In a previous post, I mentioned that credibility and building relationships are often the “it” factor in getting funded, since they both can reduce the perceptions of risk associated with your business. This is particularly true when dealing with banks and investors, who see plenty of requests each day, and need some way to choose among them.
You already understand intuitively why trust plays a role – you’re more likely to invest money with someone that you feel you can trust than with someone you’ve just met.
There are lots of articles about how to approach investors (find out their hobbies and claiming it as one of yours is a popular one lately), how to write the “perfect” business plan, and even what to wear when you meet them. While your business plan and how you present yourself have a role to play, I believe that following one simple rule will have a much bigger impact on building your credibility:
Do what you say, and say what you do.
It is definitely simple, but far from easy. Because it means that your word is your bond, that by agreeing to something, you are committing to follow through. And in a world where excuses abound and many public figures have made careers out of shading or even hiding the truth, this is a very difficult thing to do.
Well, for starters, there is the “before” and “after” aspect of this maxim. In order to be able to take the credit afterwards, you had to know (and say) what you were going to do beforehand. Which requires plenty of planning, forethought, and the ability to describe those plans and vision to someone else in a coherent way. And that doesn’t happen overnight, so there is also lots of hard work involved.
Don’t promise what you can’t deliver, and you’ll make your life a lot easier when it’s time to say what you did.
Secondly, you have to use this maxim in every situation, not just when it’s convenient. Delivering a project on time and on budget makes everyone happy, so it’s easy to talk about that. But what about when you’ve missed a deadline, and don’t know how you’ll make it up. Or when you’ve unintentionally divulged confidential information. Or when you’ve decided not to pay a supplier because you’re out of cash. Or any of the other things that can (and do) go wrong when you’re running your own business.
When things go wrong, make it right. Do what you said you would.
But wait, you say – we’re talking about business here. Isn’t there supposed to be a certain amount of embellishment, to put things in a positive light? If I talk about my mistakes, won’t the other guy get the investment (or the client or whatever I’m competing for)? I can’t be all Pollyannaish when everyone else is spinning the truth like Run DMC!
It’s certainly possible that someone else with a better “story” will win today, but if your goal is to build a business that has real value, you not only have to develop excellent products and services, you have to develop a reputation for excellence – personally AND for your company. And using this approach will be a huge step towards developing that reputation.
Besides helping you obtain funding and maintain a great relationship with your investors, following this rule has other benefits for you and your company, including:
Better communication with clients = more opportunities for new business
Open, honest communication with clients will not only build credibility, it will make it easier for your clients to tell you about other problems that they are having, which in turn allows you to develop more solutions to those problems.
Better communication with employees = less turnover and more committed employees
Keeping your word with your employees creates a genuine relationship, so it’s easier to talk about what went right AND what went wrong. And when you give honest feedback, you also get honest feedback, which means that employees are more likely to tell you what they really want – it may be something besides a new office or free coffee in the break room!
Better communication in general = an “it” factor that makes you unique
Given the rarity of this attitude in today’s world, this simple factor can give you a very important competitive advantage – you’ll be one of the only companies doing it! And, as a method for getting business, or attracting the right employees, or developing a mutually beneficial relationship with your suppliers, this “it” factor is another way to stand out from the competition.