Shop Talk

Column: Why small businesses need to fail early and often

It was Christmas 2011 when Kelly Shatat’s first year as a full-time small-business owner ended with a holiday soaked with tears of grief.

“I cried all day,” said Shatat, who founded Apex-based jewelry company Moon and Lola in October 2003.

Since starting her company, Shatat had feared letting her business grow too fast. But that’s exactly what happened the first year after she left her job as a pharmacist to focus on Moon and Lola. Shatat started picking up wholesale and retail customers after a year of stepping up marketing efforts.

When the holidays rolled in, so did hundreds of orders for custom monogrammed jewelry. Manufacturing was hindered by incomplete email orders that didn’t include customers’ color choices or initials, and a lack of manufacturing processes and experienced employees.

Situations like Statat’s aren’t as much a negative as they are a given in running a small business.

In fact, Mike Collins, entrepreneur and president of Raleigh-based productivity consultancy The Perfect Workday, said such failings are actually something that should happen early and often.

Many years ago, the model was to get everything as perfect as possible before pushing it out on the marketplace, he said.

But over the past 30 years that model has changed drastically as Silicon Valley entrepreneurs have carved out a path that calls for failing fast and forward. In other words, owners have to try something on a small segment and use the responses as a “springboard” to move forward, he said.

“It’s not unusual for businesses to have slipups, as long as it can go into their long-range thinking of what they can do,” said Fred Gebarowski, owner of Cary-based consultant firm Wildcat Business Ventures.

Before owners start testing changes, campaigns or additions, they should plan for worst- and best-case scenarios and understand whether and how the website, customer service and manufacturing systems would handle a strong and rapid response.

Also, Collins said, you should have a financing plan in place to pay for related materials and production costs.

Come Dec. 26, 2011, Shatat had already set out on her recovery mission.

A company representative contacted each of the impacted customers. Moon and Lola included a pair of earrings with each of the late orders and asked each person what needed to be done to make it right.

“We handled every situation differently,” she said.

In January, Shatat attended an Atlanta wholesale market and faced the business owners whose customers she had let down. It was “one of the hardest things” she has done, she said, but she promised she would earn back their trust.

Shatat put systems in place to ensure the ordering process was completed by retailers and created a dependable and efficient production line.

“It was a very tough time,” she said. “We came out stronger and better.”