Dick Yarbrough:

Doing Business With Friends Is Rife With Risk

By Dick Yarbrough

(12/26/07) It was not the way I wanted to end the year, but I have only myself to blame. One of my cardinal rules is to exercise care when doing business with friends. That is how friends can become ex-friends. I have adhered to that rule with a few notable exceptions. My insurance agent, now retired, is a neighbor and friend. My attorney is a longtime friend. Besides, my wife loves him better than biscuits and would beat me severely about the head and shoulders should I ever contemplate a change of attorneys. That is no small factor in his favor.

But doing business with friends can lead to disappointment, too. For a number of years, I have been dealing with one particular financial management firm. Not only did they do a good job of managing my modest nest egg, the staff from the president to the receptionist were like family to my family. We celebrated when they birthed babies, and we grieved when they fought serious illness. They told us about their vacations, and we told them about ours. We reminded them regularly how much we appreciated their management of our dollars, and they told us how much they appreciated our business. It was a great relationship. And it came crashing down.

As inevitably happens, organizations change. New management appears. New people get involved. Old friends leave or are too busy doing new things (like asking me to help them develop new leads for the business). The culture of the organization also changes, and it is not the place you started out patronizing. Bigger is not always better. The wise Woman Who Shares My Name wouldn’t know a REIT from the Ritz-Carlton, but she sensed the cultural changes long before I did. Don’t tell her I said this, but I’m not as smart as I think I am. She is.

I am not an easy person with whom to deal. My standards are high, and my tolerance for poor service is nil. Until the new crowd took over, that wasn’t a problem. Under the old regime, the customer was always right and was treated right, which meant this customer was rarely cranky. In a classic case of snatching defeat from the jaws of victory, the new management team succeeded in turning one of its most loyal and satisfied clients into an ex-customer overnight, and it didn’t seem to matter a whole lot to them. They appear relieved to be shed of me and my small-potatoes account. Likewise, I am sure. Besides, they have lost what had attracted me to them in the first place — superb service.

I have now replaced the bad actors with a new company composed, ironically, of executives from the old organization who convinced me that they wanted my business and promised that they would take of it. I suspect their track record will be equally as good or, hopefully, better. I just pray they don’t get so successful that they choose to merge or get bought out or develop “new synergies” and leave me with a bunch of tone-deaf and bureaucratic managers. Once is enough.

Life goes on, and so will the company I just left, but I am still trying to figure out how such an outstanding financial management firm got from where they used to be to where they are today. We didn’t change. They did.

Why am I telling you all this? To remind you that if you own, manage or work in a business or service that deals with customers/clients, you run for re-election every day. And you are only as good as the last experience your customers had with you. I cut my teeth in a demanding business with demanding bosses and was taught that there were only two rules for dealing with customers. Rule One: The customer is always right. Rule Two: See Rule One.

On the other hand, if you are a potential customer or client, I have some advice on doing business. Friends? You want to do business with them? Let me strongly suggest you go find a bunch of Quakers. It will save thee a lot of heartburn.