any reason, the business can still continue running if there were at least one or two other persons to catch the load left by the other. While yes, some can manage working alone, it could be very stressful and tiring. I was an extremely introverted control freak at that time that I always preferred to do everything alone. I was trying to be strategizer, saleslady, marketer, and bookkeeper at the same time, but that apparently didn’t really turn out very well. By trying to be in control of everything, I often lost control of everything. I found myself sacrificing one aspect of the business in order to focus on another. For example, whenever I had to make advertisements or posters for my products, I had to spend hours digitally drawing those. Those hours I spent on drawing and editing, I could have just spent to call for attention or attending customers. And of course, whenever I had to attend matters outside the business such as schoolwork, the entire business paused as well. The pace of the business turned out to be very slow.
- I didn’t focus enough on the business. I had way too many preoccupations at that time. One, I was attending UP where I had to study very well and maintain good grades. Two, I kept a second part time job on weekends where I worked as a piano tutor. Three, I traded stocks on the stock market. Four, I had piano lessons, voice lessons, and Chinese lessons, which I all took very seriously as well. To cut it short, it was a period of figuring out what exactly I wanted to do with my life. Eventually, the business ended up becoming a last priority.
- I had no real passion for the business. II realized I didn’t feel happy and content about the type of business I had. Though it made good money, the money itself didn’t really motivate me much. I found myself having no real passion for selling things I myself didn’t give much value for and considered as mere boondogles. I realized I wanted a more meaningful venture that can solve real problems and help others as well.
- I stopped too early. Perhaps if I just focused and continued growing it, I might have already paid back the money I owe my mother, and might even own a physical store by now. But I didn’t. Do I regret it? To some degree, of course. It was quite a shame I didn’t get to pay back such large amount of money after all! Still, I don’t regret pursuing interests other than money making as it made the person I am today. Not to mention the skills I earned from my other above mentioned interests gave me the very idea for new ventures I’m currently working on. This time, I’m hoping to create something that offers better benefit and impact to others as well.