Hamed Alaghebandian | Crain's Baltimore

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

Hamed Alaghebandian

Background:  

Happy Farm Botanicals, based in Odenton, formulates and produces all-natural beauty products and home cleansers. The company avoids harsh chemical preservatives and organisms altered through genetic engineering. Its products are sold through major retailers, salons and beauty stores.

The Mistake:

We had a contract with our first major client soon after we got started in 2013. But because of overconfidence, we agreed to fulfill an order we couldn’t possibly do because we lacked the infrastructure. In this case, it was expert personnel and more modern equipment.

We had demand outstripping our ability to fulfill it, and it cost us a lot of profit.

Luckily for us, it didn’t result in the client being too upset. We were able to get everything back on track and regain our standing with the client and keep the client. But it did cause quite a financial burden, and it was certainly a humbling experience.

We use organic botanicals that require extensive research and testing to develop cleansers for the body and home, without harsh chemical preservatives. This is time-consuming, and you really need top researchers. We just didn’t have enough of them at first. But I think with all startups, the wing-it attitude is there and it’s in every entrepreneur. Half of being an entrepreneur is winging, but it’s easy to get arrogant. And sometimes, in the real world, winging it backfires.

We had demand outstripping our ability to fulfill it, and it cost us a lot of profit.

The Lesson:

I think one of the lessons of running a business is really controlling your growth and building on your foundation. Just like in construction and engineering, you need to have a strong enough foundation to build on. You can’t build a 30-story tower on a single-family home's foundation. That was an early lesson.

For us, it goes back to the lesson that getting a contract is only half the battle. Getting a contract is not the hardest part. Fulfilling the contract is, and that’s a whole different ballgame.

On our end, it definitely opened our eyes to what we need to do to be able to fulfill contracts like that. You have to know your capability and make sure you have the infrastructure to do what you’ve contracted to do. And the bottom line is people. You have to have good people in the proper positions to support what you want to do.

I had to take a step back and really analyze the mistakes we made and come up with a plan on how to prevent those mistakes in the future. I’m certainly more careful now about what contracts I take on, and I will not take anything unless, based on previous experience, I’m sure we can fulfill it in the time it needs to be fulfilled.