In 2020, amidst the Covid-19 pandemic, my startup had a successful exit. Grafomap, an online store that sold personalized map posters, was bought by a buyer from the printing industry whose name I cannot disclose.
This wasn't an exit you'd read about in the news. But for me, it was an unbelievable success. Just a year before this exit, my co-founder and I were sitting at a table to make a tough decision – to file the business for bankruptcy, or to give it a second chance. We went for the second option.
Now, having just launched a new business – the on-demand supplement dropshipping platform Supliful
– I decided to take a look back at my near-failure experience and the lessons it taught me.
But first, let me tell you in more detail what I went through with Grafomap.
From a promising start to taking out personal loans to save the business
Back in 2015, I received an email from my childhood friend Martins. He had a new business idea that he wanted to discuss with me – an online store where people could design and order personalized map posters.
Now, our relationship as business partners had a long history. We had previously launched (and failed) a number of businesses, the last one being a freshwater pearl online store that lasted for a few months before we had to close it down.
To be honest, I wasn't really bouncing off the walls about the idea of getting involved in building another business from scratch. But at that time, I didn't have anything to hold me back. I didn't have any better business ideas either. Long story short, I decided to give the idea a try.
Martins and I invited a developer to our founding team and launched Grafomap. And it kind of took off – people loved the idea and we were featured on a number of top-tier media outlets. At that time, that was the traction we needed to keep going.
But after a few years in business, we had experienced a hell of a rollercoaster ride – from Black Friday to Valentine’s Day when sales were spiking, to off-season when a mild depression took us over and we questioned whether this business was even worth maintaining.
At one point, Martins and I had our backs against the wall and almost empty bank accounts. That's when we had to make one of the scariest decisions in my life – to lose what's been invested thus far or to take personal loans and try to get the business off the ground for the last time. And if that failed, we'd lose even more.
We decided to take the risk and it paid back – in the end, we managed to scale Grafomap to $1.5M in revenue. Then, we sold it at the first opportunity.
My Startup Went From Nearly Bankrupt To An Exit – Here's What I Learned:
As I said, Grafomap wasn't my first business. A number of my previous entrepreneurial endeavors hadn't lasted long, so I knew very well what failure was. But none of those failures taught me as valuable lessons as my struggles and successes running Grafomap.
Here are the three key lessons learned:
1. Your co-founder can be the game-changing element
There is a lot of useful advice on how to choose a co-founder – look for someone with a complementary skillset and temper, with similar work habits and ethics. This person must be someone you trust and, ideally, someone you have a history of working with together, either as colleagues or co-founders.
Martins and I are childhood friends. We went to school together and we had worked together on a bunch of business ideas and had a proven track record of being a cohesive team. This played a crucial role when our business was facing bankruptcy.
When we made the decision to take out personal loans to save our business from bankruptcy, we both took an equal share of the risk – and an equal share of the loan. Neither Martins nor I became a tag-along co-founder.
Then, having put so much skin into the game, we were both equally interested in getting the business off the ground. For months, we analyzed our mistakes and worked with our heads down. And, thanks to that, we succeeded.
2. Don't underestimate your repeat purchase strategy
Repeat purchases are those made by existing customers. And research shows
that these customers are extremely valuable – 61% of businesses say that the majority of their revenue came from repeat buyers. Besides, these customers not only shop more regularly but also spend up to 67% more on each order than new customers.
For Grafomap, repeat purchases turned out to be a problem. Even though people loved the product, they rarely ordered more than one poster. After all, how many map posters are you going to hang on your wall? Most probably, only one.
Repeat purchases were something we hadn't thought of carefully enough when we launched Grafomap. Instead of being able to work with existing customers who already knew and loved our product, we constantly needed to be chasing new customers. Their acquisition was time-consuming and, in the long run, too expensive.
So, after selling Grafomap and beginning to brainstorm new business ideas, one of the preconditions was – this business must be able to generate repeat sales. So, from this perspective, supplements are a perfect product – there's not only potential for repeat sales, but there's also a potential for a subscription model.
3. Learn to prioritize as early as possible
At Grafomap, my main responsibility was all things marketing. I think that over five years of running Grafomap, there wasn't a single marketing tactic left that I hadn't tried – from Facebook ads and email marketing to blogging and everything in between.
I jumped at every opportunity because I was certain that the key to success was not to put all of my eggs in one basket. In the end, my eggs were all over the place, I was burnt out, and the results were still unsatisfactory.
Something needed to change. I sat down to analyze Grafomap's customer acquisition data and realized that the majority of sales were coming only from two of my marketing activities:
- Facebook ads
- Affiliate program
So, further on, I spent all my time and effort on these two things. This saved me hours of time and, in the end, helped Grafomap scale to $1.5M in revenue.
Here's what I learned from almost failing my e-commerce startup:
- Choose your co-founder wisely
- Pay extra attention to your business model
- Learn to prioritize