Your Business Really Blew It: What Now?
by Jeff Wuorio
used with permission from the Microsoft Small Business Center

We all make mistakes. It's the damage that really counts.

Not long ago, Twin Partners, a Rochester, N.Y., advertising agency, signed on a media behemoth as a client. During the agency's first media buy for the project, it switched to a less-expensive freelancer. And the results showed.

"She didn't use the proper software. When we showed our work, we were told that it was not representative of what we said we would do," recalls agency owner John Galbraith.

The giant fled, taking nearly a quarter million dollars in revenue. But Twin Partners has rebounded from the experience, in large part from lessons learned from the gaffe that cost it the job.

I was just sickened, but we learned from then on to take the high road," Galbraith says. "We've done well because we learned not to cut corners."

Businesses of all sizes and types are subject to devastating missteps. So what do you do about it? If it doesn't mean the end of your company, you spend some time doing whatever it takes to get the anguish and misery (and incompetent employees, if necessary) out of your system. Then you pick yourself and your business up and move on.

However, you must know what steps are necessary to recover -- and what message you can squeeze from the mishap so it doesn't happen again.

Here are six to consider:

1. Know the what, the how and the why. Start by identifying precisely what went wrong -- as Twin Partners did in pinpointing the cut-rate freelancer who lacked the necessary software. That achieved two closely related objectives. It earmarked the problem and also suggested a solution that has since fueled the company's resulting growth. "We learned that we need to spend more now and expect a return on that investment over the long run," Galbraith says.

2. Admit your mistakes (and your willingness to learn from them). Making a mistake is one thing. Denying responsibility -- particularly when all evidence points to your culpability -- can only make things worse. If the mess is of your own doing, be ready to acknowledge the error and stand ready to do whatever's necessary to repair any damage. That demonstrates integrity and a commitment to right all that went wrong.

3. Go beyond what you have to. If you're the one at fault, don't just correct the mistake -- mollify it by offering more to make sure a client sticks with you. If that means a print job that's been fouled up, dangle a 20% discount for the next project. "If the company merely reprints the order, apologizes and delivers the order, the customer has no incentive to come back because they've handled the problem the same way any other printer would have," says Lisa Kanarek, an author and business consultant.

4. Don't accept the blame if it isn't warranted. Clients and customers have a penchant for approving things, only to double back later and
scream they never said anything of the sort. Here, your tack depends on the situation. If the client has been a pain and you can swallow the loss, cut yourself free. As a compromise, split the difference of whatever cost may be involved. But don't be afraid to stand your ground if the matter is significant and you can justify your position. This illustrates the importance of having clients sign off at every point possible to acknowledge their approval of what you're doing, says author and home-office expert Jeff Zbar. "Be tactful. But don't be afraid to fight for something if there's enough money involved or if it's a real matter of principle," he says.

5. Be creative in resolving and recovering from problems. Not only can that move you past a simplistic duck-and-cover reaction, but you can also transform a train wreck into more of a fender-bender. Business coach Joyce K. Reynolds cites a manufacturer which had to cope with a Hindenburg-sized bombshell -- hundreds of thousands of dollars' worth of unwanted custom fabric. Rather than simply eating the losses, the business tried to make the most of the marketable value of the material. "We determined that there was a promotional item that could be made out of the fabric," Reynolds says. "It went a long way toward reducing the cost of the error. It shows the importance of not panicking and getting creative."

6. Be smart and savvy in dealing with foes and saboteurs. One of the most potentially damaging elements of a big mistake is the talk after the fact, such as a disgruntled ex-customer who's bad-mouthing you to anyone within earshot. Don't turn a deaf ear. If you know someone is running down you or your business unfairly, write a letter asking them to stop. If it continues, contact an attorney; slander may be involved. Equally critical is how you approach prospective clients and customers who may have caught wind of such talk. It's generally a good idea to acknowledge any differences you have, but not that you have made every effort to resolve the problem amicably. Make sure
you have references from satisfied customers at the ready. One malcontent versus 10 happy campers suggests a rare problem that is out-of-character for your business. "Be honest, explain what happened and what you did to resolve it," Kanarek says. "Then, share a list of references for the [prospective customer] to call. Someone may want to seek revenge, so no matter what you say, you can't win. That's when you let others do the talking for you."