10 Unexpected Things That Will Go Wrong Once Your Business Takes Off
It was the best of times and the worst of times — but nobody prepared you for the problems your “success” would bring.
For the first 18 months of my entrepreneurial career, I worked in the vacuum of my dark, 457 square foot studio apartment, spending thousands of dollars each month without making a single sale. It was glorious in that my isolated bliss shielded me from the woes I would have encountered if that business were booming all that time…
While that costly, customerless venture went down in history as my 6-figure failure, I was blessed — or should I say cursed — to stumble upon some subsequent ventures that did generate interest and sales. A lot of them. At an incredibly accelerated rate. I quickly learned that a booming, high-growth business comes with some very real downsides, too.
Unfortunately, there are more than a handful of unexpected incidents that can go wrong — and in my experience, once your business grows beyond a certain size, they most certainly will.
1. The negative consequence of having a high volume of customers
The process of transitioning from a brand-new pre-revenue venture to one generating a high volume of sales takes entrepreneurs on a mental and emotional roller coaster. That progression looks something like this:
- Fear you won’t get a single customer
- Elated shock and disbelief when the sales start trickling in
- An overwhelming insecurity that those newfound sales may dry up
- An unexpected, out-of-the-blue angry customer demanding a refund — and your immediate panic that they may be one of many to come
A good friend of mine runs a company that blew up in the most viral way, with press coming in hot from every which angle: Buzzfeed, Shark Tank, Oprah, The Dodo, you name it. He went from a few sales a week to thousands per day. It was amazing — until the returns and refund requests started pouring in. His product was good, but selling in volumes of tens of thousands attracts all kinds of customers and their colorful reactions.
Some people returned the product used, worn, broken, and torn, while others purchased multiple sizes or colors in order to sample them all, choose their favorite, and return the rest. Most of those returns couldn’t be salvaged or resold, and instead were written off as “shrinkage” costs.
His “shrinkage” costs from unsalvagable returns exceeded 30% of his revenue! That meant when he made $100k in a month, $30k of that would go right back to the customers it came from — and he’d lose the product cost, as well.
Truth be told, his story isn’t unique — and neither is his 30% refund request rate. A few things you can do to ensure refunds don’t put your business in a financial bind:
- Have a clear return policy (make sure it isn’t overridden by the platform on which you’re selling)
- Research the average return ratio in your industry and set that portion of sales in a refund reserve fund until the refund period has ended on those sales
- If you’re seeing overwhelming refunds from one source of leads or channel of sales, consider if decreasing or eliminating that source of leads or sales would be financially preferable for your business
The last thing you want is to go into debt over customer returns because you were blindsided by those refund requests and spent your customers’ money before it was 100% yours.
2. The two types of unwarranted disputes
A client hired me for a financial consulting gig a few years ago ahead of their investor presentations. The engagement lasted a couple months, and soon enough that client became one of my best friends. Thus, you can imagine my surprise and dismay when my payment processor alerted me of a dispute for a very large sum: the multi-month consulting fee.
It was incredibly awkward asking my client-turned-friend why they disputed the payment…(hence, why you should never mix business and pleasure). Once I mustered the courage and sent them a timid text, treading around the mistaken dispute, they were instantly apologetic. Since I’d billed the consulting under my company’s business name — rather than my personal name — they didn’t recognize the charge on their statement. Suspicious of a large charge from an unfamiliar entity, they called their bank to dispute it, unaware that it was in fact my consulting fee.
Luckily, I was dealing with friends and good, honest people, so they were quick to have their bank reverse the dispute. However, a few months later, a similar incident happened to one of my other companies — but this time, from a regular customer, not a friend. Since at the time I had multiple companies on one payment processor, the parent company’s name showed up on their statement. While this had never raised a red flag before, this customer was quick to call her bank and cancel the unrecognizable charge.
The moral of the story is simple: Your statement descriptor matters — a lot. Make sure customers know exactly what charge they’ll expect to see on their bank statement, and don’t get too creative with it.
Not all disputes are amicable accidents, however. When you attract a high enough volume of sales — especially those acquired via social media or other low-touch paid digital advertising channels — you never know who you’re dealing with. A small percentage of buyers may be scammers, intent on gaming the system to get away with free products at your expense.
For these situations, it’s important to keep good records, including a customer’s receipt of the product or service and proof of access or use if you have it. Winning a dispute all comes down to the evidence, so arm yourself with failproof data and you’ll hardly ever lose.
3. This is why you need to get a bit tech-savvy, no matter your business
The last payment-related headache you’ll most likely face as your business scales — especially if you offer any type of subscription product or multi-month payment plan — is a failed payment. Or should I say, failed payments?
