I started off this set of posts discussing the three things that I felt were most important when opening a new company. Planning comes in as number two on my list.
I'm basing this post on a past professional relationship with an old client. Names have been changed to protect the guilty, but this story I feel really needs to be shared with those of you who are contemplating opening a business.
The client came to me quite soon after the initial business idea had taken place in her mind. She ran the idea behind me so that we could discuss the type of web site that would work best for what she wanted in her company.
During this chat, I asked her a variety of questions, and I was a little hesitant when she had difficulty answering them. These weren't involved questions, just basic topics about how she wanted her business to run once it was up and going.
A few days later I began working on her new site. I designed for a while and then heard back from her: While she liked the design, she'd been looking at websites for similar businesses and wanted to change something. I made the changes and continued on.
A few days later she contacted me. She'd been doing some thinking and decided that she really didn't want to offer one product to her customers and so she wanted that product removed but she wanted to add several others. When I asked what she hoped to charge the customers, she made up a number and said, 'Does that sound fair?'
Since I had not done any market research on her items, I told her to go out and find similar products, see what they were charging, determine what was the same and different about hers and price accordingly. You see, businesses do a ton of research before putting a price on a product or service. And if they don't, they'll likely find that they have either overcharged or undercharged, and neither of these things is good.
A minute after sending my reply I received one from her: Just put X amount of dollars as the price. If it is too high I'll lower it later.
It was too high. She had to lower it later.
After this had been done, I continued working on the site and, well, you guessed it: A few days later I received yet another email that she'd decided to add on an entirely new feature to her products and needed to know how to go about doing this since she had already started trying to sell her first set of products.
By this time, as you can imagine, I was quite frustrated. But more than that, I was worried about the future of her company because she had spent such little time planning.
Many businesses exist, and many new business fail. Why? Oftentimes money is to blame: Not enough in reserves to carry a person through the difficult times. Perhaps the company has advertised enough, either, or they find that there is a lot of competition in what they are offering, be is services or products.
In all of these cases, adequate planning could have told the potential business owner what needed to be tweaked, changed, added or deleted from the business before the business even began.
Planning is crucial to starting a new business. If you can't sit down and write out a business plan, as important as this is, you should at least write down your goals, as we talked about in the last post, and then you should begin planning out your business on paper, so you can see it in front of you. What are the key areas that need to be addressed when you start this business? What is it that has to be done first, and then next, and then next, before opening your doors? What is it that differentiates you from the other businesses that feature the same type of services and products?
You can answer all of these questions by planning correctly.
In the end, I developed the website and as always continued to keep in touch my client to see how she was doing. Unfortunately her company did not last. There were numerous reasons, but I can tell you that each of those issues could have been developed better if she had planned ahead. While this would not have guaranteed her success (nothing can do this!) it would have at least given her a much more realistic picture of her potential business, its possible successes and its probably pitfalls.
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