My Favourite Failure: Debt collectors at the door after over-extending too fast - Alex Chisnall

0:00This might sound like the plot of a spy novel, but UK startups are increasingly at risk of state actors trying to steal their assets. Take one Scottish renewable manufacturer that was harnessing wave power. They were visited by a 60 strong delegation led by a senior Chinese official. A couple of months after that, some of their laptops were stolen. Guess what happened next? Yep, pictures emerged showing a Chinese firm making a product that was virtually identical. This is why we're working with a National Protective Security Authority and the National Cyber Security Centre, the UK's security experts.

0:36They got in touch with us because they seized such a growing threat facing UK startups. How are they responding? With the launch of a new campaign, Secure Innovation. It's not just your cybersecurity that matters, but your physical security too. If you want to get a better handle on your security, check out npsa.gov.uk forward slash innovation and download their free quick Start Guide. There's a link in the show notes. It was tough, really tough. I had to tell somebody that they were going to lose their job. You know, I was doing the numbers and first time in my life I had to do that. And it was this big Australian dude and he burst into tears and it's totally not the reaction, you know, I was expecting, but I had to deal with it.

1:25I came to conclusion, that we'd signed this deal. And in hindsight, big mistake. Alex Chisnell today is the founder of Podpreneur, a podcast agency and the host of the Screw It, Just Do It podcast, which I just appeared on if you want to check it out. He's built a great business and loves what he does. But his first foray into entrepreneurship was a bit of a disaster. After a debt collector knocked on his door, blocked his car and refused to leave, it resulted in him having to come clean to his wife about the extent of his business's problems. It was the worst place Alex has ever been. He explains how it got to that point, his regrets, and the business lessons he took from it, so you don't make the same mistakes.

2:15In 2009, Alex left Virgin after 17 years. He had a year's worth of pay and wanted to start his own thing having been inspired by Richard Branson who put in quite a lot of face time back then. Anyway, Alex started off as a personal trainer but then saw a gap in the market. Relatively early on I would say, definitely within the first year and that was a realisation to me of a lot of the clients I was working with were getting repetitive strain injuries from training for things like marathons, triathlons, etc. And also from work, from literally being sat at a desk all day. I went and retrained and I definitely didn't want to be one of those people of which there are a lot, especially in that industry, because the industry is kind of built around that, that every single month they're doing a different course.

3:07They're just paying money to do courses or lifetime learners. So I did that and I managed to get a fantastic location, which was the second busiest leisure centre in the whole of the UK. And it also backed onto the biggest employer in Bournemouth, which was JP Morgan. And so there was like 6 ,000 people primed for repetitive strain injuries and being sat at a desk all day. So, yeah, I segued into that and that became the main thing. The practice was flying and then it suddenly dawned on Alex that he could build something much bigger. I thought I could scale it to a chain of sports injury clinics because I then became aware of an organization, which funnily enough, I guess life comes full circle, doesn't it?

3:55Which last night I was on a call to them about launching a podcast for them with my podcast agency. And I came across them maybe a decade ago and they were a coaching organization for fitness professionals. and that was the first time that I had been made aware that I could just go from a one-man band to actually taking that step back and being the business owner, employing other people and scaling the business. So that's what I did but I thought I could scale it to a chain of sports injury clinics in leisure centres. So the leisure centre that I was with had a bunch of other leisure centres So we managed to negotiate to have treatment rooms in another three of those, I think two or three of those.

4:45And I was employing a team of therapists. I then employed receptionists, the PA, etc. And I could definitely see where this could go. And I had high hopes. and then I was approached by a couple of people who were launching a brand new facility in Sandbanks, one of the most well-known places for the cost of property in the UK. And it was a multi-purpose facility with a yacht club, with a cafe, a restaurant, a gym, lots of other therapists there from chiropractors to beauty therapists. And I just thought, right, this is fantastic. We've got, again, an amazing location, people who have got the money to spend on something like this.

5:35And I've got the team to do it. I just need to employ more people to cover when we launch. Sandbanks looks like the dream site on paper, but Alex should have listened to his gut from the start. From the first day that I moved into the new facility at Sandbanks and when I got introduced to the owner there. and I tentatively put my hand up, kind of moved towards him, looked at him and he just looked at me, carried on walking and walked straight out the room and I just thought, wow, okay, this isn't a good sign, this isn't good vibes. But following on soon from that, it was when they launched the club and for me, I've been sold this dream, this multi-purpose facility, working with all these other therapists in a great environment with a gym.

6:25And there was nobody there. And it was me and the other therapists all just like looking at each other going, okay, now what are we going to do? And all of the other therapists there, one man bands. And I've been there. I know that that was tough. But what was tougher for me was knowing that I'd employed, I think two, maybe even three new therapists, a receptionist, because I'm thinking we're going to this swanky high-end club full of boat owning, you know, multimillionaires. And there just wasn't anybody there. So it was a lot of time just spent in the cafe drinking coffee. And then I literally just took matters into my own hands.

7:04I literally sat on the pavement with a desk handing out flyers, kind of going, you know, old school marketing, but it just wasn't in a location near to footfall. It was literally one of those locations that's just around the corner from and 100 yards down the road from the main line of shops and the main car park. So very soon, I knew a couple of guys who were doing something like Groupon locally, where they would drive a load of traffic to you. People would buy your services for maybe 20%, 25 % of the full value. And you knew you had an opportunity to sell to them then. You had them in a room.

