Two months ago, I made one of the hardest decisions in my life. I decided to close my startup business, Skimp.
The model was simple, yet unique.
Skimp gave customers access to trade prices for home electrical and white goods. Trade price is a tad above wholesale price.
Customers entered their desired product details on the Skimp website. A trade price was then obtained from several commercial divisions of several bricks and mortar retailers. The customer was presented with the lowest price and if they chose to order, they were put in touch with the retailer to complete the transaction and arrange delivery.
Skimp was the conduit between the customer and commercial divisions of the retailers. Normally, trade prices are only available to businesses, large insurance companies and others bulk buying organisations. These were not prices that many people would have been able to negotiate in store. Prices you’ve never seen, was the first tagline.
Skimp received a commission from the sale. It was a simple model that worked to get customers the best price for the exact product they wanted.
It was not a group buying site. Customers did not have to band together to all buy the same item. Customers got the exact product they wanted, but at a far better price than retail.
It should have worked. But it didn’t.
So what happened?
2012 was always going to be a testing time for Skimp. It was a make or break year. The business really needed to do more than “almost” cover its base costs. It needed to start proving its worth and capitalising on its potential.
I had allocated the first half of the year to focus on customer engagement and sales growth.
Skimp started the year with a solid base to work from. There were new partners and strong suppliers. Plus, it had delivered our best sales results ever.
But then, we heard that our high sales had triggered unwanted attention from the retail divisions of our suppliers and partners.
This proved to be a problem when two of our biggest suppliers advised that our business model had to change in order to keep trading with them. They wanted Skimp to start selling online directly to the customer, so that the commercial division didn’t trade with customers directly.
Then another supplier cancelled our arrangement due to a human error on their side.
To make it worse, a new supplier we were expecting to bring online quickly, was delayed.
How quickly the playing field changed. It was time for a big rethink.
The big decision
Skimp simply couldn’t operate without national suppliers. However, a change to our business model at this stage would mean significant technical redevelopment of the website and extra customer service support would be required. Plus we weren’t convinced that this new model would prove to be sustainable.
We would need to introduce a payment gateway and stock management to our website, effectively becoming an online retailer rather than simply a conduit. The development work would take several months to implement during which time the business may not be able to operate effectively if the retailers wouldn’t supply us.
This would have had a dramatic effect on our short term revenue, not to mention the growth plans that needed to be implemented.
The development work would also cost a big chunk of money, at a time when the business needed to focus on increasing revenue. And, there were no guarantees that the suppliers might not change their minds again, further down the track.
For weeks I went back and forth over my options. I considered changing the business. I met with competitors to see if there were any opportunities or synergies. I tried to connect with more suppliers and I asked lots of people for advice.
I considered trying to continue without any changes. I thought about closing it down.
I didn’t want to make a rash decision that I would regret. So, I stopped doing any non-essential work. I delayed new partner contracts and spent the time agonizing over what decision to make.
Evaluating my options was the most challenging time of all. It made me realize the emotional attachment I had to this business.
Skimp wasn’t just how I spent my working hours, it was also a passion. It represented a dream for a future and a lifestyle that I was working towards. It occupied every spare minute of my days and provided me with the thrilling ride of being an entrepreneur.
Of course, it goes without saying that it also sucked me dry of any spare cash and caused me plenty lot of stress.
The questions raged around my head.
What would I do without Skimp? How would I achieve those lifestyle dreams? Could I let down my partners and customers? Would anyone even notice if Skimp was gone? And what about all that money that I have spent on Skimp that would never be seen again?
But, over the weeks I spent thinking through my options, the idea of closing it down slowly became less distressing.
Like ending a relationship, I went through a whole series of emotions: disbelief, blame, sadness and anger. I realized I’d reached the point of acceptance when the idea of closing it down didn’t make me feel sick.
I even started thinking about having spare time again, being able to spend more time with my children. Maybe I’d be a better Mum/Wife/Friend/Person, without the stress of the business.
Once I got to that moment of clarity, I knew the answer. All of a sudden it seemed logical.
• Spending more money, on a cash-poor business that had yet to prove itself, was too high risk.
• Making changes that that could compromise the business and didn’t guarantee any better outcome was stupid.
• Rushing into a new business model didn’t feel right.
• Being a vulnerable online startup in an industry skeptical of the value of online sales, left me in a position where a supplier could crush my business with a single decision.
I didn’t have the funds to reinvent myself. And, I didn’t have the energy to continue without a strong light at the end of the tunnel.
I didn’t want to spend any more time on a business with a low chance of success at the cost of spending time with my young children. I really didn’t want to be a failure either, but maybe this was meant to be character building?
It took me three years to get Skimp to where it was.
It took three days to close it down.
I called staff, partners, suppliers and providers. I took products off the site and arranged to take the whole site down three weeks later.
And admittedly, I felt slightly better when I saw that Wow Sight & Sound close down the same week as Skimp.
I had spoken to Wow about working together. So, had I continued, they would have been another supplier out of the running.
Skimp has disappeared now, almost like it never was. Apart from a few stray accounts I need to finish up, my work on Skimp is complete.
I’m happy to say I have no regrets in closing the business down. It was the right thing to do.
I have taken away many lessons from the business but at the same time I’m scarred from the experience.
One day I’ll get up and try something again.
In the meantime, I’m happy running my other business, looking after my children and wondering how I ever had time to run Skimp in the first place.
It’s funny how time can give you perspective.
Louisa Dahl is the Cofounder and Director of digital marketing networking events company, Interactive Minds. She was the CEO of Skimp.