Small operations functioning in business take too many unnecessary risks. In the name of getting business, we embark on transactions that promise payment on the backend where the deal looks good. We may function based on the feeling that if we don’t do the business they client would look elsewhere, and we can’t afford to lose this deal. We operate out of fear rather than fact.
There are times that we need to realize that not all business is good business. We need to qualify our clients to see if they fit our profile which we should have decided throughout our planning process. The answers to these questions would help one in embarking on transactions for your business that would ensure sustainability.
- Why is this client not willing / unable to pay today for what they want?
- Are we in the finance business or the business that we have embarked upon?
- What procedures and policies do we have in place for handling clients / customers who want to have credit? Does this transaction fit within those guidelines?
- Who’s really affected should this client / customer default on their payment? Is there recourse that ensures we have the cash flow to meet our business’ commitments?
- Will the decision we take on this transaction keep us up at night / put us in the hospital due to the related stress? Will this client be up / resting comfortably during this same time frame?
- If roles were reversed would we be invited to use their credit facilities?
I’m sure that you can think of other questions; but the reality is are we in business / playing shop? The answer would determine if we’re really taking our business seriously and treating it with the respect it deserves. Remember the size of a business is determined by the mind of those who are embarking on it.