We didn't have an accounting system in place from day one and now things are a mess

We reached $1M in sales by bootstrapping and working long hours. We didn’t have a lot of processes in place and our systems were fragmented. We couldn’t tell what was going on. We all agreed that we needed new systems. We asked around and found a lot people were using XYZ Clouding Accounting for their accounting. We thought it was a good system but we had multiple sites and wanted to open a new business in another country. We also needed integrated stock systems, etc., so we chose ZZZ Cloud Accounting.

We didn’t have any problems setting up the system. Problems started with data entry. We entered all the data we had from our existing systems. Since the data sources weren’t integrated and reconciled, we immediately ran into problems. There were large discrepancies with the stock (finished and raw materials). We couldn’t reconcile the bank statements with the balance sheets, and sales and discounts looked off.

We quickly concluded that the data we entered was flawed and there were problems  going back to when we started the company. The company that sold us the new software said we should stop what we were doing and create a ‘newco’ which would use data from today onward. We should then go back and sort out the old data even if this meant having a third party reconstruct the accounts, etc. We followed their advice. It took months to sort out the old data. When we did, we found we were losing, not making money. We had discounted 70% of our product, not the 50% we planned, and our overhead was understated  by 20% because we have not entered the invoices for electricity and local taxes. All of this meant we had to postpone any fundraising and revise our pricing.

The website I built had too many bugs and Christmas sales were a disaster

I really didn’t like the website. It didn’t have enough functionality.  It was three years old and looked outdated. I made it myself because it was too expensive to have it done professionally. The time was tight though; the Christmas sales season started, which was an added stress.

In the beginning, it was relatively easy. I was putting up new products, updating stock numbers, and making sure new orders were sent out. Friends tried out the updated site and all the functionality worked when I tested it out.

The site went live on November 10. Sales were good, but some of the products couldn’t make it through checkout. I also couldn’t update stock levels. By the end of the week, I couldn’t tell if product availability was accurate. We were out of stock, but people were still able to order on the site. I panicked and started to make adjustments manually.

As sales increased, it was chaos. We lost control of our stock, didn’t have an updated catalog, and couldn’t adjust invoices for discounts. We made hundreds of manual adjustments and planned to sort out everything after the new year though the problems were getting worse everyday.

We fell way short of our sales targets. By the middle of January, we realized we didn’t have any real idea of our inventory. We had customer returns that we couldn’t process and people were contacting us to say their Christmas gifts were never delivered.

We never should have launched so close to Christmas. We should have tested the new site more thoroughly and made sure the payment systems were robust. We learned that no matter how good our products were, we needed to have world class support systems. This mess took us six months to sort out. We lost loyal customers and we almost ran out of cash.


We got into a real mess because we didn't keep accounts from the beginning

I have a photographic memory. I keep all the details of the business in my head. I do have a notebook where I record invoices and orders and once every couple of months I do a profit and loss.

In the first quarter, our business had $18K in sales. Now we have $87K and I think we’ll reach $150K by the middle on next year. I still keep everything in my head but I have to admit some things are slipping through the cracks.

Finally, I gave in and we hired someone to do the accounts. He slaved away and after two months had things somewhat under control. He found over $12K in unpaid bills including demands for the local and federal tax offices. Together these came to over $30K; we don’t have that kind of cash on hand.

Two days later we saw the first set of accounts since we started the business. We had lost over $90K, were selling at least half our products at a loss, and had not paid state sales tax for three months.

I was astonished. I priced all my products myself and thought we were making good profit since we had cash in the bank. I was also sure I had paid the tax bills.

As we prepared for growth, we got the technology part right but overlooked training and organization

We built a platform that allows local craftsmen and artisans to sell their products globally. It took us six months and over $350K to complete the work. We knew it could handle over 40 transactions per hour and this could be doubled with some added capacity at some additional cost.

The platform was featured in India Today magazine and all of a sudden orders started pouring in. Sales soared and on a good day, we’d have 20 orders per hour, so there was excess capacity on the platform.

Last week we started to get consumer complaints. Orders were late or not fulfilled. They received the wrong product or color or it was broken when it arrived.

The biggest problem was stock outs. The craftsmen didn’t know how to update their available stock accurately. If they sold something, it stayed up on the website. New products didn’t make it on the site. Clothing sizes were off.

At a review meeting, one team member said, “We spent all our time and resources on the technology and no time on organization and training. No wonder we’re in such a mess.”

I can't deal with my startups' lack of discipline and systems

My to do list was growing everyday. When I looked at the list I got depressed. I could never get it all done. I was never going to catch up. I know that I should prioritize things but I do not really know how to do it. It seems simple but it is very hard for me.

As a team we also have problems establishing priorities. Everything and anything is a priority. Sometimes there are daily changes in what we must do. We are constantly fighting fires.

The CEO often tells us to drop everything and do x. This only makes matters worse. Things are half done and some things just get lost.

When a customers calls asking where their order is, we simply fill that order next.

We can't carry on like this. A business can’t be run this way and it is driving me crazy.