Conveying credibilty

Have you noticed that in many countries, often very distant from each other, you find narratives which have a similar storyline? A young, naïve and trusting boy from a small village comes to the city where he is faced with cunning, cynical city dwellers. This is common: but why?

The problem is that job specialisation and huge city populations have caused the destruction of traditional community ties. The great benefits of efficiencies that accrue to modern civilisation come at a price. In modern society, pride and respect have been replaced by greed and admiration of the new 4WD: marketing gimmicks have replaced reputation.

So why do we need business associations? The first key word is trustworthiness.

I consulted an elderly couple, who were pushed into negatively gearing their investment by unscrupulous “investment advisors” and have lost about $20,000 on the investment as a result. Any business and investment decision comes with some risk. However, what is really appalling is that the investment was recommended to them despite the fact, with their low income, the couple would never be able to benefit from the recommended investment strategy.

There are stock and mortgage brokers who pose as “trusted advisors” and who recommend products on which you can lose tens of thousand of dollars just so they can have their commissions and kickbacks. We have auto mechanics who charge for repairs that were never performed, and chief executive officers who are happy to claim multi-million dollar bonuses, despite ruining the corporation. We have lawyers pitting separating couples against each other to secure their own source of income. No profession is free from the disease. (Of course, all the named professions and trades have a vast majority of decent, hardworking people.)

There is also the other side of the coin. A tree-lopper from St Albans was telling me about problems he and several of his friends had with some clients. The clients were making extravagant complaints and deducting huge amounts from the bill before paying.

It all would not be possible in a traditional village. No-one would dare to be unfair to their neighbour, as the next day no-one in the village would talk to them. The problem is that nowadays we just do not know whom to trust. Of course, we can not go back to small villages. But what can we do?

Those who have negotiated business deals in Arab countries might have been surprised by the question: "Are you a member of your local Chamber of Commerce?” Arabs, who have been trading for thousands of years, know well that being a member of a local chamber means you are responsible for your professional conduct to the whole business community. Of course, it is good for your business as well: being a member of a chamber (or traders’ guild) gives you credibility in the eyes of your prospective customers.

We have also some modern day examples of this approach. A US Better Business voluntary program does exactly that: it eliminates anonymity of businesses by their self-disclosure, and they have a consumer friendly complaint handling system.

In Polish there is a word partacz (partach) which means somebody, who does a very poor job. Originally it was somebody who was not a member of a trader’s guild. In German, there is the word meisterstűck - a piece of work of exceptional quality. An apprentice was obligated to present it to the guild to be admitted as a member. “Meisterstűck” is also a word expressing respect and admiration for somebody who has achieved excellence in this chosen area. As a society, we need to rebuild this sense of professional pride. Chambers of commerce and traders associations have a great role to play in this regard.

It has been shown time and again that intelligent and co-operative strategies are beneficial for everybody. It would mean more work and less hassle for businesses, better service for clients, more jobs within the community, and better sleep at night for everybody. Both scientific studies and commonsense observations show that societies which have developed ways to enhance co-operation are growing stronger and are dealing better with difficulties.

“What’s in it for me?” a business person might ask.

The key benefit of associations is encompassed in the simple message, “Together we can do more”. There are many worthy things one might need or want, but which are just not feasible for a single small business.

Some traders’ associations organise joint promotions of their shopping strips; some go to such lengths as St Albans trader’s Association which organises major events. Many lobby their councils for support for practical solutions to problems, for example, changes in opening hours and the traffic flow.

More visionary associations organise businesses and local communities in a joint effort to bring about change. Some, for example, might decide to solve an ongoing parking problem by the joint purchase of a run-down shop and converting it into a two-storey parking lot.

Some, like St Albans, lobby for major redevelopments such as pushing a railway station underground. Others, identify safety as a problem and organise joint patrols of hire security services.

Chambers and traders’ associations can stimulate creation of buyer’s groups: 10, 20 or, even better, 500 businesses combining their purchases of utilities or petrol, for example, can achieve significant savings.

Joint projects and joint ventures can be created quicker and more easily, if organised within a group of local businesses. Put simply; every business has its periods of cash shortage and periods when they would be happy to invest. What is beyond the reach of one business may be possible as a joint project.

For example, just a few months ago, a local printer was looking for partners for a joint development in the rapidly growing airport area. The idea died because chasing potential partners was too time-consuming. But this could be a different story within a well organised group.

Pooled Investment Funds are yet another possibility. While Pooled Investment Funds legislation provides tax advantages, knowledge of local conditions can help identify great local companies worth investing in.

Networking is invariably recommended as the most effective way of selling your products and services. Clearly it is one of the quickest, cheapest and most successful ways to sell products, especially those like business services, naturopathy, design and so on.

The story, however, does not end here. The benefits of buying within the network are perhaps even more important. For example, you may have problems with unreliable suppliers. You do all the work, attract the client’s attention, close a deal, and you would have completed the job, if not for some elements that have been outsourced.

When the suppliers fail to deliver you lose at both ends: not only you have spent time and money organising the service, but you also have to deal with the angry customer.

Let’s face it, everyone makes mistakes. The question is how we deal with them. Being a part of local business association gives you a strong motivation to fix any oversights. If you are in a network and you do a bad job with one person then you have destroyed your reputation within the whole group: just like in a village.

Another benefit of being in a business network is information. Recently one of our members, a successful businessman and owner of a wholesaling business acquired a highly sophisticated IT system from overseas. The system was expensive, but the benefits were expected to be much higher. However adapting it to Australian conditions meant additional costs. The worst thing was it caused significant disruption to his business.

For him much of this could have been avoided if he could have approached someone in a similar business to recommend a reliable supplier.

Opportunities are endless. What you need is ideas and the willingness to implement them. So, why don’t you join your local business association or if you don’t have one, why not create one?