Your Business’s Reputation: An Invisible (yet essential) Asset
Your Business’s Reputation: An Invisible (yet essential) Asset
- Karen Torbett
If you were to ask your employees or your customers what they thought of your business, what do you think they would say? Do you think they would be as positive if they were asked the same question by a stranger who happens to be a potential buyer of your business?
Not knowing the kind of reputation your business has can come back to bite you when you decide to sell. Most people interested in buying a small business (or even a large one) will do some investigating into the reputation of your business. Of course they won’t ask you – they’ll ask your employees, your vendors and suppliers, your customers, your competitors, and local community.
Maintaining your business’s reputation should be a priority for any business owner, and not just because of the impact it can have on a sale. Your business’s image can attract or repel customers, too.
Here are some of the things that can negatively affect your business’s reputation, and some tips to improving a tarnished reputation when it comes time to sell.
Relationships That Matter
Your customer is #1, right? Pleasing customers is a primary objective for most businesses, whether the customer is a family seeking quality and budget-friendly meals in your restaurant, or a large contractor who purchases supplies from your manufacturing facility.
But the customer isn’t the only important relationship in business. The way you interact with your own vendors, your business location’s landlord, the local government, your utility companies, your competition, and the bank is just as significant.
These business relationships are essential to developing a good reputation. Do you pay your vendors on time? Do you pay your rent and utilities on time? Are you in frequent rifts with local government or other local businesses? How do you treat your competitors? Do you talk badly about them?
Don’t Try to Sweep Things under the Rug
Just because it didn’t make the front pages of the local paper doesn’t mean an informed buyer can’t find out about any lawsuits or customer complaints levied against your business. For a small fee, the public can find out a great deal about a business through a business background check. Though a person won’t be able to find out everything, he or she can easily discover enough to change their mind about purchasing.
If scandal or damage to your business’s reputation has prompted you to sell, it will likely be reflected in your asking price, but that doesn’t mean you shouldn’t be up front with an informed buyer who asks for this information.
A truly motivated buyer may not be fazed by a few nicks and cuts to your business’s reputation, and in some cases, hearing your side of the story can help to improve it. But when it comes to more serious issues, such as a lawsuit or scandal that has noticeably affected your customer base, it will show in your financials, so it’s best to just come clean.
In some cases, it may be in your best interests to hire a publicist or public relations firm to help manage the fallout of a scandal or lawsuit, especially if you have time before the information gets to the public. Crisis management is a key area of expertise for most publicists.
Treat Employees Well
Some industries are naturally more disposed to heavy turnover of employees. Businesses that generally hire people who are looking for part-time work, or are satisfied with minimum wage pay (such as teenagers and college students) are going to see workers come and go. Knowing that an employee isn’t going to make a career working in your convenience store doesn’t mean you should disregard him or her, or treat him or her any differently than long-term or “white collar” employees.
People like to talk about their jobs – especially if they aren’t happy. If you’ve ever treated employees unfairly, people are going to hear about it, and even this can damage your business’s reputation.
Your business’s reputation can be affected by more than just former employee complaints. Senior staff members, who you trust to do the business’s accounting, handle invoices, and pay bills are going to know what’s happening financially. This goes back to the issue of vendor and supplier relationships. If your vendor and supplier relationships are poor, the staff members who deal with those people are going to know it, and they could talk about it – even just with friends or family in the community.
Treat your employees well and don’t expect internal blemishes to remain internal.
Word on the Street
Your customers are sort of your unpaid representatives in the field. If they’ve had a great experience with your business, they’ll probably tell a few people. This referral system is called “viral marketing,” and is one of the most effective ways businesses gain new customers.
In contrast, a customer who has had a bad experience with your business will probably tell a lot more people. This is human nature, which is why it is imperative that your customer service be equipped to handle complaints expertly.
You aren’t going to be able to please everyone, and when you are confronted with a customer who has been dissatisfied for some reason (no matter how silly it may seem to you), treat them the way you’d want your mother to be treated if she were in their place.
You can turn around a customer’s negative experience by going out of your way to “make it better.” When people are treated like a V.I.P. in regard to a complaint, they’ll probably tell even more people. And, it demonstrates how important your customers are to you. They’ll appreciate it, and you won’t have to worry what the locals say if a potential buyer holds a street survey (and they do).
Competitors aren’t Enemies
Being part of an industry puts you in a network of business people just like you. It’s true, everyone is looking out for their own bottom line, but camaraderie among competitors helps to strengthen an industry, which benefits everyone involved.