Failed payments occur when some bank-related issue prevents a scheduled or attempted sale from going through. They could be due to:
- An incorrect CVC code
- An outdated card
- Insufficient funds in the account
Unfortunately, the only way to address these incomplete payments is to deal with them head-on. Typically, that means contacting the customer and explaining the issue. This is when understanding your software and technology comes in incredibly handy.
When a customer’s payment fails due to outdated card information, who’s going to send them the card update form? You are — assuming you know how. Your best bet is to get intimately acquainted with your checkout software, invoicing provider, or payment processor. The worst thing you can do is leave your business in a lurch because you don’t understand your own technology and have yet to locate the “card update” button, resend receipts, or issue partial refunds if need be…
4. Even your itty, bitty business will probably succumb to this attack
Years ago, if you told me hackers would target my itty, bitty business website, I would have laughed you out of the room. There are so many better, bigger hacking targets out there. That’s what I thought, until the day before a marketing promotion to 400k+ prospects, my site was taken down entirely.
Between paid ads, emails, referrals, and a good amount of SEO work, we’d started generating some traffic — like tens of thousands of hits at a minimum. Apparently, that was enough to pique the hackers’ interest. Thanks to an unconfigured firewall and a backdoor into a dormant site on my company’s shared hosting plan, the hacker got in — and they went to town, burying redirect links throughout the site in an attempt to divert our hard-earned traffic.
Frantic, we called in our developer, our hosting provider, our security team — the big guns, as they say. It was an “all hands on deck” cleanup, and it took all night.
The moral of the story? Always pay for backups, website security, and make sure your firewall is properly configured. Hackers smell traffic a mile away.
5. Don’t get too excited about your newfound press
One of the most exciting moments occurs when your company gets its first earned media debut. I still remember thinking that national feature would change my life — and catapult my company’s sales — forever.
Spoiler alert: Media features don’t necessarily generate leads or significantly increase sales — and they certainly don’t guarantee a “forever” impact.
While the newfound press may not instantly take your sales from $0 to $1M, it can definitely up your “street cred” or social proof among prospects, which can increase your sales conversion rate. Thus, it only makes sense to milk those media features for all they’re worth and plaster them across your website and every bit of marketing content you create. After all, it’s free, right? Wrong.
Unfortunately, even earned media can come with some costly strings attached — like the legal requirement to purchase a license from the media company’s logo owner. Ignorance to the legalities of licensing, logos, and the use of earned press can cost you a lot more than a fine or a slap on the wrist.
One of my companies was hit with a $10k licensing fee for showcasing our very own media feature we thought was protected under “fair use”. Luckily, they didn’t sue and offered us a few licensing options if we agreed to cooperate. Bottom line? Know your rights, and don’t assume earned media is yours to repost or promote for free.
6. You’ll probably wake up to a few of these, too — or a few hundred
They say you know you’ve made it when you get your first hater. I think they’re referencing celebrities, but I’m going to apply that same logic to business and marketing, as well. Once my company began amplifying our reach, running multiple concurrent high-volume campaigns across various channels, the hate started rolling in.
- Angry comments
- Rude texts to our business line
- Obscenity-laden emails
- Accusatory voicemails (from people we never called…)
When you’re reaching a ton of prospects, whether through social ads, automated chatbots, physical mail, or outbound email, some people are going to get annoyed. Some will even get vengeful and threatening. There are only two solutions:
- Stop all marketing activity, crawl into your hole, and shy away from the haters and the rest of the world forever
- Develop a thicker skin and find a way to deal with these haters at arm’s length, rather than allowing them to ruin your day, mood, or business
7. Once you get into the 6 or 7+ figure groove, this nasty wrench may hurl itself your way
Picture this: You’re three years into using and mastering the same marketing software. You’re that provider’s biggest customer, spending over $4k per month thanks to your usage level. All of a sudden, ahead of your next mass promotion, the functionality upon which you relied stops working.
An exchange with the provider reveals worse news than you expected: You’ve outgrown their software. They can’t handle your volume and admit that glitches will occur attempting to support your company’s over-usage.
It’s the 11th hour, your planned promotion was set for next week, and you need to scramble and find, learn, and configure a whole new provider. In other words, you need to make up for the past three years of experience in the next three days. Yes, this is a true story, and it shocked me at the most inconvenient of times.
The unfortunate truth is that if you scale quickly, you probably will outgrow your initially chosen software provider at the least convenient time. You may not even see it coming — I certainly didn’t.
The solution? Diversify your marketing, familiarize yourself with many types of software, challenge yourself to become as resourceful as possible, and constantly remain on the lookout for alternatives. In my case, the three years of experience enabled me to implement makeshift temporary workarounds while searching for our next upgraded provider. As usual, resourcefulness was my business’s savior.
