Some Practical Advice from a Lawyer

Just saw this posting from Michael Brady, an attorney here on Long Island.  Thought that you might be interested in what he has to say.

Good People Make Good Agreements

As important as it is to have a good written agreement in place to memorialize the terms of a transaction, doing so may not be enough to avoid litigation. Even more important is dealing with trustworthy people.

It’s a painful fact of life that some people are just not honorable; they will not meet their obligations regardless of what they put on paper. In that case, the only true protection is running away as fast as your legs can carry you!

But how do you know who can be trusted and who can not? How can you increase the odds that you will not wind up in litigation? While no measures are foolproof, you should:

1. Trust Your Gut.

Often you can tell right away that a situation doesn’t pass the smell test. Your first impression of your counterpart is negative. They express values or strong opinions that don’t mesh with yours. They bad-mouth their competition or acquaintances. Their initial proposal is completely one-sided and border-line insulting.  These are all flashing beacons warning you to change course!

Rarely will you go wrong if you trust your gut feeling. However, when your gut is sending you missed messages, consider investigating the other party.  Use background checks, review their financial statements, check out their Dun & Bradstreet reports, and contact the Better Business Bureau. Ask them for references and then actually call to verify them. Even a simple Google search may set your mind at ease. In business, the devil you know is definitely better than the devil you don’t know.

2.  Beware of Low Bids.

It’s almost cliché to say it, but if a deal is too good to be true, it probably is. Just as an onerous one-sided proposal in your counterpart’s favor is a warning sign, so too is a proposal that overly favorable to you. If the other party seems generous to a fault, it may be because they have no intention to deliver what they promised. Even with the best of intentions, if the transaction is not economically viable for the other party, they will have less incentive to honor their obligations.  They may also cut corners and deliver shoddy results in order to stem their losses.

Beware of bids that are far lower than others. Court dockets are full of lawsuits against people who have over-promised and under-delivered.

3. Put An End to Endless Negotiations.

When two parties’ differences are so great that they can only reach an agreement after arduous and protracted negotiations, chances are these differences will continue to flare despite the signing of a contract. Look at Israel and Palestine:  after over sixty years of negotiations and despite the signing of several agreements, they still have not achieved a lasting peace.  If you have to negotiate even the simple points to your agreement, you may be better off agreeing not to agree and doing business with someone else.

Also beware if you receive hard-fought concessions from your counterpart. If they concede to these terms under protest or because they feel they have no choice, you might be in a worse situation than if they never agreed at all. Resentment, anger, and economic distress all become “reasons” for them not to fulfill their obligations. Hollow promises fill court houses.

4. Get Paid Up Front.

The more time you give the other party to pay for your services or products, the less likely your are to receive full payment. There’s no law that says your payment terms have to be “net 30 days.”  Get paid as much as possible on the delivery of your work.

If you are not in the banking industry, you should not be acting as your customer’s lender. Let someone else finance the transaction.  I hear complaints that, in today’s credit environment, loans are hard to obtain and that “seller financing” is often the only possible way to get a deal done.  But think about it:  if the banks–with all their investigative resources, analysis and underwriting requirements–determine that your customer is not a good credit risk, why would you decide otherwise? Is any deal worth doing if there’s a good chance you won’t be paid?

But if you insist on being a lender, at least act like one.  Know your borrower (see Rule 1), and charge sufficient interest to justify the risk. Just be aware of your state’s usury laws and the Applicable Federal Rate (AFR) in setting your rate.

When you reach a fair agreement with a party you know and trust, and get paid on delivery, your written agreement becomes a sword you can leave in its sheath.

Here is the Link to Michael’s site.

http://bradyadvisor.wordpress.com/2010/09/16/good-people-make-good-agreements/

Staying Positive

If you are like most business owners, there are times when you are overwhelmed with all you have to do to keep your business running and vibrant.  I know that it is easy at these times to think about the days of being employed and getting a guaranteed paycheck each week.  You may be thinking how great that was.  How all you had to do was to get there on time, do your work, get your hour for lunch, and tough it out until quitting time.  Before you fall too far into that trap, I urge you to remember what it was like during the work day.

  • Getting to work at a specific time, even when there was seemingly no rhyme or reason for it.
  • Staying at work until the appointed hour, even if the work for the day had run out.
  • Listening to the complaining and moaning of your co-workers.
  • Hearing all of the reasons that your creative idea would have to wait for another time.
  • Feeling like there was no future for you.  Perhaps you felt stuck in a particular job.

