Bad Business and Conmen

My sister mentioned recently that she has worked for six companies in the last three years without moving from her desk. This is not the result of some freak industrial accident but the fact that her company keeps going bust and then reforming in new imaginative guises.

I heard a similar story from a friend in the same week. She has been working for a magazine that has a bad habit of not paying any of its suppliers. Added to the insult of not receiving a pay cheque in months, she got the added shock of a court order from an unpaid supplier she had booked some work on their behalf with. The magazine is still trading.

Unfortunately, everyone seems to have a dodgy business story. We did some work for a company in our early days. Fortunately the alarm bells started to ring early so we only did some outline work before invoicing. We then entered a twilight zone of amusing excuses, bounced cheques, tense meetings and no money. But like a bad penny, he kept popping up — we heard from small printers that hadn’t been paid, and a friend who had to take him to an industrial tribunal to get three months of salary. It seems to be a fact of life that it is the most vulnerable who get burnt the most.

It is these people who have given entrepreneurs their Arthur Daley reputation. Business is about taking calculated risks and these don’t always turn out. The difference is that these ‘dreamers’ knowingly entering into agreements they have no intention or realistic plans to honour. That is fraud.

No self-employed person is keen on strict bankruptcy regulation. It is hard enough making a business work without a sword hanging over you. However, there has to be a system that is flexible and discerning enough to stop the con men.

At the same time, you have to protect yourself. Pay heed to the maxim that a deal isn’t done, until the money (and not just the cheque!) is in your bank account. In particular be very wary about entering into supplier contracts with first time clients. Perhaps set up the arrangements, but ensure they deal direct with suppliers. It is a bit more work but a whole lot safer for your bottom line. You can console yourself that any customer who is nervous of this should probably set alarm bells ringing anyway.

It’s also worth checking the grapevine about new customers and asking for trade references. If you get stung, spread the word to save others. Personally, I would love to see a website that allows you to post the name of anyone who has ripped you off, but this would lead us into dot com territory. And that’s a whole other story!