The Essential Ingredient for Business
There’s an old saying that says trust is earned in drops and lost in buckets. In life and in business, every single encounter or transaction is an opportunity to put another drop in the trust bucket. It’s also a chance to squander years of goodwill with a single bad move. Getting things done requires cooperation and a healthy dose of trust is what makes it all possible.
We all know that doing business requires agreements to govern risks and responsibilities. This is never easy and it’s normal for deals to include extensive legal documents listing out every contingency an attorney can imagine. It’s great to have clarity, and we should all definitely get quality legal advice. But a legal-only focus to deal-making is penny wise and pound foolish. All successful businesses are built on long-term relationships. This requires building trust.
Drafting and haggling over detailed contracts is time consuming and expensive. Worse, even carefully drafted agreements can end up in hideously expensive court or arbitration. In legal disputes, it’s always the lawyers who win. That is why detailed contracts, important as they are, can never replace the security that comes from repeat deals with trusted partners.
I sleep well at night because I know I can count on a team of quality professionals. We all make mistakes, but a trustworthy associate will just own up to errors and do everything possible to fix them — no sweeping under the rug, finger pointing, or evasion. In return, they can count on me to do the same.
Generosity also builds trust. For example, I sometimes make property upgrades or concessions that weren’t in the contract, because keeping my tenants happy and my occupancy rates high is so valuable to me. I don’t like to bargain hard for the best possible price on services because it’s in my long term interest to have happy associates. Ideally, everybody I work with will value my loyalty and business for years to come.
The trusting relationships I have built with attorneys, investors, banks, marketers, real estate agents, developers, and long term tenants help me close deals faster and profit more over the long term. Because I can count on easier conflict resolution, my risks are lower. It is impossible to overstate how much I value this trust, accumulated over years in this business.
The formula is simple. First, be open and honest about your interests — self-interest makes capitalism work and there’s no good reason to hide what you want. Next, establish commitments to and from your partners in plain language, before getting legalistic. When something does slip through the cracks, don’t be afraid to share responsibility. Finally, own up to any failures to meet your commitments, and do what you can to make things right. It’s as simple as that.
Nobody in real estate gets rich from one big score. Capital grows through continual reinvestment, deal after deal, year after year. Treat others fairly, earn their trust, and demand that those around you do the same. Over time, untrustworthy people will fall away, and those left around you will be the right people to help you prosper.
Call me at 847-317-0077, email me at [email protected], or tweet me at @benreinberg or @alliancecgc if you can submit us a property to acquire and/or would like to invest with us. For further information on investing with Alliance, please click here.
My Best,
Ben