I could go on and on, as could you.  So, now you remember the cost for the seeming security of being employed by someone else.  Maybe you feel even worse because you don’t want to go back, yet you are still looking at a mountain of responsibility for your business.

At times like these I physically write down all of the great things about running the business.  Yes, I have to write it down to get me focused and keep me positive.  You may be in such a down mood that you are having trouble conjuring up something.  Remember, nothing is too small to be grateful for.  For instance, try some of these:

  • I can do my paperwork in my jammies before I get ready for the day.
  • I can drop my kid at school on Tuesday and Thursday and no one gives me a hard time.
  • I can work on the weekend and take off on Monday if I need to.

This may get you into the positive frame of mind in order to move onto bigger things like:

  • I can spend an hour with a client if that is what is needed to get the job done.
  • I received a heartfelt thank you note from a grateful client last week.
  • I am doing what I love to do and am sharing it with the world.

You get the idea.  Once you start to think about the great things that are happening in your business, even more will pop into your head.

I urge you to grab that piece of paper and do some writing.  Stop the cycle of thinking of all of the bad things.  Once you are re-energized about your business, you will be able to handle the unpleasant things with ease and grace.

Have you found yourself in such a situation?  What have you done to boost yourself back up?  Love to hear from you.

Beth Schecher

Are You Prepared?

I am sitting here looking out the window at the first rain that is preceding hurricane Earl.  I have watched the people of Long Island prepare for the coming winds and rains for the past day or so.  Even in the midst of a pending storm, I am thinking about business.  I am wondering how prepared your business is when something happens outside of the daily normal events.  Things happen that we have no control over.  This could be a severe storm, road construction in front of your place of business, phone service outages, a sudden illness or disablement of any of the owners or employees, or equipment breakdown.  You know the kind of thing I mean.  I am sure that you have your own list of things that may have already occurred in your business life.

No matter what type of business you have, it is always wise to take the time to evaluate your preparedness.  One of the critical parts of your plan is to address the impact on your customers.

Think like a customer.

  • What is it they expect from your business?
  • What is the impact on them if you are not able to open your doors or perform your service?
  • How long can they sustain being without your service or product?
  • How upset will they be if they show up for service and your doors are locked?
  • Can they go elsewhere for service?

How can you keep customers happy and have them return to your business once you have recovered from your outage?  The goal is to let your customers know that they are important to you.  People are usually understanding and realize that sometimes unexpected things happen.  What they don’t appreciate is when you ignore that they have been impacted.

Consider three different time frames in which to address the customer:

Contact the customer before they show up at your door. This is usually possible in a small office or business with regular clientele.  For instance, the staff shows up at a doctor’s office only to discover that the doctor is ill that day.  Calling each patient that is scheduled for that day before they leave the house goes a long way.  The patient may not be happy about the cancellation, but they do understand that people get sick.  You may have been able to offer them the opportunity to see another doctor that day, and they will appreciate knowing that it is their choice.  Most people are glad that your have given them the respect of a heads up.  How can you best notify your customers in the event of a problem?  Do you have a plan?

Handle the situation at the expected time of service. Sometimes you just can not get to the customer before they show up at your door.  Yikes!  Now you have to deal with a range of emotions from someone who is caught by surprise.  I have seen disappointment, anger, elation (well, that was at a dentist’s office), and confusion.  No matter what the response, know that it is a valid one for the customer.  Do you have your staff trained in how to deal with customers at this point?  This is not always easy but worth taking the time to work with your staff on how you want them to respond.

Making amends after the fact. Whether or not you were able to talk with your customers before or during the outage, it is always good to show appreciation to them for their patience during your difficult time.  People want to know you care about them and that you understand they have been inconvenienced because of you.  It really doesn’t matter if it was your fault or not, they were still impacted.  There are many ways to show them that you are willing to go the extra mile for them.  Open extra hours the next week. Give a half price special for three days to get them coming back in the door. Give them their next visit for free.  Customize it for your business and for the particular situation.  It is not so much what you do, but that you show the customer you care about them.

Coming in to work to find the phone system is out is not the time to make up your plan.  I urge you all to schedule time to build your plan for potential outages.  It is good for business, good for your customers, good for your stress level, and allows you to continue to make a difference in the world.

If you have a story about dealing with an outage that you think might help others, please pass it on to me in the comments section.  Looking forward to hearing from you.