In business there are some unwritten rules. I call them business ethics. Not everyone has business ethics, so be careful. And be sure you do not lower your standards. Although the rules I will discuss here are not enforceable in court (for the most part), they will be extremely important for your continued success. People will respect you if you have character and proper ethics. Someone may get away with pulling a fast one on someone once, but not for long. Remember the saying, “You can fool some of the people some of the time, but not all of the people all of the time.” Word gets around quickly in an industry, so if you want to be successful for the long haul, you need a good reputation for your business dealings. Here are some of the rules I live by.
A Deal is a Deal
If you make a deal, you need to be prepared to follow through on your part. “Get it in writing” is what you hear whenever you do business. As a lawyer, I give my clients the same advice. But you should be able to count on what someone says before anyone signs on the signature block. Once you have agreed to the deal, whether it’s in real estate or an operating business, whether a purchase or a sale, you need to go through with it. There may be a time when you’ve made a deal and the next day, before you have everything in writing, you get a better offer. Times like these will measure the depth of your character. Business is a marathon, not a sprint. If you make a quick buck by ripping someone off in a deal, you will carry that mark into future deals. Successful people, the ones you want to do business with, do their homework and will find out if your scheming becomes a pattern. When you make a deal, be sure that it’s the best deal you can get before agreeing to it. It’s all right to tell someone that you want to think about it or that you want to see if someone else will make an offer. The following is a real example of what it’s like to negotiate with someone who doesn’t believe in the notion that a deal is a deal. An acquaintance of mine was selling an eight-unit apartment complex. My wife called him and discussed the price, and they agreed on an amount. That Friday afternoon, I stayed at the office drafting a contract for the purchase of this complex. I called him and let him know I had a contract for us to sign, so he came over to look at it. He didn’t feel entirely comfortable with the contract’s creative terms and said he wanted to sleep on it. That was fine and understandable. I asked him to take the contract home and think about it. The following afternoon, I called to see what he thought about the offer. We negotiated one more point and verbally agreed to the sale. He said he would sign the contract and we could escrow it in the morning. The next afternoon I got a call from him saying that he’d received an offer for more money. I reminded him that we had a deal, we’d agreed to the contract’s terms. He fell back to the “we did not sign the contact” position. Against my better judgment, I asked him if he would sign a contract with me if I matched the other offer. He said he would. After reevaluating the property and determining that it was still a good deal even at the higher price, I changed the contact and headed to his house on a Sunday evening. I spent a total of two hours at his house, going over the contract in detail, after which he called the other bidder to tell him he was accepting my offer. He hung up the phone and started talking about the property again before signing. Just before he put his pen to the paper, he got a call from the other bidder, who increased the price significantly (and to more that I was willing to pay for the property). I sat there for another hour while he explained the dilemma he was in. He said, “I normally would have kept my agreement with you, but since real estate has to be in writing, I have a real dilemma.” His wife asked me, “Does this happen to you often?” I told her, “When I make a deal, it is a deal and that is it.” Eventually he went with the higher offer. Nothing personal, just business. But I will never do business with that guy again and will advise others not to trust him and to “get it in writing first.” So, if you make a deal, keep it. In the long run you will gain more from many deals than just this one. If you miss out on a bigger offer, so be it. Learn from your experience, have character, and get on to then next deal.
My Word is My Bond
If you say you will do something, do it. This is similar to the “a deal is a deal” rule. Giving your word is more than in a contract or an agreement. Let your reputation be such that if you say “yes” to something, it means you are going to do it. This will let others know that you are reliable, that you stand behind your word. This could be as minor as picking up everyone’s lunch order at work one day. Being a person who keeps his word will open doors in the future. It is also a great foundation for your character.
No Unnecessary Partnerships
I don’t have anything against partnerships. In fact, I am involved in several partnerships. Partnerships can help spread the risk and the amount of investment. Sometimes the deal is too big for one person to do. Even Donald Trump is part of several partnerships. When I refer to unnecessary partnerships, I’m talking about getting together with your buddies and deciding you ought to open a restaurant, buy a property, start a business, etc. You can fill in the blank. Social investing is a very quick and expensive way to lose money and lose friendships. These deals usually stem from a friendship, not a carefully analyzed business opportunity. Keep in mind that when you are in a partnership, you don’t call the shots. Be sure that you’re in a group that can work and make decisions together. Not deciding about some key items can hurt a business. Have an exit strategy. Know what it takes to buy out the others or to get bought out.
Treat Everyone with Respect
You don’t know who your next customer will be. The business owner might not wear a business suit. He may be in jeans and a T-shirt, if that’s the way he runs his company. The old adage, “don’t judge a book by its cover,” is very true in business, especially these days. Although respect must be earned, you should still treat everyone you meet with respect. This is class. Be sure that your language and gestures do not offend the person you are dealing with. The last thing you want to do is insult the decision maker, because it could cost you that customer and anyone she knows. I know a couple, a successful doctor and his wife, who manages his office. They had all their accounts at the one bank they had been with since they started their business. They wanted to open a new account or get a good rate on a loan from this bank. The wife called the banker, telling him what they needed. The banker ignored her instructions and completely dropped the ball; he was waiting for the doctor to call. This insulted the wife, who was the decision maker for banking transactions. Shortly after this, the couple closed their accounts and went to another bank. I heard about this from the wife and she recommended I avoid that bank. How many other people do you think she told the same thing to? Not treating people with respect will cost you. If you are good to people, one in ten people will say something to someone else. If you are bad to a person, that person will tell ten other people. Showing respect does not mean that you’re a doormat and let everything pass. But you don’t have to sink to the level of the jerk who is giving you a hard time.
Don’t Be Afraid to Stand Up for Yourself
If you don’t stand up for yourself, no one else will. You are your best advocate. If someone is blaming you for something that you didn’t do, speak up. Don’t take the blame to keep the peace because that peace may come at the price of your job or client. At the same time, never lie or try to pass the buck if you are responsible, just state the facts. Once you show that you won’t stand up for yourself, you’ll be at the mercy of the bully you are dealing with. Just as in school, there are bullies in business. When you stand up to a bully, nine times out of ten he will back down. But for that one time, be ready with the facts. And don’t let your success at standing up for yourself make you into the bully.
This article is an excerpt from my book, The Road Map to Rich: a Lawyer’s Perspective on Getting and Staying Rich. If you would like your own hard copy for free, please call us at 956-791-5422 and we will deliver to your preferred mail box