Many businesses are so uptight about customer risk that the processes to manage the odd instance drive business away

Richard Branson famously said, “I never get the accountants in before I start up a business.” His logic is that accountants, by their nature, are typically risk averse, and would have shut down many of his businesses before they even started as they were too “risky”.

Unfortunately, in business, you see so many examples of businesses that are trying to cover every possibility and every risk to make sure they don’t have any risk in business. There is a well-researched statistic that says 1.7 percent of the people in the world are tossers that want to make your life difficult. We have all experienced them and they can be time-consuming, annoying and cost our businesses money.

Unfortunately the sour taste left in the mouth from the 1.7 percent often dictates business behaviour with the 98.3 percent that are good sensible people.

Let me give you a couple of examples. I recently needed to put a book on the iBookstore. I was given a choice of five companies that I could deal with to make the process easier. As I clicked through each of the five, the first three had a process that showed me they wanted to cover themselves against tossers. They had an application process that resulted in a person emailing a 20-page contract that had to be signed and witnessed and then submitted for their approval with an expected lag time of four to five days for the entire process BEFORE I could upload my content.

I am sure their legal and accounting teams were very proud of how bulletproof their system was. Two of the five, and one of the companies I chose to use, made the process so simple that, after entering all of your information online and choosing from several presented options, you uploaded your content. I’m sure the easier option wasn’t as legally “tight” as the more difficult option but they would be winning the majority of the business.

The second example defies belief. I needed to purchase a product, so, as many people do, I did all my research online. I’d found the product I wanted and went to a local business to ask them to order this in. It was a purchase worth several thousand dollars.

When I asked them to order it in, I was told I didn’t have an account with them.

No worries – I have plastic! Apparently that wasn’t good enough. They have had fraudulent credit card transactions before so now they only deal with account customers.

I was offered a four-page account form and asked to fill it in. The approval should come through in three to four days. Then I would be able to order the product.

Not only did I find this ridiculous in the extreme, but for the business in question I was going to be given a 14-day from statement account. Instead of being paid immediately, they were going to be delayed in receiving their money. As you can imagine, I found somewhere else to purchase my product that didn’t see me as such a huge risk.

My main point here is that we can’t remove all the risk from our business lives.

Accountants and solicitors would have us believe they can remove it but there is a point when the amount of additional work you have to do to remove that risk is not worth it. My advice is to decide on your risk appetite, keep in mind that the higher the risk appetite your business has then the higher likelihood that one of the 1.7 percent will burn you – but with a higher risk appetite you should be seeing higher returns and therefore you can take it on the chin when one of the 1.7 percent walks through your door.

If commercial risk scares you too much, get out of business and pursue the life of a hermit!

Tell me if you’ve met the 1.7 percent at md@smallbusinessrules.com.

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