This is one of those lessons that are called “hard”. However, the message it delivered was powerful, emphatic and almost ever-lasting: always have a back-up plan. (!)
Though this sounds true for almost all things in life, but for an entrepreneur, having a plan-B is very helpful. Its importance increases when the entrepreneur is building inventory or is investing money for product delivery, service rendering, or consultancy services.
The year was 2006 and I was working from home as a freelance content writer. The running costs of my business were pretty low and I had all the luxury of spare time. I used to work whenever I liked, whatever I liked.
It so happened that I landed on a project that was not of content writing but purely outsourcing of business process. A client from USA wanted to have me print letters with blanks where hand-written names could be inserted; have these letters wrapped and inserted in white envelopes; have the addresses written on the envelopes (again hand-written); and finally sealed: The last step was to courier these letters back to the US from where the client would post them.
The first order was of 10,000 such letters which we delivered successfully. I involved a lot of friends, their friends, and lot of my colleagues who liked the work. Residing in a very small town, it was easy to get people write the address in a neat hand-writing and pay them. Interestingly, the courier person remarked that it was the biggest shipment that he did in his business: It cost us around 32,000 INR at that time.
Now, the client was happy with our work and he wanted to increase the work. I was bit skeptical because of work-force that I could pull together and manage. However, the sheer magnanimity of work and money involved spurred a lot of people around me and we plunged into it head-long.
The next installment was of 40,000 envelopes. We hired a taxi and got around 60,000 envelopes purchased from Delhi. Had 40,000 letters printed from our local press and was ready to start the next installment. Overall, we had invested around 60,000 INR by the time we could get our pre-payment from the client. However, all was not well. We took a risk; did not have a back-up; and lost.
At that time, I was not using wi-fi internet system. My UPS was giving away and it was acting only as an extension board, providing 3 plugs but no back-up. I was chatting with my client and suddenly, the power went off. Now, in Punjab, during summers, we face severe electricity-cuts. My UPS was not credible at that time and I lost the connection. After 10 minutes, I got back but it was very late for the client and he said we would talk tomorrow.
As fate would have it, the very next day, my client met an accident and very unfortunately, he died. One of my first encounters where a big business potential and a very good overseas relationship ended abruptly marking an irreversible situation!
Now, the lesson part:
We lost a potential client who was thinking to have us do the lot of 100,000 envelopes per month.
We had invested our money which we lost because the paper was printed and it was hard to sell back the envelopes (we did manage to sell them at half of the original price; the printed paper is still lying with me used for rough work). The irony is that the moment I lost connection, the buyer was looking to pay me. Had I got my UPS back-up intact, I would not have lost the money. Though it sounds but dry because I am overlooking the bigger accident, but it has a lesson in it: Always make sure that you have a back-up; more importantly, when you are doing financial transactions.
For an entrepreneur, it is pretty important to have back-up for everything. Entrepreneurship carries a lot of risk, which often is high-paying and highly-satisfying. But the set-backs could also be fatal. Prepare a good platform where if something fails, you have something to rely upon: just be prepared.