Lately I have been talking to a lot of people who are starting up or have started in the last few months. It’s always good to talk to people who have the courage to ‘move out of their comfort zone’ and do something creative. This is not to say that I don’t like to talk to people who are happy in their comfort zone Image may be NSFW.
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One question that I almost always get asked is “How can I trust my clients, customers, business partners, lawyers, accountants, employees and who not?”.
That is a very valid question. And this is something everybody faces – and I can relate it with my experiences. But let me turn around the question and ask you - what option do you have other than to trust? When you are small, you neither have the bandwidth or resources to hire ‘experts’ or expensive lawyers for documenting everything. At the same time, for the lack of experience, it’s almost impossible to think about a list of situations that one could run into – and hence it’s rather foolishness to even attempt doing it in its entirety. But here are certain things that one should do:
- Spend money on the legal contracts: When you are small, it is very common to sign contracts without seeking legal opinions – as it helps save you a lot of money. Don’t do that – absolutely don’t do that. If you are signing a similar 2nd contract, it is still OK to not get it whetted by the lawyers but do engage the lawyers the first time you are creating a particular kind of contract. You wouldn’t realize the importance of it until you become a little bigger and then know the potential downsides of not doing that.
- Spend time and keep an eye on all the major aspects of business: It’s good to follow the policy of ‘Divide and conquer’ with different heads for different aspects of business. But have regular meetings with the different heads and open all books (including yours) for scrutiny by all major stakeholders from time to time.
- Create a Shareholders Agreement: This is probably much more crucial than what it seems initially. You could survive even if your biggest customer leaves you stranded / cheats you or your accountant did something to maximize their benefits. What will hurt the most is if you or your business partners lose trust in each other. Remember that we all are humans – there will be times when the misunderstandings will creep in. So, it’s important to create a shareholders’ agreement soon enough which exactly talks about what are the authorities of each person and the team as a whole. A good analogy is that if you keep the money lying on the floor with nobody watching, many people will turn ‘thief’ and steal but very few of them would actually do it if they know that somebody could be watching.
- Communicate regularly with the stakeholders, customers, team-members and others important for your business: Yeah – follow all processes, have the legal systems in place and sign the right contracts but there is nothing to replace the regular communication with all the parties involved. Most people wont do anything bad with somebody they really treat as their ‘friend’. Communicate with people and be their ‘friend’ and you will mostly be in good shape.
In spite of all this, trust people. As long as you exercise a bit of caution, you will be much better off by trusting people rather than spending your time and energy thinking about what can go wrong and who can do wrong. This is not to say that people will not cheat you – THEY WILL – most of the times unintentionally but sometimes (sad) intentionally. And if it happens, just increase the level of caution that you exercise but dont get too paranoid. Try your best to forgive and forget it and worry about the common long-term goal. But, yes, don’t hesitate in making your concerns very clear to the offending party and / or severing your ties if you absolutely cannot withstand what has happened. No loss will be as big as losing out when you become bigger.
Whatever you do, please remember that you should forgive me for being really irregular with blogging BUT dont forget even if you can’t necessarily find a common goal Instead, keep visiting the blog. Image may be NSFW.
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I do intend to be regular, though not necessarily frequent.
Image may be NSFW.
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