We've been awfully lucky in business to avoid the disasters many small business face with projects gone bad. However, I can still count two examples, both of which make Tim and I cringe and both of which have taught us a ot about avoiding the same mistakes in future!
Bad Relationship 1 – Customer
We embarked on a project for a guy who wanted to create an online community. This guy wasn't technical at all and didn't have any business experience, and seemed to have extrememly high expectations of what could be achieved on his budget (warning sign). We had an excellent first meeting, clearly documented the deliverables (our response to warning sign), gave him an excellent deal, got the deposit and set to work.
Weeks down the track, we were 80% complete and he not only pulled the plug, he wanted his deposit returned. He was warned by a third party that we had delivered exactly what we said we'd deliver and we had every right to get 80% (or more) of the agreed price.
In spite of the documentation, the clearly outlined deliverables and numerous conversations where we stated that his budget would not cover the entire system, he still expected his dream system. We never got our money and even worse, he left feeling ripped off.
The relationship started with a hiss and a roar. We fell into the trap of being impressed with his passion and thought we could align our expectations through discussion and a clear deliverables document. We gave him a really good deal, which boosted his expectations of what he could get for his money, instead of charging full price which would have forced him to be more realistic.
This one came down to intuition. We knew there was going to be trouble and should have just walked.
Bad Relationship 2 – Design Firm
We sometimes work as subcontractors for other companies. Working as a subcontractor requires a lot of trust as you forfeit the relationship with the customer and therefore rely on the other company to keep the projects on track. Currently, we have excellent relationships with the companies we work with, they deliver completely on their side and we do on ours. Customers are always happy, they are happy and we are happy, projects are short and profitable for everyone. We are still finishing a project from months and months back with another firm. The project got well off track, communication virtually stopped, and we have to write off any money on the (very small) project – money we still haven't seen.
I will say at this stage that this relationship failed because of all three parties, communication channels, deliverables and timeframes were not clearly set in place, tempers have risen and the project has dragged endlessly. The biggest problem was that the people involved in the project have changed over time and roles were not clearly assigned – this lead to confusion and blame.
You Can't Avoid Making Mistakes… But you can Avoid Making them Twice
Our biggest fear in business is bad relationships. You simply don't want them. However, it is unavoidable in the high pressure zone that is small business that things go wrong. In our two scenarios, the warning signs were very clear, at the time, we took the risk of continuing, these days we probably wouldn't.