When most people start a business they’re filled with the anticipation of success, recognition and financial reward. The last question that anyone asks is, understandably, ‘what if something goes wrong?’. It’s vital, when you conceive that business plan, that you’re stoked with the maximum passion, so looking at what problems might crop up is for losers, right?
Some people (mostly those who have never run a business before) think that it’s ridiculous to consider the pitfalls and to build in some protection for the business at an early stage. My opinion is that ‘it will never happen to me’ is a very human failing. It’s one of the reasons why we drive too fast in the wet, reach from the top of ladders for things that are too far away and ask for ‘just a small one’ even though we know we should have stopped drinking two glasses earlier.
If we had evolved to live risk-free there would be no difference now to what there was before a way of making fire was developed.
800,000 years BCE
“I’m thinking of having a go at fire-making tomorrow.”
“Rather you than me. That stuff hurts if you get it on you.”
“Maybe you’re right. Pass me another uncooked rabbit leg.”
But when we think about some of the things that have happened to other businesses we can see what has gone drastically wrong and take steps to avoid them. It’s dull stuff, for that I make no apologies, the most exciting things about your business are not likely to be those things that protect it, but you still need to do them.
1 Passing Off. This is when your business name, logo, content or product is sufficiently like that of another business for you to be mistaken for them or your product/thing confused with theirs. It’s particularly significant, therefore, if you occupy similar sector positions.
With logos and product names the weight will usually fall on the side of the party that can produce evidence that they hold a trade mark. Without there being anything registered there’s a long argument to go through with legal expenses attached.
Probably doesn’t seem like a big deal when you are starting out, but 3 months in when you are destroying your logo, letterhead and cards and rebranding the web site it hurts. All because a solicitors’ letter landed telling you the errors of your ways and there isn’t enough cash yet in the business to get everything redone – you will be kicking yourself for not taking a bit of time to check out who else was using that ‘unique’ name you had thought of.
2 Much Wants More. Offer someone a really good deal on something and they can take that as a sign of weakness or desperation and press to negotiate further ‘sweetness’ into the deal. They’ll also expect the same deal in the future and, before you agree to it, imagine them referring to you as ‘the mug that works for almost nothing’.
People who want you to work for less money than you’ve already decided is a fair price, are being disrespectful of your skills. That doesn’t matter one bit unless it encourages you to chase the money and disrespect yourself too. Do it once and you can end up doing it all the time to the detriment of your business.
3 Over-Promising. If you’ve done your numbers properly you know how long things take to complete whether you’re dealing with a service or a product. If someone orders 200 of something and you only have 110 in stock, don’t tell them that they’ll receive all the product within 48 hours.
You don’t know when your delivery will arrive with you to send out to them because it’s out of your control. If a service takes 6-8 hours to do and someone wants it done 10 times in four days you have, at best, nine hours per day when you’re not working. At worst, four hours per day.
By the time you build in the mistakes that you’ll make as you only sleep for a couple of hours per day you know that this is going to be a dissatisfied client. Be persuasive and talk about quality of end results to buy more time. Ask the client which of the 10 should be given the highest priority, which would they like to exclude from the mix.
4 Marketing. Asda doesn’t spend £100m on marketing each year just because it can. It does it because it works. From the outside marketing can look like a bit of fluffy page decoration or screen activity, but from the inside marketing is very scientific. Asda knows what newspapers its target demographic reads, what it watches on television and even what type of car it’s most likely to drive.
It knows that many of its’ younger customers also have young families and that summer holiday entertainment frequently involves a trip to the beach. Seaside fish and chips is a luxury purchase when you’re on a low income but a disposable barbecue and a low-grade sausage, burger and vegetable kebab pack is perfect for feeding children. Why not add in burger buns with your purchase? Price bought individually 85p, but with a BBQ pack only 60p.
You’re not a supermarket and you probably don’t have a powerful research and marketing division, but you can make some intelligent decisions with some research of your own. If you don’t know where to start then going into the marketplace blind will probably cost you more in losses than someone who can guide you. Look at some of our free videos on the TV page on this site for some cheap and cheerful research methods to start you off. This is not a step you can ignore; if you do you will burn money on marketing that does not work and it will be your fault, as you can do it differently and effectively if you take some time to learn how.
5 Family Opinions. Perhaps this should really be number 1. When you pitch a business idea to friends and family you may as well be talking to a nodding mirror. No one in that group is going to tell you that your idea is a bad one (unless it’s going to adversely affect a sizeable inheritance) because they love you and don’t want to hurt your feelings. Family opinions count for very little. You need to have the opinion of a disinterested third party who has business experience and who monitors trends.
We don’t ever expect the worst to happen to us because we’re human and it’s built into our DNA to anticipate success. We can move against the grain by asking all of the hard questions early on. When we do that it’s actually less likely that something bad will happen. You can create a winning formula or go in blind and hope for the best. Depends on how much you can afford to lose and your attitude to gambling with your future.