Founder of Winterspring Capital, where you can invest in multifamily real estate passively without the headaches of being a landlord.
Many of us grew up hearing that it’s a “dog-eat-dog world.” It’s a defensive mentality that can help you protect yourself from getting taken advantage of due to naivete. Yet it’s also a mentality that often primes people to be combative, mistrusting or some combination of the two. This way of thinking leads one to always question who is getting the better of the other person in a partnership or negotiation. It may blind you to the fact that, in business, there are often ways to find a middle ground where everyone wins. Unlocking that middle path will help you and your business operate more effectively and build trust with all those you interact with, which is critical to the longevity of a business.
The elephant in the room with this topic is that there are, of course, examples of selfish cutthroats who have used their ruthlessness to become successful. I would argue, however, that popular culture overstates the numbers and that those same people would perhaps be even more successful and celebrated if they were more focused on making everyone win. It’s only logical that a person who builds goodwill and finds a middle ground will have an easier time bringing in repeat customers and maintaining healthy relationships with suppliers, contractors and other vital partners in the operation of their business.
In fact, there’s even evidence showing there are consequences when businesses behave too selfishly. Research performed by the Harvard Business Review found that supply chains underperform when partners in the chain are too concerned with looking out for their own interests rather than looking out for one another. Knowing that, it’s a good idea to consider ways that you can embrace this mentality as you operate your own company.
Looking at a few example scenarios from various industries that are easy to understand can help you model this way of thinking in your own industry:
• The Mortgage Broker
Working with a mortgage broker can help homeowners find the best rate, but they’re also extremely vital in larger real estate transactions, such as obtaining financing for developments or apartment complex acquisitions, where they may also be referred to as capital markets brokers. Their help comes with a steep price tag, which typically involves them being paid some percentage points of the loan they help you acquire on the day the transaction closes.
I’ve heard some smaller developers and investors say they would never go through a broker because of the cost. For me, however, a broker is worth every penny; they earn that high fee for a reason. Despite having direct relationships with lenders, we still strategically leveraged brokers as our company grew and we began tackling larger investments. By introducing us to lenders and other partners, we were able to get access to deals we wouldn’t have otherwise. If we had gotten bent out of shape by the broker receiving his cut, that would have blinded us to a clear pathway toward growth for our business.
• The Retail Store Customer
Let’s say a customer was sold faulty merchandise or improperly cooked food and they then demand a refund from a business owner. In the short term, it might benefit the business owner to turn them away and state that they don’t provide refunds, even under such circumstances. You’ve already collected their payment, so buyer beware, right? In the long term, however, decisions like that will hamstring or potentially kill your business entirely.
Eventually, that business owner will encounter customers who will seek to punish them for their selfishness by spreading the word about their actions. A wiser decision in a situation like this would be to not only refund the faulty item but also provide some kind of free item or credit for a future purchase as a token of your apology. Yes, you’ll end up taking an even bigger monetary hit today, but you’ll be increasing patron loyalty, making it more likely they will come back again and again to your establishment.
They may even bring their friends and family, write you a positive review online or simply spread the word about your remarkable business practices. Customers notice these things, as you probably know as a customer yourself in your day-to-day life. Not only that, but you’ve made your customer happy while helping grow your business. It’s a pretty good feeling when everyone wins.
The Importance Of Reciprocity
The truth is, we’re wired on some level to enjoy reciprocity and mutual benefit as a social species. That’s why we shouldn’t let societal baggage and the existence of some bad actors corrupt us. Our more generous and giving instincts can actually be tools for our own benefit. Realizing this requires one to consider things in the long term, which we should be doing anyway as business owners.
Once your eyes are open to the possibility that all sides in a transaction can come out for the better, you’ll be able to open those doors you need to walk through for the further growth of your business.