Jay Starkman | Crain's Miami

In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that have shaped their business philosophy.

Jay Starkman

Background:  

Engage PEO delivers comprehensive HR solutions to small and medium-sized businesses, providing hands-on, expert HR services and counsel to help clients minimize cost and maximize efficiency for stronger business performance.

The Mistake:

I underestimated the amount of work involved in starting up a new company. Prior to launching my current company Engage, I ran a similarly large company with several hundred employees. So after I sold it and left and started this new company, I didn't anticipate the amount of work that's necessary at the early stages of a company.

That resulted in incredibly hard work around the clock, and a need to start hiring people quicker than I had planned for, just because I had completely underestimated the amount of work needed at the initial stage.

As just one example, we needed to create a pricing model. I had a really good pricing model at my old company, and I couldn't use that because my old company had been sold, so I had to put together a brand new pricing model. So I sat down to do it, and at my other company, I had someone specific who had done that. Here, however, it was on me. So I started doing the work on it, and I realized how hard it is to put something together from scratch.

I ended up needing to hire an outside party that I had not budgeted or planned for, and as a result had to get that help to put together that pricing model. So I ended up spending a full week – and this was before the company had even launched – of 15-16 hour days, working with this hired consultant to put together a pricing model.

This was especially time-consuming and wasteful when you consider that a pricing model is a minor part of a business. You're just trying to figure out what to charge, and that it's not nearly as important as putting together all the pieces of the service. So I ended up spending a full week doing nothing but getting that pricing model in a place that was acceptable, and because of the way it was put together, I basically had to trash it a year later and put together a brand new one.

It's a mistake to assume that you don't need to take extra care in planning.

The Lesson:

When you launch a new business, understand the specific tasks that need to be done in order to fully grasp the time it's going to take.

When starting up a new line of business, it's essential to carefully map out the various tasks that are required and make sure that enough time has been allocated for each one, with a good appreciation of what's involved and not taking for granted what you already have set up.

Even if you know what needs to be done, it's a mistake to assume that you don't need to take extra care in planning.

Take much more thorough planning of each individual task so you can be better prepared for the demands an early stage company has. I knew that entrepreneurship was hard. I had started several companies before, but you forget the amount of work that's necessary, especially those first six months. I think that's something that all entrepreneurs underestimate.

Follow Engage PEO on LinkedIn at linkedin.com/company/engage-peo.

Photo courtesy of Jay Starkman

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