I once worked with a customer who decided to remortgage their home and look for a personal loan to fund a chain of coffee shops within London. Now, while I wanted this blog to be an especially happy one and for things to work out with this customer, there were a few fundamental issues that resulted in the downfall of his potential new business. 

The problem with his idea is that instead of working with an existing business is that you will never know if the multi-location version will be successful. You will not know if just one store will be successful. This is an issue called over-extension. When you extend too far too soon, you will run the risk of losing everything because you must devote more resources than you have. He spent more time and money designing the shops and kitting them out with nice furniture like white coffee tables, instead of concentrating on his core business. 

If you do not set up an initial location and experiment from there, you cannot get the chance to learn and gather valuable market research. The market research is necessary to learn and move forward. That lack of experience as a business owner is a hinderance, and this customer suffered from such. 

Lack of planning and strategy is the key downfall for many business owners around the United Kingdom. When the customer took the loan, he was confident that he would be able to make the multi-location model a success based on his planning and ambition, but sometimes ambition alone is not enough to help you succeed. 

After five years of trying and taking multiple loans with other companies because we would no longer allow him to get further into debt, he went into bankruptcy selling all property he had acquired alongside the company. 

It was a sad story, but it is also a happy story for me to relay to business owners throughout the years. Despite the number of times that I have argued for better planning, most of the time customers do not listen. Hopefully, now they will.