August 23, 2013, by Malvika Johal
My guide to starting your own business – Part 7 “Reputation and Integrity”
Written by: R L (Bob) Hall (BSc, PhD; University Of Nottingham ) Owner & MD of Top & Jeffries Limited; Co-owner & Chairman of Fuel Additive Science Technologies Limited, Shropshire, UK
It takes forever to get established. Growing a business is a bit like assembling that flat pack furniture we all buy. You are reasonably competent at assembly when you have just done your first one, but you only start to get slick after you have done it several times in rapid succession. It seems to take forever to get established. All that non-intellectual operational boring stuff that has to be done (e.g. premises, bank accounts, credit card, work flow systems) takes way longer than it should. It also takes a long while for your customers to get used to you.
As a business start-up, you are a new unknown entity and need to start to develop your brand and business reputation. People buy from folks they like and they have confidence that the product/service will actually do the job you say it will. Delivering on this promise is your only trump card and failure is not an option the business can survive. From time to time individuals in customer organisations may appear to try and stretch your integrity. They may want some gossip, scandal or have inside track information. My experience is that the “appearance” of a potential short term gain in your inter-personal relationship with that customer is not worth the downside. If you “spill the beans” on someone else, that customer will assume you would happily do the same to them. Resist this kind of temptation, the individuals may not like it at the time, but they will certainly respect you for it and that is what is important.
This lesson also translates to product/service pricing. I try, wherever possible, to keep the same prices for all of my customers. There are different pricing levels for different order quantities, but I try hard to be uniform throughout the customer base. Any other way inevitably causes problems. This may be as simple as all the sales and admin staff getting confused and charging the wrong prices or one of your customers merging with/being sold to another. If there have been different pricing levels in the past one of those customers is going to feel like that they have been treated like a second class citizen. Even with no malice intended, incidents like this can erode your reputation.
Individuals in customer organisations can also sometimes try to push the envelope hard to gain some short term concessions out of you. This may be a delay/extension of payment terms, one-off additional volume discount, “sale or return” (yes, folks still ask for this today) or some other “special” deal. I can honestly say that every time I have gone along and agreed with these “one off” situations I have always regretted it afterwards as it has created some kind of problem later on. My advice is to never do it, if you have done your homework properly on your product/service offering, pricing and payment terms then why should you change? If that particular customer does not want it, understand why, but stand your ground and move on to others that will.
When you have made a sale do not feel embarrassed about chasing for the payment the day after the invoice is past due. Growing a business depends heavily upon cash flow and you need all the invoices paid as soon as possible. Failure to chase these payments means your business will fail, full stop. Put persistent non-payers on “stop” and do not sell them anything else until they have paid. Again, customers may not appreciate being chased at the time, but they will certainly respect you for it and will think twice about delaying payment again. Be sure to subscribe to be updated on the next in this series entitled ‘People’.