How not to succeed at business!

The internet is awash with self help guides on how to grow your business. Just type in “how to” and there will be millions of hits promising you the “top 10 steps to success”.

However, recently I’ve been reflecting on how some of the mistakes I have made in business have helped me learn the most about how to move forward. I’m devastated that my secondary school teachers were right: you do learn the most from your mistakes. These painful lessons are the times when we are called to honestly reflect on ourselves, the decisions we have made and sometimes the way we have treated others. I am a firm believer that only those people who are willing to admit they’ve made errors are those who can move forward and grow as individuals.

So, gritting my teeth, I’m opening myself up here and admitting to of the painful lessons I have learned as a small business owner. I am learning, I am growing, and I intend to not make these mistakes again.

Is it scaleable?

It doesn’t matter how good your product is, if you can’t produce enough of it to fulfil demand or make a profit, your business will fail. Scaleability is the word we use to describe this; you have be able to make enough of the product, quickly enough in order to sell enough to make a profit.

A friend of mine fell into this trap. She was a stay-at-home mum who had two young children at home full time. As an avid craft fan she would make crocheted and embroidered gifts for her family in the evenings after her kids had gone to bed. She always made more than she needed, so she decided to sell her stock at local craft fairs. The aim was to use her hobby to provide a little bit of extra cash towards the holiday budget for the family without having to spend on childcare.

The first stall was a success, she made about £50, not bad for four hours work standing behind a stall in a cold church hall. It lulled her into a false sense of success, as the second fair she attended, resulted in zero sales. Once she factored in the cost of childcare, she was worse off. She also hadn’t considered how many hours went into creating each item and when she tried replenishing her stock she realised she was actually losing money. In addition, to turn over enough of a profit to make the enterprise worthwhile as a supplementary income she would have to enrol at craft fairs every Saturday, using her husband as free childcare and taking away from family time.

Far from being a nice little pocket-money earner, her craft business was costing her money. In this situation, my friend was time-poor. Creating small crocheted and embroidered gifts is labour intensive, especially when you have demands on your time throughout the day that take you away from creating your products. She realised the business wasn’t scaleable.

Is it deliverable ?

I once owned a cafe in my local town. It was a great little shop, in an excellent location and had great footfall. You would think this was a recipe for success.

However, the area for seating inside was really small, and through the ups and downs of running that business I realised one of the reasons I needed to move into the catering industry was that you could scale up really easily.  Could get my products to my customers rather than wait for them to come to me. In the shop I was limited to an extent by the number of seats I could fit in; obviously there was a market for takeaway food, but it wasn’t a large enough market in this area.

The product was good, the delivery was poor. I couldn’t get this great product (my food) to the customer effectively (the location). 

By the way, my craft entrepreneur friend eventually developed a product that was scaleable and deliverable too. Instead of making craft products herself she switched to teaching others her skills. She developed embroidery kits for beginners and used them to teach workshops at a local arts and crafts coffee shop. She changed the product and the location. 

Now she has a guaranteed income from her customers, the time involved is much shorter (one two-hour workshop at a time) which means childcare wasn’t a problem anymore. Also, once you have designed one kit you just keep printing out the number of copies you need each time. She’s not time-poor anymore and the product can be produced very quickly, as required.

Is it cost-effective?

At the beginning of this year, Just Catering altered our menus and prices to better reflect the type of business we were attracting. We wanted to better suit the needs of our customers, so decided to focus on corporate canapés, appetisers and hours d’oeuvre. These titbits, delicacies and finger foods were the most sort after at our corporate events. We also wanted to offer our customers more variety so that we could better cater for their dietary needs. We offered more vegetarian and vegan options, highlighted our gluten free canapés and food for those with dairy intolerances.

Significantly, we put in a 15 person minimum requirement for every booking.

I’ve never done this before. I am the kind of person who just wants to help and do everything I can to cater for my clients. But, when faced with the reality of facts, figures and time constraints, I knew in my heart of hearts that doing buffets for under 15 people was not cost effective. I am very grateful for every client I get, but I simply wasn’t making profit on these events. I had to make a hard decision for the sake of the longevity of the business.

Every business decision is a moral decision. Some people like to divorce morality from their work; they claim that the end justifies the means or the figures have to add up no matter what the cost to people’s lives. I’m not someone who believes this. I’m not advocating capitalism at all cost. I am a believer in moral capitalism; the type that assesses the impact of decisions on people as well as ones financial bottom line.

With only one full time employee (me!) no one was going to lose their job from this decision. Plus, an event for fewer than 15 people wouldn’t require me to hire any additional workers anyway; no part time staff were going to lose work. My decision wasn’t a big really one in the grand scheme of things, but it was a tough one for me. I know that it was a step towards giving longevity to this catering business in Birmingham.

I am sure that there are lots more lessons to learn. If I am brave I will share a few more in the coming months. But ultimately, the emotional intelligence required to admit to mistakes, reflect and make morally principled decisions is a great treasure in my eyes. It is one of the key skills that will make a business grow and succeed.