Welcome to “Small Business, Big Mistake” where small-business owners face up to their biggest mistakes and share advice to help your company avoid the same fate.
There’s a reason entrepreneurs attribute their failures more often than their achievements as contributing to their success in business. In fact, early success — though encouraging — can be blinding as we can tend to miscalculate the effect of sheer luck and timing. How do I know this? I learned this valuable lesson only after failing.
Every year, I perform an audit of my business offerings and map them against current and potential client needs. One year, after completing the audit, I followed my instinct with an idea which had proven successful with one of my major clients. The idea was to convert a classroom training program for entry-level people to an e-based platform. In concept, this should have been perfect, because the program had demonstrated earlier success.
However, after a huge investment of time (12 months), staff (four employees who devoted a significant amount of time on this) and money ($100,000), the project proved a failure, generating only lukewarm responses from new prospects. Looking back, I believe it is because I hadn’t yet learned these four important lessons.
1. Don’t ever make assumptions. Just because it works for one customer doesn’t mean that it will work for a broad client base. In our case, our largest client had unique challenges and was not a good representation of what the market was willing to bear.
2. Bring a product to market quickly. Our project specification should have demanded a functional prototype which could have been brought to market and tested within four weeks. Waiting a full year to develop a fully functioning model resulted in a changed market and client needs that our product no longer no longer met.
3. Take small steps. When investing hard-earned cash on a new product, taking small steps is a safer bet than a single large leap. Whether you are developing a new program in your current area of expertise or venturing out into a new area, taking incremental steps will bring more success and more clients.
It would have been easier for our clients to take a small step by sampling the prototype than a large step that involved a massive investment and greater risk. With small, incremental steps, it is easier to make corrections along the way.
4. Solicit feedback early on. Simply because our client base was willing to participate in the creation of the training modules doesn’t mean that they would be willing to purchase the new product. Looking back, we should have developed a prototype within a few weeks and offered it to our current clients at a discounted rate to get honest, open feedback.
Feedback would have given us a better idea of how this product would be received by new prospects and allowed us to make necessary adjustments to appeal to the broader market.
As a result of these mistakes, we now make sure to take time early on during the idea phase before rushing into a project without asking the right questions. For example, our security division has been approached by a vendor to provide high-definition surveillance. Before making any investment, we have negotiated with this vendor to offer the service as a pilot to select clients for 30 days at no cost.
This step in the idea phase allows us to get real-time feedback from our clients with little financial risk. By partnering with our clients to offer them state-of-the-art technology, yet treating their financial investment as though it were our own, we have deepened our customer relationships and solidified our partnerships.
Ultimately, the key takeaway I would share with other business owners is this: Not all good ideas make great products or great businesses.
Michelle Benjamin is the founder and chief executive of Benjamin Enterprises and Pivot Partners, with offices in both Washington, D.C. and New York. The company offers consulting services ranging from strategic process enhancements, workforce optimization and operations improvements.
Check out the previous installments in this series.