8. This one cost me an unexpected $2,500 — but ignoring it would have cost me $50k+
After narrowly avoiding a major hack attack that threatened to take down my entire company’s reputation with unsavory redirect links and vicious malware, I let out a giant sigh of relief. For about two weeks, until the next technical crisis befell us: Our website started glitching and slowing down big-time…until it became consumed in a spinning wheel of doom.
Oh, and what do you know? We had another major promotion scheduled for the following week — again.
We again called an “all hands” meeting of our developer, another outside developer, and our server and hosting provider. We were left with two options, corroborated by all three parties:
- Upgrade hosting to hopefully provide a solution — though it may be temporary
- Rebuild the entire site on faster technology
Either way, we weren’t getting out of the problem for under four figures. Since time was of the essence, we chose option 1, and paid the $2,500 to upgrade to our own dedicated server. Thankfully, that was enough to return the site to just below lightning speed and functionality — for now.
Your takeaway? The bigger you build your site with pages, features, plugins, and other bells and whistles, coupled with an unrelenting flood of high traffic, the more likely your site is to lag, slow, freeze, or go down entirely. Monitor your site’s health, speed, and server usage so you don’t get blindsided by the spinning wheel of doom at the least opportune time. Additionally, keep a reliable, responsive developer (or two) and hosting and server provider on hand at all times. You never know when you’ll need them to save the day at the last minute.
And the $2,500 I paid to upgrade the server? That was a hit to my company’s wallet, but it was a lot less painful than the $50k we would have lost if the site crashed during the upcoming planned promotion.
9. You’ll get the most shocking of emails
For most companies these days, email is the lifeblood of prospect and customer communication. Thus, it stands to reason that companies would be fairly protective over their email addresses to ensure unscrupulous employees aren’t sending inappropriate or reputation-compromising messages from the company account. That’s easy to prevent: Don’t hire bad people. But what if those unauthorized emails aren’t coming from your employees after all?
A few months ago, I was checking my company’s junk folder, and I came face-to-face with a very perplexing, downright frightful email. It was sent to my company’s address…and came from my company’s address. The body of the email was some long extortion scheme that requested we wire money to some offshore account in order to regain control of our email.
A less seasoned entrepreneur — or someone who’s never been on the receiving end of a money extortion scam — might have panicked and complied right away. For me, however, this was not my first rodeo. There was the influencer who scammed my second startup out of $4500, and then the social media marketing “agency” who scammed my later company out of $30k+…
Scam me once, shame on you. Scam me twice? Still your fault. Scam me a third time? Nope, I think I’m gonna do my research before wiring you $20k.
In this case, the scammer had simply made it appear that they were sending messages from our email address, but they hadn’t actually hacked our account. Nonetheless, it was a frightening wake-up call that did pose the even scarier question: What’s to stop them from ruining our reputation and sending mass scam emails to hundreds or thousands of people from our address? Good question.
While I don’t have a solution to stop scammers from targeting businesses, I do have a suggestion for those on the receiving end: Don’t give in. Do your research, alert authorities if need be, and tighten your security. In my experience, many of these scammers talk a big game…much bigger than the one they’re equipped to play. Don’t allow fear and gullibility to override your instincts to thoroughly research the situation and weigh your options. The scammer can wait — trust me.
10. This will rear its ugly, expensive head big-time
The biggest mistake first-time and failed entrepreneurs can make is ignoring their losses — and their taxes. Many newbie entrepreneurs figure if they aren’t making money, taxes can wait until one day in the future if or when they start turning a profit. Here’s the problem: Delaying those tax returns is only going to make that “future” tax year a lot more complicated and costly.
Losses in business are good: You can carry them forward to offset profits in future years, thus lowering your future tax obligation. However, failing to report those losses in a timely manner can actually result in penalties — expensive ones. Take it from someone who found herself with a $20k CPA bill and thousands in “late” penalties on a defunct business from years prior: Don’t delay. Get an accountant sooner, rather than later.
For those who’ve already made the mistake of putting off the CPA until the profits come? Do yourself a favor and set aside a massive cash reserve for a major accounting cleanup, as well as enough to cover any taxes, penalties, or late fees. Better prepared and funded than surprised and wiped clean.
If something can go wrong…
Building a business from nothing to something is no small feat — and anyone successful in that endeavor should feel extremely proud. However, along the ascent to success, it’s easy to get lulled into the false sense of security that the rosy path you’re on will continue indefinitely. As someone who’s experienced both highs and lows in a multitude of businesses, I can assure you the highs were riddled with lows along the way — and they didn’t stop once I reached some threshold of success. What did stop? My unpreparedness and surprise.
The best thing about surviving adversity is the strength, resourcefulness, and mental fortitude it affords you to face the next bout of negativity. Business, like life, is rife with unexpected twists and turns. Preparation and the confidence to power through is the key to overcoming them and achieving the high beyond the valleys of despair.