7:39They'd be getting an amazing treatment from you. You'd hopefully be relieving some pain that they felt. you become a therapist in more ways than one, not just a physical therapist, but people share all sorts of things with you in that environment. So I had high hopes, but very soon when we sat down and we went through our monthly figures, one of the therapists hadn't even sold one booking, hadn't even upsold one extra booking. The problem was that most people in Sandbanks don't live there 12 months a year. They're rich, so they have pads all over the world, meaning the people who were buying the Groupon-like deal were buying it as a one-off treat.

8:22There was no repeat business, and another mistake Alex had made was not paying rent that scaled over time as the site became more popular. Instead, he'd been paying full rent from day one. Alex had to let the Australian chap go and wondered how the hell he was going to get through this. So very soon, you know, I came to the conclusion that I simply wasn't hitting anywhere near the revenue numbers. After that initial wave of people came in and generated a spike in income for the fourth center, I'm pretty sure it was the fourth or the fifth, things just flatlined again. I had to get rid of that first therapist.

9:02I'm left with two therapists and a receptionist on a government training scheme where I'm still paying some amount of money. And I'm having to start moving money around. And so my bills are getting later. I'm paying the rent later. I'm paying the therapists later. That was the most horrible bit was then my own personal bills started sliding, you know, getting later on the mortgage payments, getting later on the electricity, later on the gas, later on the telephone, later on the council tax, you know, those brown envelopes started coming coming through the door, having to have awkward conversations with the managers of the different leisure centers because they want to know why their bills aren't being paid on time.

9:50And things just started falling around my ears, basically, to the stage that I get a phone call from my 17 or 18-year-old receptionist saying one day they've locked the treatment room, they've changed the locks we can't get in there and i'm literally like panicking going but we've got customers you know we still had customers coming in it might have only been a couple but we have people coming in that day and it's literally you know i hope i never have to go to i hope no one ever listening to this program has to go through anything like that again they managed to reopen the treatment rooms but it was a plaster on a gushing wound The facility owners didn't want Alex near the site, so he was banished to a nearby hotel.

10:39He was trying to keep on a brave face, but he was in turmoil. It was like excruciating. I would literally be struggling to sleep that night. My heart was palpitating. It was all of those. It was manifesting itself in physical ways as well as mental ways like that. and I think well I don't think I know that the lowest point was was getting a knock on the door and it was you know a debt collector and it was from the council tax and I guess the council tax had kind of farmed that out to an agency in this you know the typical you know seven foot seven foot tall um you know brick outhouse appears at the front door and kind of squeezes his size 12s inside the front door and goes, I parked my car at the front of your driveway in front of your car.

11:31I'm not leaving until you pay this bill. And it was literally my wife in the front room going, what's that? What's happening, Alex? Gives me shivers just talking about it and literally telling him, okay, I'll sort it out. I'll work it out. Give me some time. And he's got, you've got an hour okay and sitting down with my wife having the conversation and her being incredibly understanding and just going straight into action mode and going okay how much money have you got on on your credit cards um and between the two of us literally managing to uh to flip things around it begs the question how honest had alex been with his wife that's a really good question it's good to ask the tough questions as well I think in hindsight and we're you know we're going back um a good yeah we're going back a decade now I guess um or shy of a decade I would say definitely not 100 % I was I was definitely you know burying envelopes in in drawers and in carrier bags and got to that stage where I wasn't even opening them you know and just burying my head in the sand because it was 100 % overwhelmed it you know literally felt like you know those analogies of you literally felt like a tsunami of a wave or a skyscraper was coming top it literally felt like that like that kind of pressure bearing down on you but you know at the time to to dig us out of that hole you know we you know and they're flexible of course they're flexible so they're like yeah we'll take 300 pound off that card we'll take 200 pound off that card we'll take another 250 off that card and we're literally just flipping cards around like uh like a game of roulette or something like that so i definitely definitely haven't been completely honest with her you know she's running her own business as well we've got two young children at the time really young children at the time i think probably like two or three and you know five or six years old um so definitely could have done without that kind of pressure at the time.

13:44So yeah, I think the learnings there are definitely the sooner, the more honest you can be. And if you can share that with someone, and I know not everyone's able to do that. I've always been a solo founder again, and it's a tough place to be when you've got no one else to lean on. But that's where, you know, being like within an organization like NPE that was talking about before having just like a mentor, a coach, someone to speak to, someone to bounce stuff off. I think if we all looked hard enough, most of us would probably find someone that we could speak to like that. And if you haven't got, you know, wife, partner, husband, etc., there'll be someone there that you can share, you know, someone who's a good listener, someone not necessarily who's been through that, always good to find someone who's probably been through that, but someone who could just listen really and be a sounding board because you just just going to bed with it all yourself.

14:44And the moment you kind of share that, you can then put a plan together, you get somebody else's eyes on it, problem shared, you know, all those kinds of analogies. And yeah, I think that was the first moment for me on trying to get things back. And also knowing when to quit is a tough one. And I think lots of us have definitely been in that position, myself included, of not knowing when to quit. I should have quit far sooner. And there's no shame in that. It's recognising it and moving on to something else. Whilst the first site had been profitable, the next two were more like part-time operations.

15:21And the Sandbanks location was a money sinkhole. It all came crashing down around Alex. He couldn't keep hold of any of the sites. At the time, he thought it was the worst thing that had ever happened to him. And look, it is tough to escape that feeling. I know what that's like. But Alex says you have to remember, it is just a business, and you will learn from it. Alex, for instance, learned the importance of growing sustainably. So, don't dig yourself a bigger hole, he says, and don't make it your legacy.

16:01That was Alex Chisnall, who screwed it after doing it, but is now doing it the right way. thanks for listening to this episode I've been your host Dan Murray Serta if you like this episode please subscribe or follow us and leave a review we love to hear what you think and we really appreciate it thank you and see you next time