Business ethics and longevity

On Friday I called up one of my business partners and had a good old whinge to him.  You see, my problem was with the telecommunications industry.  As with most business which has the whole passive large volume business model, it attracts people who aren’t in it for the long term.  The ideal business model means growning a business to a certain size, then offloading to one of the largers players for a big price tag.

To be honest, I was one of those people when I first entered the market.  I had the dream of growing massive and then selling.  I would accept any client applications for credit  at very cheap rates despite warning bells ringing.  A few months later, those same clients would be 3 months outsanding on their invoices, but because I was desperate to gain customers and income I would take the risk.

I learned quickly from those early lessons and have since built my business around long term relationships with clients.  There are a lot of clients out there who value simplicity, ease of owning the service and honest rates – which has given me a solid foundation.

I guess there is nothing wrong with the idea of growing quickly, its just the reality of achieving it means you have to be the absolute cheapest on the market even if it means selling services at a profit level that isn’t sustainable and do whatever you can to gain customers. Now I know ethics isn’t for everyone, and a lot of people don’t necessarily care about who gets hurt in the process – but I value it and in terms of longevity it just doesn’t make sense.  I once read a book by Robert Kiyosaki and he said something along the lines of: if your starting a business with the idea of supplying the product at the cheapest price, then don’t bother.  Price isn’t enough, you need to deliver more than price to be successful.

Back to my grip, it seems people who value ethics and longevity for the industry are few and far between.  I guess its a reality I have to deal with.  There are always going to be companies who enter the market at ‘cutt-throat’ rates and retail to the public.  They will gain market share and I won’t be able to compete with them until the service levels drop and they start leaking customers which I will do my best to pick up.  At this point they will still be gaining as many customers as they can until they – for whatever reason – are unable to make a payment to their wholesaler – and bang all the clients are left with no service.  Other business owners sell up or restructure and rebrand the business to avoid service disruptions yet continue to operate in the same manner.

My business partner, who is kind of an industry guru, said to me:

There is no justice, because there are operating inside the law and that kind of business model is prefectly valid for some people.  It might not be good for the industry, it might be totally frustrating, but its perfectly legal.  These people will continue doing this and there is nothing you can do about it, your business model is not centred around the cheapest possible market price, so build a bridge and just keep driving your business and you will more successful in the long term.

I know I have the model, and the niche to be successful, I guess its just patience.