Are there times when you should really turn down or discourage business?

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Consultant Michael Stone in a recent eletter describes a moral dilemma of one of his contractor clients. The contractor had been invited to quote a renovation project for a job at a run-down, double-wide mobile home — and the customer was ready to sign on the spot, having been declined (even to show up for an appointment) by other contractors.

The problem: The contractor feared the necessary work would far exceed the property’s resale value.

Stone suggested that the contractor investigate the situation by assessing comparable properties, and then advise the client of the work’s uneconomic nature. If the client insisted on the job, the contractor should clearly state the issue in the agreement so there is no misrepresentation and possible follow-up legal action asserting exploitation.

In the end, the client agreed to a “discovery” agreement and provided a $1,000 deposit. The contractor showed up at the site, poked around into the walls and discovered the rot and problems were even greater than feared and it would be wildly uneconomical to complete the work. He worked out the actual time cost for the research, wrote a rebate cheque for all but $250 of the prepayment, and left the scene knowing he had treated the potential customer fairly.

The closest I’ve seen to this sort of situation in my own business history has been working with a new business owner, just starting out. He wanted to get word out about his business and was interested in advertising in one of our specialized publications.

I asked him some questions about his business experience, budget, marketing knowledge and expectations, and suggested that a much wiser marketing investment at the outset would be to join a trade group where many of his potential clients would associate, and build relationships there. Otherwise, we could take his entire marketing budget, gobble every cent, and he would possibly end up with extremely limited if no results, because his is a service that cannot simply sold by advertising, but must have some relationships/business development to close the deals.

In a second situation, in the days when we were full-blown into marketing supplier-supported features (where a general contractor or owner would encourage through a letter–instigated by us– to ‘support’ them with advertising in our publications), we received a call from a service provider who said he is in desperate financial condition, but really needed the contractor as a client. I told my staff that we should either not charge this advertiser a cent for the ad; or make it so inexpensive that it won’t have any impact on his cash flow.

I’d like to say we were always so good, but cannot be so perfect, because I’m sure there are many situations where we took money from clients and really didn’t give them much in return. But underlying the message here is the simple concept that we deserve to treat everyone we work with respect and genuine understanding of their circumstances. If a sale isn’t right, we shouldn’t make it. In the end, honesty is the best policy and results in a truly sustainable business.

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