I Always Wonder: Is This Person Keeping Track Of Our Business-Relationship Accounting Ledger?
I’m only 24 and I don’t have a lot of business experience, but something I always wonder about the people I work with (freelancers, factories, investors, etc.) is…
“Is this person going to remember when I do something good for them?”
For example, I might agree on 30/70 payment terms with a factory, where I will pay them 30% up front, and then 70% on shipment. If I have enough cash in the bank and decide to pay them early, tightening my cash flow while loosening their cash constraints and decreasing their risk… will they remember?
If our next order has a 2% discount, then they clearly remembered. Trust grows.
If they want to negotiate a higher price on the next order, and now they expect 100%-up-front payment, I know they are either…
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Not keeping track, or…
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Purposefully pushing me harder, hard-ball negotiation.
Either way, it’s a bad sign.
Especially when you are dealing with suppliers, investors, and freelancers from around the world… you may not have the clearest lines of communication. Actions speak louder than words, and they certainly speak louder than text-based Skype messages between someone who speaks native English and someone who speaks native Chinese.
Three Thoughts Relating To This ‘Ledger’
First, self-regulating and keeping track of an imaginary ledger can be naive at times. Some people won’t toss the ball back when you throw it to them. Some might not even understand what you were trying to do. Some may even see you as weak!
Sometimes, you try to give a little extra, and your next interaction begins with “We negotiate first, then I will talk to my boss.” Ouch!
To begin, give small. If the other party won’t play ball with you, then it may be the type of business partnership where you always negotiate, never give more than is defined in the terms, and every deal is a ‘fair’ one that won’t create excessive goodwill, but is fair for all parties.
Second, I believe it’s good to keep myself on the positive side of the ledger, even if it’s just a little bit. Small bonuses for freelancers aren’t necessary, but why not provide this? Telling your supplier that it’s OK that they shipped a week late, rather than demanding a reimbursement, may be fine in some instances. Normally, there are unseen things this person has done for you. It may not be as obvious as an unexpected $20 bonus, but every second of every day, they make the decision to give just a little bit more effort, or let things slide.
If my business is profitable, and that is due to the actions of someone who did the right thing, I don’t mind giving a little extra, even if what they did was part of the job description and they were already pad fairly.
Third, keeping yourself in the position of net-positive-value-giving is a smart business investment that makes you feel as good as if you are giving to charity. I donated some money to Wikipedia this year, and I realized that an equally good place for that extra money to go was into the pockets of the people who made my business possible in the first place!
Also, I believe that always trying to give a little bit extra keeps you in an action-oriented, offensive business position. Rather than being in ‘profit reaping’ mentality, you are in ‘investment mode’, even if you do remove the majority of the profits for yourself, the business owner.