How your company loses more .. as it grows and expands more

Elfaggala is an e-commerce platform that connects stationery sellers with interested customers. The platform provides instant sync between the seller and the in-stock products on the platform and allows customers to purchase any product and obtain it within 60 minutes by supplying it from the nearest seller to the customer.

The thought of shutting down is never easy for the founder to put into action, especially when raising funds, but having the idea of shutting down at the beginning as a decision that will be made in the case that some details occur is the best approach to preventing damage to all parties.

Challenges and issues that led to the closure of the company:
Business Model fit

During the operating period, the founder tried to apply more than one business model for the possibility of continuity (E-commerce - Q-commerce - Marketplace - SaaS Pos), but the unit economics (the difference between the cost of reaching the customer and the net income from it) for each model that was tried to be applied were not feasible due to the nature of the customer and the nature of the market in a particular industry, which makes the product seasonal for some customers, and other customers have other requirements that reduce the economic viability of the project, and in the event of its continuation, the result will be more damage and losses for all parties. It is sometimes preferable to have an online market implemented by a supplier or industry investor rather than a third party.

Lessons learned:

The decision to shut down was made at a time when things were stable for the company, after the passage of the COVID-19 crisis and the presence of some cash within the company, and despite the existence of investment opportunities from some investors and supporting entities in the entrepreneurial ecosystem, the founder preferred to act ethically and clarify the full picture for the buying entity in order to prevent further bleeding.
Here are some tips and notes from the founder based on his experience with the company:

  1. If the purpose of creating the company is to show off and write co-founder, CEO, then it's better not to start.

  2. Due to work pressure, there was a rush in hiring, which resulted in some poor choices. To remedy this, the "Hire Slowly - Fire Quickly" rule was followed, which involved not rushing in choosing the team and taking extra steps such as conducting multiple interviews with the employee if necessary. In the case of a wrong choice, it is important to correct the mistake quickly, with the company being responsible for paying any penalties or termination costs. Having the wrong person for even one hour can be much more damaging than the cost of the termination period. If there is fear or hesitation in implementing the firing decision, then you should not start the company. If the budget allows, it is important to consider increasing the person's salary beyond what was originally agreed upon, especially if they are a good ethical person who has not been able to adapt to the nature of the work or provide the necessary skills for development.

  3. Stick to your word, whether it's a contractual agreement or verbal communication with employees, suppliers, or anyone else.

  4. It's not necessary to start a company if there is no suitable team or if the market is not appropriate or if the idea is not accepted. Even if the market accepts the idea but achieving it with appropriate quality will affect the unit economics, leading to increased losses with expansion rather than profit. Therefore, your smarts lie in identifying the elements of success and failure from the beginning and in initial testing. If they don't prove successful, you should close the company because delaying this decision will cost you time and money. It's important to make the decision to continue or close without being emotionally affected, simply because you saw an example of a company that was closed or joined another company and the outcome was better for both parties. The appropriate decision for that company may not necessarily be the appropriate decision for your company.

Industry: Stationery
Business Model:
E-commerce / Q-commerce / Marketplace / SaaS POS
Investments: 50K $
Date: 2017 – 2021
Company Status: Closed
No. employees: 12
Country: Egypt
Ahmed Ibrahim
“Co-Founder”
+12 years of experience in Product Management, Software engineering & Entrepreneurship.
BSC Electronics & Communication Engineering, Cairo University.
Mohamed Amr
“Co-Founder”
+10 years of experience in Operations, Business Development & Entrepreneurship.
BSC Funding & Investment, Faculty of Commerce, Cairo University.

  1. Try to have the team cover the basic needs of the project and do not work on more than one thing even if you are multi-talented, because your energy, efficiency, and productivity will decrease. If you have to do it, do it only in the first period.

  2. 80% of problems can be solved through communication. Don't assume anything before talking to the other party.

  3. Listen to everyone and thank them for their time, but not all advice should be applied without proper scrutiny, because sometimes some advice may not be appropriate, and only a few are suitable for implementation because they fall within the person's expertise and relate to a specific case that is not suitable for generalization.

  4. It's good to talk to founders from different companies. The person who can help and think with you the most is the person who is in the same circumstances as you, able to understand your challenges, think outside the box, and give you opinions that you may not see yourself due to the crowd of opinions. Additionally, this can be considered a form of therapy, but it is important to choose someone who can speak honestly with and present your problems without showing off.

  5. Help your new fellow founders. A phone call or a short message can save someone from going down a harmful path, and you may need this person in the future.

  6. It is important to confront negative comments or bullying from friends or relatives who may not be treating you fairly, especially in the beginning. Even if you are a calm and polite person, it is important to embarrass them in the moment because most of these comments come from shallowness or animosity. However, it is also important to consider those who criticize objectively.

  7. As a founder, it's natural to experience pressure, but you should take care of your health and exercise, and have at least one day off to regain your energy. You should also avoid excessive financial pressures, because there may not always be the ability to compensate for them. If there is a need to not receive salaries as founders or to reduce them, you should first consider whether the project can continue if these funds are available or not.

  8. While you work, don't neglect a very important point that I personally neglected for 3 years, which is personal branding. You should apply the "80% work and 20% presentation" rule to your work and achievements, and constantly communicate with people from different fields to open up opportunities. Closing yourself off is not healthy at all. During his work period, the founder recorded 4 radio interviews, TV reports, and appeared in 4 newspapers, but did not share any of them due to downplaying the achievement and the results he had achieved, and his ambition for the future. He believes that if he celebrated these small achievements, it would lift his spirits and the result would be better. It should also be considered not to be the deceptive type that appears often without achieving any successes in reality.

  9. If you want to make quick income and profits, it's best to focus on a small project with clear parameters, because start-ups are entities that are not well-defined. You work with them to turn them into a company with clear parameters and a working and repetitive model, where usually there are no profits and when profits exist, they are reinvested in the company. The result lies in the sale of the company and this is a long journey that you must know and prepare for.

  10. On the way, you will get depressed and sad, but you must learn how to recover, how to talk to yourself, and how to adjust yourself.

  11. Admit your mistakes and apologize when you are wrong, and don't avoid your responsibilities.

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