Computer Co That Cost
I wanted to turn my hobby of computers and computer related things into a business. I reckoned there was a business to be had in supporting local companies who needed hands on support in both hardware and software. I registered a name 1012, ten to the twelfth, which I thought was pretty cool and then I looked around for some people to join my dream.
As luck would have it I had just begun using a small local company to supply our main business with hardware at low prices. For the sake of argument I'll call it FredJoe Ltd. This will stop them suing if they read this. It was run by 2 guys predictably called Fred and Joe. Fred did the hardware and Joe the software. I was talking to Fred about my company (which was only a name) and like a shot he wanted to ditch Joe and join my company supplying hardware.
So I was in business. I had a financial adviser who wanted a system. So we sold him what he wanted . He wanted a computer desk and chair as well. Fred bought one for next to nothing and sold it to him for a fortune. Predictably the result of this was that when my adviser wanted to replace all of the machines in his office - he found someone else.
Next up I got an enquiry for a lot of machines for the local college. I won the bidding and then Fred set about building the machines. The problem was that the supplier of the components for the machines had a 5% component failure rate. This meant we were for ever queuing to replace components and we delivered late with the result the customer didn't come back.
We won other contracts and but the customers only bought once and soon it was obvious even to Fred that we weren't going anywhere and he quit.
Now Joe stepped up and said he fancied a go. In fact he was so keen that he would work on a pure commission basis. That way I couldn't lose. If he didn't deliver he didn't get paid. However at the end of month one he hadn't sold anything and so he wasn't going to get any money, which meant he wouldn't get to eat. He didn't like this idea and I had to agree to advance him a loan against the future earnings.
He sold some stuff in month two but I had to advance more and by month three the pattern was well defined. We found customers Joe followed our, by now, his usual technique of ripping them off and they left again.
Christmas was coming and Joe was convinced that we could shift some machines by running an advert in the paper and selling machines at rock bottom prices. I didn't want the public coming near our main business so we rented some space in a local shop, ran some adverts and waited for the punters to buy. Someone had to front the operation but that was OK because Joe had a friend Bill who would work for nothing, purely on commission.
I wasn't falling for that one again since I was still loaning Joe more and more money. So I made it clear that Bill didn't get a penny, centime or cent unless he actually sold something. So this was agreed on. The phones started ringing but we continued not to sell anything. Now the reason we couldn't sell anything was that Bill didn't have a car (no I don't understand the logic, either).
So I got Bill a car. It was promptly, stolen. Then it was found so that was OK. Then it was stolen for good. Bill continued to sell nothing and Christmas happened as scheduled. Bill left having sold nothing. We were minus a car.
Then Joe hit it big he found a source of cheap second hand lap tops and we bought them. We actually sold them for a profit. We made about £1200.00. A start at least. Then Joe had the bright idea to buy some memory chips. The price had remained stable for a long time and we could have a bargain. I paid £100,000 for a box of chips about the size of a mobile computer. They were delivered and I took them immediately down to the local bank and put them in a safe deposit box. I was petrified of the damn things.
Walking through Walsall with a box worth £100,000 is not sensible or sane, but it made more sense than leaving them in my office or under my bed. I got them to the bank safely and then we tried to sell them. The price crashed and we couldn't sell them at all. After 2 months I told Joe to sell them at whatever he could get. He sold them back to the guys he bought them off for £30,000. A straight loss of £70,000. They must have seen us coming.
However by the end of the month the chips were worth less than £10,000. I was out of the 2nd hand computer business.
It was pretty apparent that whilst we could find clients we would annoy them as quickly as we found them and they would go somewhere else. Joe's overdraft with me was becoming embarrassing and he had no way of paying it back. I had other fish to fry and Joe's presence was becoming counterproductive. So by mutual consent we gave up. The losses, apart from the disastrous deal on memory chips, were pretty much below the radar. It was, all in all, a lesson on how difficult it is to set up a new business.
This lesson was one I failed to comprehend fully as in the 2010's I set about starting yet more new ventures.