Speaking badly about a competitor is not just in poor taste, but can be against the law, too. Slander is a real offense recognized by the courts. If you think it will help your restaurant to instigate a rumor about a neighboring café’s poor cleanliness, or if you purposely (and falsely) mention a competitor’s struggling financials to anyone who’ll listen, you could be liable for causing damage to another business’s reputation (and it doesn’t do much for yours, either).
Laws affecting libel and slander are found in a state’s business code under Deceptive Trade Practices. Every state has a law on this, and though penalties may differ from one state to the next, the context of the law is basically the same: “disparaging the goods, services or business of someone else by false or misleading representation,” is prohibited.
Take advantage of the wealth of experience and business wisdom that exists within your community or your industry. Burning bridges among competitors can do nothing but harm to your business’s reputation.
Repairing a Damaged Reputation
Like a person’s reputation, a business’s reputation develops over time. And, just as you can’t improve your own ‘name’ overnight, it takes a considerable amount of time to repair a business’s poor reputation.
Unfortunately, businesses with poor reputations do not often have the luxury of time to fix things prior to a sale. If you’re a business owner and you haven’t been paying bills on time, and haven’t treated your customers or your employees very well, you may have a hard time selling the shop without some carefully planned renovations – to your business’s image.
There are plenty of things you can do to improve the look of your business, but changing the minds of the vendors, suppliers, lease owners, employees, and customers takes time and effort. This means that when you come to the decision to sell, you can’t realistically expect to sell for a decent price within a few weeks. You must prepare to sell by taking steps to improve fractured business relationships.
Give yourself a year to begin paying bills and invoices on time and improve your customer and employee relations. Twelve months of effort won’t take your business’s reputation to the absolute top, but it will leave a positive impression with the people you work with (vendors, etc.).
You’ve poured time, money, and effort into your business. When it comes time to sell, you want to be able to get enough out of the sale to make your investment worthwhile. Keeping your business’s reputation in good standing is a must. If you’ve suffered a blemish here or there, take the time necessary to repair damaged relationships and improve your business’s good name before you place it on the market.
Failing to do so could represent a significant difference between what you wanted to sell your business for and what any knowledgeable buyer will be willing to pay.
Your Businesss Reputation An Invisible yet essential Asset - To learn more about this author, visit Karen Torbett's Website.
Like this article? Share it with your friends
Your Business’s Reputation: An Invisible (yet essential) Asset
- Karen Torbett
If you were to ask your employees or your customers what they thought of your business, what do you think they would say? Do you think they would be as positive if they were asked the same question by a stranger who happens to be a potential buyer of your business?
Not knowing the kind of reputation your business has can come back to bite you when you decide to sell. Most people interested in buying a small business (or even a large one) will do some investigating into the reputation of your business. Of course they won’t ask you – they’ll ask your employees, your vendors and suppliers, your customers, your competitors, and local community.
Maintaining your business’s reputation should be a priority for any business owner, and not just because of the impact it can have on a sale. Your business’s image can attract or repel customers, too.
Here are some of the things that can negatively affect your business’s reputation, and some tips to improving a tarnished reputation when it comes time to sell.
Relationships That Matter
Your customer is #1, right? Pleasing customers is a primary objective for most businesses, whether the customer is a family seeking quality and budget-friendly meals in your restaurant, or a large contractor who purchases supplies from your manufacturing facility.
But the customer isn’t the only important relationship in business. The way you interact with your own vendors, your business location’s landlord, the local government, your utility companies, your competition, and the bank is just as significant.
These business relationships are essential to developing a good reputation. Do you pay your vendors on time? Do you pay your rent and utilities on time? Are you in frequent rifts with local government or other local businesses? How do you treat your competitors? Do you talk badly about them?
Don’t Try to Sweep Things under the Rug
Just because it didn’t make the front pages of the local paper doesn’t mean an informed buyer can’t find out about any lawsuits or customer complaints levied against your business. For a small fee, the public can find out a great deal about a business through a business background check. Though a person won’t be able to find out everything, he or she can easily discover enough to change their mind about purchasing.
If scandal or damage to your business’s reputation has prompted you to sell, it will likely be reflected in your asking price, but that doesn’t mean you shouldn’t be up front with an informed buyer who asks for this information.
A truly motivated buyer may not be fazed by a few nicks and cuts to your business’s reputation, and in some cases, hearing your side of the story can help to improve it. But when it comes to more serious issues, such as a lawsuit or scandal that has noticeably affected your customer base, it will show in your financials, so it’s best to just come clean.
