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Catastrophic Muck-Ups And How to Avoid Them

The One Where Funch Got Rolled by Payment Terms

Funch Catastrophic Muck-up

An exciting opportunity to be stocked by one of Australia’s largest online retailers seemed too good to be true. But before too long, excitement turned to despair when the retailer went into liquidation and vaporised Funch’s cash flow and growth momentum.

The full catastrophe

When a huge retailer says yes to stocking your product, you don’t think to challenge their payment terms. What if they say no? What if this lucrative order disappears? The alternative might just be that your revenue disappears.

“Our biggest catastrophic muck-up was having outstanding invoices owed to us by Aussie Farmers Direct – an Australian food delivery company that went into liquidation before we could get paid. It was a really difficult challenge for a small business. If we did some more research, maybe we could have avoided that muck-up.”

No sight like hindsight

Unfortunately, hindsight doesn’t come with a time machine and most business owners probably would’ve found themselves in a similar situation. Funch co-founder Tanya Duncan recommends small business owners challenge larger company’s payment terms to avoid getting stung.

“In hindsight, we should have questioned their terms and made them work for us. Giving big companies the same terms doesn’t make sense, but we didn’t have the confidence to challenge them and make them pay upfront or even part of it up front. If we had our time again, we’d do a bit more research into the company to check they’re going okay before fulfilling such a big order.”

Funch

“It was quite a big blow. Essentially what it did was rob us of cash flow, which meant everything else had to be wound back. We went from growth mode into survival mode.

Changing tack to stay afloat

While losing out on the revenue on a big order was devastating for Funch, it didn’t sink the business. In fact, Tanya and her business partner Lisa Bourne took a step back, developed a strategy to deal with the muck-up and to their credit, their business continues to grow.

“It was quite a big blow. Essentially what it did was rob us of cash flow, which meant everything else had to be wound back. We went from growth mode into survival mode. It’s really frustrating. When all you want to do is grow, it’s hard to go oh hang on a minute, we need to get back to building up our cash flow again. But we survived, we just had to scale everything back and get even more creative with the way we did things.”

Learn how Tanya and Lisa grew Funch from a thought in the gym to a booming business in our Good Business Spotlight.

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Sharing customer success stories from good businesses around Australia, practical good business guides and the occasional catastrophic muck-up (and how to avoid them).

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