When it comes to the operation of your business, the importance of planning cannot be understated. Even before you open the doors to your first customer, you should draw up an extensive business plan. Establish your finances. Decide how you’re going to nurture growth. What are your goals? Everything gets figured out. On the day when things finally get moving, you’re prepared. Even then, however, the planning continues. Every year, every quarter, every meeting needs framework.
A plan in motion
The story behind the founding of The Richards Group, the LLC behind me and all of my entrepreneurial enterprises, started with a plan.
In 1990, I worked for my father’s tugboat company building artificial reefs from sunken ships. To simplify this work, I developed some heavy-duty garbage bags designed to haul toxic sludge from our future reef ships. They were good products and I thought other players in the industry would likewise see their value, so I decided to sell them. Before I could open shop, however, I had to draw up a plan.
I decided which local non-competitors could benefit from such a product and established a price point of $2/bag. Once these matters were settled, I had to figure out how my first interaction would go. If they liked the product, but not the price, would I be willing to go lower? How many could I produce, and how frequently? If the product did not meet their needs, what about it could be improved?
With my plan prepared, I called my first potential customer, Fennel Container, and gladly accepted their invitation to show off my bags. Things were going according to plan…
But then, a twist!
When I arrived for my meeting, product in hand, I was told that the scheduled representative wasn’t available. I was going to have meet with someone else.
He and I got to talking and quickly things deviated from my plan. This guy told me his company was already buying an equivalent product from someone else! I hadn’t accounted for that. What’s more is that they were paying $27 for a product I was ready to sell for $2! Was I going to make this sale by raising my price? A little confused, but ready to press on, I asked to see the product. Imagine my surprise when he showed me not a heavy duty sludge bag but a “roll off” style waste container liner, a different item entirely! The gentlemen at Fennel Container did not want garbage bags for hazardous materials. What they wanted was a more suitable liner. Period.
This wasn’t part of the plan! Maybe if I doubled back, I could convince them of the merits of my product instead. Maybe they knew of another company with demand for these bags. I didn’t have much time and was forced to think on my feet. So what did I do?
I threw the plan out the window.
Sometimes all your planning and hard work will not prepare you for what’s really going to happen. Instead of trying to reintroduce a product that their company wasn’t interested in, I decided to tackle their current needs. I took a few measurements of the liner, went home, cut one out to their exact specifications and took it back the next day. My liner fit better than the competition and at $25 apiece, they would start buying them from me! By abandoning a plan that gave me no advantage I picked up a profitable business deal instead of walking out empty-handed. In order to legitimize my new arrangement in a professional manner, I began The Richards Group, which has stood behind every new business since.
Planning is great, essential even, but being aware of the needs of your customer is better.