New business ventures can be exciting—if you have the time
For want of a nail, the horseshoe is lost. For want of a horseshoe, the horse is lost. For want of a horse, the rider is lost. For want of a rider, the message is lost. For want of a message, the battle is lost. For want of a battle, the kingdom was lost. And all for the want of a horseshoe nail.
-A metaphorically constructed proverb about the importance of seemingly insignificant things from Poor Richard’s Almanack by Benjamin Franklin
Looking back, the five of us were pretty cocky. We’d just graduated with master’s degrees in business, and we felt somewhat invincible (silly boys!). All thirtysomethings, we had risen to significant levels in our respective fields. I worked in finance in a directorial role, two of the other fellows were chiefs in law enforcement, another sold radio equipment and related technology, and the last was a marketing specialist who could sell sand in a desert.
I was especially close to one of the police chiefs, and one day, we floated an idea. Since our group included law-enforcement professionals and a radio and security-equipment specialist, we had the goods to form a company. Our marketing buddy could “beat the bushes” for new security business opportunities, and I could complete all the bid and quote paperwork to submit to potential clients. Our “Swiss Army Knife” had all the necessary blades.
One of us said, “It’s not a matter of if this will be successful, it’s simply a matter of when.”
Early Success
Within a month of our first organizational meetings, I identified a significant opportunity with a city water department. In fact, the first bid we submitted totaled more than a quarter-million dollars. I attended the preliminary walkthrough with the equipment specialist, and he compiled a list of what was needed to make the facility secure. The chiefs reviewed the plant’s layout and added or enhanced specifications where necessary. I put together a bid package that was creative enough to allow bid evaluators to add or subtract itemized options (cut here/add there), practically ensuring a successful submission. On the bid’s opening day, we found ourselves in the thick of competition. Only one other company came in with a lower bid. Since it was a tried-and-true company with a lengthy history, the contractor selected it for the job. It was a learning experience for us. Next time we would nail down a few things we’d missed and get the business.
We didn’t have to wait long for the next opportunity. This time, the client bid in a different manner. He stated his needs and essentially said to the bidders, “You guys tell us what we need. Here’s the budget—be prepared to explain what you propose.” We faced a real challenge. Should we create a bid that spends every penny of the budget in an effort to hide some profit? Or should we skimp and go lean to submit a strategically lower bid and snag our first contract with integrity? We elected to go lean and come in low. We figured there would be more opportunities ahead, and it was better to start with honesty as our policy. We built a small margin of profit into the bid and, sure enough, we won the award. Our bid was so low compared to the competition that the contractor called us in to verify the pricing. We smiled and nodded, appearing very confident in our quote.
But being as inexperienced as we were, we didn’t anticipate we would have a very fussy client. Our equipment specs were on target, but we didn’t budget for the number of man-hours required to meet the client’s particular needs. After final installation, he insisted on weeks of testing and tweaking. Everyone in our group had full-time jobs beyond the business, and those jobs were attached to a great deal of responsibility. We split the follow-up work fair and square, but we recognized how it squeezed our time. When all was said and done and the bills were paid, the profit was considerably small, and we each admitted that our primary jobs had suffered. We decided the next few jobs should be quotes under $10,000 instead of six-figure challenges. Indeed, the next two jobs came in around $8,000, providing us nice holiday bonuses that December.
Harsh Reality
At the start of the new year, there were some changes in the gang. My wife gave birth to our fifth child, one of the chiefs was promoted, the other chief joined a new company, and our marketing person joined a small business with his wife and brother-in-law. It was a series of blessings, but they tore at the fabric of the new business. Suddenly, it seemed no one had time for it. To add to the hardship, we had developed a good reputation in a short time, and we started receiving calls for new business. A nice problem to have, right?
We called a meeting. One of the members said he would have to suspend his participation for the next few months. His promotion required him to train out of state for six weeks. The fellow at the new job sang a similar song, and I could feel the glue melting. I was in no position to make up the difference with a new baby at home, but since most of my duties involved paperwork, I volunteered to burn the midnight oil to crank out proposals. The equipment fellow said the same. To that end, we completed a handful of additional jobs and split all profits five ways before eventually folding the company.
I still find pieces of the company’s stationery and calling cards marked with the handsome logo we had designed, and I think about how we modeled all the earmarks of a successful business. If only we had time to tend to a thriving company. Rare is the case where the product and presentation are good, but the staff simply underestimates the time commitment and cannot keep up. That was what we faced. We underestimated the time commitment, which seemed like a small inconvenience at the outset, yet proved to be the nail missing from the horseshoe that sidelined the horse, and so on.
The Lessons
- No amount of talent can make up for a lack of time to dedicate to projects.
- Don’t start a new business impressed with yourself. You’ve proven nothing.
- Organizational meetings must cover time commitments, accounting, and priorities—FIRST.
- Develop a list of “what if” discussion points, and review those, as well as “what’s expected” points.
- Assign roles. A leader will surface as business goes on. Keep him or her in check, and decide if that person should charter the company’s direction. Official roles preclude this problem.
- Decide if you want to fully “jump in” or work the new project as a side job. You must know the difference. A landscaping business can be a side job because the operator can control the client list and volume of work accepted. A company that conducts daily business needs at least one designee to “run” the business every day, not after clocking out from the first job.
Many entrepreneurs tell stories of simply holding their breath and “diving in” when starting a new business. I admit those stories make for good folklore but are rarely true. Even the most well-intended, best-laid plans will bury the devil in the details at some point and surprise the new business owner with something so simple he or she won’t believe it was missed. Be adventurous as you set forth to climb your mountain but step carefully. Landing on your feet is not guaranteed.
