Even with the best laid plans, it has become clear to me that every business project follows the “Rule of 3”: it takes three times longer, costs three times as much and is three times as difficult as it should be. This is a universal truth, so if you can accept it and even embrace it, you can put yourself on a path toward a more successful future for your business.
Here are some ways to battle some of the Rule of 3 issues that have been frustrating business owners since the beginning of time.
Everything Takes Longer, but You Can Get There
Setting your expectations too high is often the cause of this phenomenon. Once you align yourself with realistic goals, you can head for longer term success. Consider the following situations:
- Getting the big order from a new client: New customers may want to test the waters by initially offering smaller jobs. When you impress them by providing high-quality work on time or before deadlines, the large order will come.
- Getting a new product to market: Even with extensive planning, Murphy’s Law accurately predicts that something will inevitably go wrong. Perhaps a vital part is not delivered, manufacturing becomes halted, or your entire software development team gets the flu a week prior to scheduled delivery. One way to deal with this issue is to develop an accurate delivery date up front — and then, multiply it by three or at least add some padding to the date. The worst case scenario is that you end up delivering early.
- Providing on-site support for clients: The moment you lose control over the place where your work is performed or your product is installed, any number of things can go wrong. If you need to rely on a client’s computer, you might get a defective one. Or you may set out to install 220 volt equipment in a building with only 120 volt outlets. Make sure that your contract provides detailed requirement specs and estimates the resulting time delays if those requirements are not met.
Of course, time delays can also amount to income delays. So, make sure that you have enough capital to ride out the extra time.
Creativity and Planning Helps Handle Extra Expense
Even the big business players want to bring projects in on budget, but additional expenses do not generally bring their operations to a screeching halt. As a small business owner, you do not have the luxury of overspending, but there are some ways to help avoid — or at least deal with — financial surprises.
Just as you need to add a buffer when planning the timing for an undertaking, you have to do the same when it comes to budgeting. After a careful analysis tells you that your new widget will cost $5,000 from design to final production, you need to plan for what you will do if the actual expenses turn out to be $15,000. Even if you don’t have the cash on-hand to deal with the additional costs, create a Plan B so that you have a pre-approved bank loan in place or someone waiting in the wings to help.
You may also be able to manage the additional costs with some creative strategies. For example, a vendor might be willing to barter its product in exchange for one of your products or services. If you think bartering is not a viable way to conduct business, I recently heard of a web designer who conducts all business within a “gift economy.” He designs and builds websites as gifts for his customers, trusting them to gift back based on what they believe is fair value for his work. While he reports this business model has worked well for him, I’m not recommending — or even suggesting — that you take such an extreme approach to your cash flow. But entering into a barter agreement can be valuable in a pinch.
It May be Difficult, but You Don’t Have to Go it Alone
There is nothing better than the power of people. Every small business owner should find a support group of other business owners that they can use as sounding boards for business challenges. The Web offers many ready-made groups that you can turn to, or you can form your own group. Often, the experience of expressing your concerns out loud is enough to help you find solutions. And the chances are that others in your group have worked through the same issues and have found successful solutions. At a minimum, they can provide you with some comfort when things are inevitably more difficult than you expect them to be.
Dealing with the Rule of 3 can be one of the most frustrating aspects of running any business, but you can lessen its effects with creative thinking and a few good friends. And for those times when you feel overwhelmed by these issues, remember — there’s always ice cream.Tags: Accounting, business tips, Finance, Forecast, Growth