How I survived after a supplier failed to come through

Geoff Neate, Joe Tigel and Mike Allen started Spirit Telecom to service what they felt was a gap in the market for telecommunications catered to SMEs. The company has since grown substantially with revenue of $8.5 million last year.

But 18 months into its run, the businesses encountered a huge problem when a supplier promised something it couldn’t deliver – threatening Spirit’s entire business. Geoff Neate fills us in on what happened from there.

It’s been nearly a year since we last caught up. How’s everything been since then?

Around that time we were looking at an acquisition that we completed, we purchased that business and created our own network. It was a strategic acquisition.

Last year you were doing about $8.5 million. Can you give an update on revenue?

Well, we sold a business last year as well. So it was a significant strategic move on two parts. This was a telemarketing business, and that’s a dying business. It was decent cash, but not much strategic value, so we needed to get rid of that and set ourselves up for the future. We sold off that business and then acquired another one.

We’re growing on a month-by-month basis, but because of the sale we’ve gone down. Month-on-month we’ve been growing, but we’re probably going to match that same revenue point by November.

So describe this situation you had with the supplier who couldn’t come through for you.

It was very early days in the business, so it was certainly within the first 18 months of us starting up. Essentially what happened was that we worked with a few different suppliers. The first was great, the second was great as well, but we also had a couple which didn’t deliver what they promised.

In this example, we sold a service to a company, and we just had to suffer through huge delays with this supplier because they couldn’t deliver what they had said they would.

How late were they on the project?

We wanted to set up the network in this building we were operating in within six weeks, and it ended up being more than six months.

What was the customer saying?

We just had customers on our back asking what was happening. We were way behind the eight ball, it was incredibly stressful, and the supplying company wasn’t being very honest either.