Kate’s Q&A October 2015 – How do you deal with the shits in business?

Thank you to Stephen for submitting this question for October – he writes as follows:

 Had a bad week after being let down by taking some people at their word!!! You’ve said there are “shits” in business, well I definitely came across a couple last week. They made veiled threats forcing me into a corner and they still owe me £12.5k which I have my doubts I’ll ever see without a legal fight. In the grand scheme of things it is not a big deal but I cannot seem to shake off the disappointment felt by the way some people go about their business. Do you have a tip to forget setbacks like these?

I mentioned in September that the more people you come across the increasingly disappointing humanity can be, and the number of shits you come across exponentially increases as you grow your business.

It is a sad fact I have witnessed that the bigger you are the more you are exposed to – and for a person such as myself that genuinely believed that there was a 99:1 ratio of good to bad in the world it was horrifying to find that ratio increasing to 90:10 in a medium sized business and even worse as we continue to grow.

There are reasons for this – you are not recruiting from your own social pool, you are treated more as a business not a human being so people don’t have the same empathy for you and your increasing profile makes you a target, turns you into a magnet for people to try it on.

Stephen asks what he can do to deal with it – and it’s not much use to say it’s all about preventing it where possible.  But that is the key to learning from the horrible experience you are going through at the moment and reducing the likelihood of you being exposed to it in the future.

Anticipate – you need to believe it can happen at any time. And look for all the signs. Up trading, skipped payment, poor admin and making you jump through hoops etc etc – all signs of potential problems.

Budget for it – emotionally and financially. If you budget for it, it will never be a surprise when it happens. Our nicest franchisees completely dropped us in the shit, one of our gentlest employees slapped us with a Claims for U employers liability claim and one of our longest standing clients up traded massively and then went into a clause 11 which meant we weren’t going to be paid and we could sue them for the money.  Now we budget for it – a percentage for bad debt provision built into our business knowing it will happen every year.  Emotionally this is tougher but gradually you hold yourself back and have a cooler emotional tie with people out of necessity – because you genuinely never know who is going to be the next.

Prevent  – so you need bullet proof credit checking, payments up front, tough terms and conditions and no deals for mates – you are running businesses not charities. Bonds upfront, weekly direct debits – all of this will minimise your risk.

If after all of this you still get your fingers burnt – and you can 100% guarantee that you will – you need to go in hard to retrieve what you can from a situation.  I spend more with lawyers now than I ever have, and I make it known that this is the action that I will take in the event of non-compliance. People know that there are consequences to poor behaviours or non-payment and I give little leeway.

It takes years to harden up to this degree and underneath it all I still have a soft centre.  But this time last year I went out for dinner with a franchisee and his wife – and they said they considered me a friend and loved working with the company etc, etc.   I was having a lovely night but I said – quite gently – I very much enjoy your company and am having a great time, but please remember that before everything else I am an officer of Diamond Logistics and not a personal friend – and this is how I will remain because there will be time when I have to lay down the law or take action that you may not like, and you need to know it’s not personal – it’s my job.

I explained that that helps not just them but me too because I too am only human with my own desires to be loved and my own human frailties, but that detachment meant we all knew where we stood.  I can’t say too much because it’s potentially a legal matter now but needless to say above-mentioned franchisee royally shafted us this year including fraudulent invoices.  It was bad enough that they were a ‘nice franchisee’ but it would have been quite painful if they were friends that had betrayed me, so that professional distance really helped.

There’s no easy fix to this Stephen, other than in your situation to go in hard and legal to retrieve.  And safeguard your business in the future by not extending so much credit and limiting your exposure – because it can and probably will happen again.


Go get ’em – and keep me informed of your progress.