Be Slow to Trust in Business

A short while back a friend of mine lost his grandmother and had to got to the village to attend her burial. This friend of mine runs a small business that records music and videos for customers in one of the Kampala Suburbs.

For the uninitiated, in Uganda, due to the social fabric we have starting from family to the clan (which is a collection of families) and then up to the tribe (a collection of clans), we always show respect by ensuring that we attend to others’ misfortunes within that social circle. Hence it is considered very selfish of one to hear of a relative’s death and not do anything about it.

Prior to departing, he decided to hand over his operations to a young man he has known for years and had reason to trust him. Having explained all the operational issues to him, he set off for the burial confident that business continuity in his absence was sorted.

Some days later, he returns from the village and on doing an audit of his business, he practically found everything messed up. There was no money from daily sales, stock was down to almost nothing, the computer hardware had been compromised with some parts exchanged for poorer alternatives. To make matters worse, this is someone he has known and been with for a long time.

This brings us to the subject matter, Trust in Business. This topic isn’t new to anyone that has had a stint in business. Trust is an issue when dealing with partners, employees and customers. I dwelt on the issue of selecting partners in this post and trust is one of those silent considerations that are always at the background of your decision.

On the part of customers, a raw material supplier to my food processing business had grown immensely and made a lot of progress in his business. Within a year of operation, he had become an exporter to Rwanda and the DRC. He had this customer who would buy his products in bulk. Ordering for a 4 tonne truck each time. Due to the seemingly cordial relationship that had come up between them, my supplier begun extending credit to this customer from Rwanda who would proceed to pay up once the goods were delivered. A time came and the customer ordered for three 4 Tonne trucks on credit and as usual my supplier went ahead to fulfill his part of the bargain. That is the last time he heard of that customer. This single move on his business crippled him and his operations ground to a halt.

Employees are another source of challenges when it comes to trust. We keep reading in the newspapers about employees of various companies and Government agencies defrauding their employers. Now for the big organisations, their financial might may be able to cushion these shortcomings. However for you that has that small Chicken rearing business, imagine if a staff member never administered the required drugs to the chicken and opted to sell them to other chicken farmers, this could eventually lead to the loss of your entire stock. Such a setback means a lot to a small business.

What do I think about this trust issue?

In life we relate with many people and as a result we have all reasons to trust or not trust them. However, over the years I have learnt that you need to have compartments of trust if you want to live a simple life. There are people you can trust to deliver when it comes to getting work done, others when it comes to keeping time, securing secrets, handling money and so on and so forth.

When you start relating with someone, it is always important to identify which compartment of trust you’ll place him or her in. Truth be told we each have our own areas of weakness as humans and so can’t be relied upon to be trusted 100%. This implies that someone that can be entrusted to deliver on a certain project may not necessarily be entrusted with handling the finances of that project. This saves both parties from the embarrassment caused by the potentially bitter fall out.

From my friend’s experience I learnt why some other shop owners prefer to close their shops entirely whenever they are going away. They are justified to do so since the thought of making massive losses in absentia outweighs the need to keep customers served throughout, at least for the moment. Now this may sound scandalous especially when you are hearing it from an MBA like me. The business books will always tell us one thing but in reality some modifications matter a lot. Most of the material one studies in business is oriented towards large operations with the expectation that small businesses can simply copy and paste.

If you are in a business that doesn’t need the 24 hour cycle to stay alive, you have the lee way to shut it down occasionally just in case you haven’t identified someone worthy of entrusting the operations with. However, for those that have business operations that require babysitting like in the Agriculture sector, it’s high time you worked out a solution towards ensuring that you bottle up your staff or partners in compartments of trust. While it may not bring down the potential losses to zero, it will create some sanity and avoid the kind of extreme circumstances my friend found himself in.

Am glad to conclude by saying that he’s getting back onto his two feet once again.