Earlier this week, I was enjoying a pleasant and relaxing evening with my wife and I decided to page through my notebook where I periodically write down some of my thoughts.
To give you context: 2022 was my hardest year as an entrepreneur.
I quit my engineering job in 2020 to pursue my dream of running my own business(es) and taking control of my life and living with/in freedom:
- Freedom to choose when I work
- Freedom to choose how much I work
- Freedom to take the afternoon off without having to ask permission
- Freedom to follow my passions
This sounds great, but as I have written, it's not all sunshine and roses. There are some things that no one tells you about entrepreneurship.
Please note, that I am going to be brutally honest while writing this post. About success and about failures. This is not an attempt to boast or an attempt to get attention. All I want to achieve is to be transparent about the challenges of entrepreneurship.
There will be great times and there will be hard times
I started an online wine business The Daily Wine in 2020 and due to Covid-19 and alcohol bans in South Africa in 2020 and early 2021, this was the ideal time to sell alcohol online. The timing was perfect and it was "easy" to get the business up and running and it did very well.
It's easy to start thinking then that it will always be this way, and that there won't be hard times.
I made some notes in my notebook about being a bit wary and that I should maybe consider adding some alternative sources of income. In general, this is always a good idea. When it's going well with one business, it business can compensate for another business that is in a slump.
And then 2022 hit.
- South Africa was tripped by almost constant load-shedding
- The Ukrainian War started which led to fuel prices increasing
- High fuel prices, cause high inflation
- The Reserve Bank increases interest rates to try and curb inflation
- Which puts consumers under pressure
And one of the first things a consumer cuts from their budget is luxury goods such as wine.
As a result, the online sales for The Daily Wine were down 60% in 2022 vs. 2021. This is not an insignificant number. One of my biggest competitors CyberCellar, could not manage to survive and they were forced to close their doors earlier this year.
You have one of two choices
- Either you decide this is not what I signed up for and quit; or
- You stick to your guns and you make a plan
When I was reading through my notebook, I came across the phrase "stick to your guns" multiple times. I think this is what made the difference. If you have enough passion, determination and grit. You can do anything.
How did I manage to survive?
This is the part where I tell you about the not-so-romantic part of entrepreneurship. The part that no one writes about.
- I cut back what I pay myself to the absolute minimum. I was paying myself about half the salary I was getting, as an engineer. Luckily I could do this because my wife has a good job and she could take up the slack for a while. (Note to self: Write a blog post about the importance of choosing the right life partner😉)
- Cut business spending on non-essential items (i.e. I stopped going to the office each day, to save on fuel for example)
- I had to take a loan of about R150 000 from a few different sources to keep the business and myself afloat.
- I basically stopped buying myself any luxury items (clothes, gadgets etc.)
- And probably the most important point of them all, I surrounded myself with friends and family I trust. It's in times like these when you realise that you cannot do life/business etc. alone. You need other people. You need support. And you need to ask for help.
While all of the above was going on, I could have felt sorry for myself and wallowed in my sorrows. Don't get me wrong, there were times when everything felt overwhelming and I probably drank a little bit too much whisky.
During this time I also:
- Started a new sub-division of The Daily Wine called Daily Bulk Wine, which is a bulk wine trading platform, where I connect bulk wine buyers and sellers and take a commission on the transactions. The commissions I made from this division were critical in keeping The Daily Wine afloat.
- I became co-owner of Kiki & Co, by trading my time and technical experience. I did not have any money to invest
- I built websites for other people for extra income, including this blog and this one for SmartMatter.
- I started running Koelenhof Wine Cellar's online wine sales & marketing and rebuilt their online store, which has taken a lot of pressure off me financially because I know there is fixed income coming.
If it wasn't for the above and the people who made it possible, 2022 could have been devastating. It's easy to write about this now because I believe I am through it, but I wish someone else finds this post and can get some hope from it.
2023 so far
We are 9 months into 2023 and the year is going very well:
- Online wine sales for The Daily Wine are up 102% year to date and I am able to pay myself a better salary again.
- Daily Bulk Wine is doing well.
- In November we will be travelling to the World Bulk Wine Exhibition in Amsterdam to broaden the client base.
- I am currently working on the biggest deal I have ever made. To put it into perspective, this one deal will pay the same amount of commission as the salary I was earning as an engineer per year. (Update: I have since closed this deal🚀)
- Kiki & Co is doing well, we have built up a lot of stock and I believe we are ready to start seeing some returns in the next year.
- I am learning a lot of new skills for building websites and apps and I am currently working on GoKiddo which will be another income stream.
- Koelenhof Wine Cellar's online sales have done extremely well this year (around 10X what they were previously)
- I am almost done paying back all the loans I had to make in 2022 and my goal is to end 2023 debt-free (except for my home loan)
Things are going well now, but I am sure there could be some hard times ahead. I have learnt the following lessons and I know they will allow me to weather any storms that may come:
- There will be highs and lows, and it's okay. Embrace it.
- Stick to your guns
- A wife/husband/partner who supports you is crucial - thank them often!
- Cut expenses, when things are going well, they go unnoticed, but when things are tight, this can be crucial.
- Surround yourself with people you love, ask for help and help them when they need you. We cannot do this alone.
- Diversify your income. I am currently on a mission to have 7 different income streams. (I am currently at 4)
If you are an entrepreneur building a business, I would like to leave you with this quote for some inspiration:
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