Subscribe

A Publication of WTVP

The mistake that will drown your business: not treating your company’s reputation as a valuable asset.

Every business starting out is limited by what a business owner has personally or can borrow from friends and family:

To grow beyond that and multiply your success, you need to earn a reputation that will unlock:

Businesses often ignore their reputation until they are facing a public relations disaster. But to get help from others, you will need to earn their trust. And a good reputation makes it easier to do everything from borrowing money and hiring the best employees to selling more products.

Ten years ago, business schools were still advocating “branding” your company as the way to gain household recognition. It was the recognized solution for being at the top of the buyers’ thoughts when they chose what products to buy. But branding is a company flooding the market with biased advertising pushing their products. In the new business paradigm, the buying consumer no longer trusts company advertising. The consumer of today researches your company through blogs, chat rooms and special sites that rate companies. This consumer shift has created a change in buying, and the new focus in business schools has suddenly become “reputation.”

The Princeton Research Associates International reported that about one in five adult consumers in the U.S. (22 percent) have contacted the Better Business Bureau in the past three years to get information about a business or charity. The BBB also averages over one million business complaints a year, and that doesn’t include the consumers who bypass them to take their complaints straight to the Internet. So your reputation is being watched more closely than ever before.

Most of the business disasters in the news today are about companies that were less than honest to their customers and investors. The list covers Enron, Worldcom, the subprime mortgage investment pools, and most recently, troubling accusations are surfacing about the government of Greece and Goldman Sachs. Even if Goldman Sachs is cleared of wrongdoing, their reputation has been tarnished.

A good reputation does make a difference. In a study of more than 200 large international companies reported by the MIT Sloan Management Review, researchers found that international companies with the highest reputation for their company and supply chain have shown the highest profit levels in their industry.

But reputation is important for small companies as well. The Internet has now become the voice of disgruntled customers everywhere. I chose a small rural town and selected a business in that town to do a Google search on. More than 60 percent of the reviews were scathing write-ups on the treatment customers had received from the business. Is it any wonder that the business has inventory backing up in storage? If you type “business reputation” into a Google search, it pulls up over 87 million websites. Customers want to know before they buy what your reputation is.

But it is not just customers who are concerned about your reputation. Local businessman and angel investor Chuck Weaver of the Central Illinois Angels investment group stresses that without a good reputation, you can’t access the business assets that control the growth of your business. “Before we decide to invest in someone’s business, we want to know they are honest in their dealings and have earned their customer’s trust,” said Weaver. “We have multiple meetings with our entrepreneurs before we invest. We want to know about the product, demand for the product in the market, and most importantly, the reputation of the management team.”

You can build your company’s reputation by just following a few simple rules.

  1. Always tell the truth, no matter how minor the detail.This includes telling customers important information that they need to know even if they don’t ask.
  2. Keep your word. If you under-promise and over-perform, you will never be tempted to ship substandard product just to meet a deadline.
  3. Never hire anyone who doesn’t have a high level of personal ethics. Your employees establish your reputation on the street. If you decide early on that all of your employees need to be above reproach (including yourself), you will avoid a lot of problems later.

A happy customer will recommend you to a friend, but a customer who feels cheated will warn anyone they can about the bad experience they had with your company.

It makes me remember an old Russian proverb I heard as a child: “Fool me once—shame on you, fool me twice—shame on me.”

Your company’s reputation does make a difference and can unlock three great resources: other people’s time, other people’s money and other people’s knowledge. iBi

Search