In some cases, it may be in your best interests to hire a publicist or public relations firm to help manage the fallout of a scandal or lawsuit, especially if you have time before the information gets to the public. Crisis management is a key area of expertise for most publicists.
Treat Employees Well
Some industries are naturally more disposed to heavy turnover of employees. Businesses that generally hire people who are looking for part-time work, or are satisfied with minimum wage pay (such as teenagers and college students) are going to see workers come and go. Knowing that an employee isn’t going to make a career working in your convenience store doesn’t mean you should disregard him or her, or treat him or her any differently than long-term or “white collar” employees.
People like to talk about their jobs – especially if they aren’t happy. If you’ve ever treated employees unfairly, people are going to hear about it, and even this can damage your business’s reputation.
Your business’s reputation can be affected by more than just former employee complaints. Senior staff members, who you trust to do the business’s accounting, handle invoices, and pay bills are going to know what’s happening financially. This goes back to the issue of vendor and supplier relationships. If your vendor and supplier relationships are poor, the staff members who deal with those people are going to know it, and they could talk about it – even just with friends or family in the community.
Treat your employees well and don’t expect internal blemishes to remain internal.
Word on the Street
Your customers are sort of your unpaid representatives in the field. If they’ve had a great experience with your business, they’ll probably tell a few people. This referral system is called “viral marketing,” and is one of the most effective ways businesses gain new customers.
In contrast, a customer who has had a bad experience with your business will probably tell a lot more people. This is human nature, which is why it is imperative that your customer service be equipped to handle complaints expertly.
You aren’t going to be able to please everyone, and when you are confronted with a customer who has been dissatisfied for some reason (no matter how silly it may seem to you), treat them the way you’d want your mother to be treated if she were in their place.
You can turn around a customer’s negative experience by going out of your way to “make it better.” When people are treated like a V.I.P. in regard to a complaint, they’ll probably tell even more people. And, it demonstrates how important your customers are to you. They’ll appreciate it, and you won’t have to worry what the locals say if a potential buyer holds a street survey (and they do).
Competitors aren’t Enemies
Being part of an industry puts you in a network of business people just like you. It’s true, everyone is looking out for their own bottom line, but camaraderie among competitors helps to strengthen an industry, which benefits everyone involved.
Speaking badly about a competitor is not just in poor taste, but can be against the law, too. Slander is a real offense recognized by the courts. If you think it will help your restaurant to instigate a rumor about a neighboring café’s poor cleanliness, or if you purposely (and falsely) mention a competitor’s struggling financials to anyone who’ll listen, you could be liable for causing damage to another business’s reputation (and it doesn’t do much for yours, either).
Laws affecting libel and slander are found in a state’s business code under Deceptive Trade Practices. Every state has a law on this, and though penalties may differ from one state to the next, the context of the law is basically the same: “disparaging the goods, services or business of someone else by false or misleading representation,” is prohibited.
Take advantage of the wealth of experience and business wisdom that exists within your community or your industry. Burning bridges among competitors can do nothing but harm to your business’s reputation.
Repairing a Damaged Reputation
Like a person’s reputation, a business’s reputation develops over time. And, just as you can’t improve your own ‘name’ overnight, it takes a considerable amount of time to repair a business’s poor reputation.
Unfortunately, businesses with poor reputations do not often have the luxury of time to fix things prior to a sale. If you’re a business owner and you haven’t been paying bills on time, and haven’t treated your customers or your employees very well, you may have a hard time selling the shop without some carefully planned renovations – to your business’s image.
There are plenty of things you can do to improve the look of your business, but changing the minds of the vendors, suppliers, lease owners, employees, and customers takes time and effort. This means that when you come to the decision to sell, you can’t realistically expect to sell for a decent price within a few weeks. You must prepare to sell by taking steps to improve fractured business relationships.
Give yourself a year to begin paying bills and invoices on time and improve your customer and employee relations. Twelve months of effort won’t take your business’s reputation to the absolute top, but it will leave a positive impression with the people you work with (vendors, etc.).
You’ve poured time, money, and effort into your business. When it comes time to sell, you want to be able to get enough out of the sale to make your investment worthwhile. Keeping your business’s reputation in good standing is a must. If you’ve suffered a blemish here or there, take the time necessary to repair damaged relationships and improve your business’s good name before you place it on the market.
Failing to do so could represent a significant difference between what you wanted to sell your business for and what any knowledgeable buyer will be willing to pay.
Your Businesss Reputation An Invisible yet essential Asset - To learn more about this author, visit Karen Torbett's Website.
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