My biggest business mistake

Filed in archive business tips on March 19, 2010

© joebeone


Just after my second year in business, I made a mistake that almost shut down my company. It was the biggest error I've made and I continued to pay for it most of the following year. Though, on the upside, I learned so much. So now, I'd like to offer my quick story so that you will be saved from making the same mistake that I did.

My company had the opportunity to take on a very large project, bigger than anything we'd taken on in the past. In fact, it was for more money than we'd ever written a proposal for. We believed we could handle it and brought on a new PHP programmer to make it happen. Then we had the perfect storm of problems: the programmer over-projected his abilities and hours, walked away from the project, the client wasn't up front on their expectations and we over-promised on the delivery date.

Lessons we learned:

1. Never test a new contractor on an important project. Give them something small first, or make sure you have a ton of referrals to back them up.

2. The more money that's on the table, the more specific your proposal should be.

3. Never pay a contract an hourly rate without proof of completion. Your contractors should have just as much to lose as you do.

4. Always give yourself extra time to deliver.

5. Don't pay yourself until the project is over. Keep that money in the bank just in case you need it.

6. Think twice before taking a start-up client who had to "get rid" of a previous company. It's rarely a one-sided issue.

7. Make sure you have adequate time to research and test your solution before turning in a proposal.

8. Contracts are the most important part of any business transaction. Don't be afraid of writing one that's ten pages if that's what it takes.

Have you ever made a mistake that taught you a lot? We learned a lot about how to handle clients, how to handle contractors and how to write a better proposal. I wish we'd known sooner but the lessons we did take home made us a stronger, more competitive company.