Biz911

The “Soup Nazi” on the old Seinfeld show had an interesting business model.  He obsessed about the way that customers ordered.  He was so outrageously rude that he took customer relationship to a new low.  And he got away with it – on TV, at least – because his product was so good.  People would line up for it, in spite of the ordeal.

It can work that way in the real world, when people are desperate to have a business accept them as a customer.  Successful club owners know something about this.  But that’s a risky strategy.  The product has to be really, really good.  And people are fickle if a better choice turns up.

For me, I like to do business with people who are pleasant.  I have choices and go elsewhere if they are rude or indifferent.  The thing is, it’s relatively easy to ensure that your business gives good service.  This builds positive relationships with your customers.  And it makes sense, because it builds your “herd” of long-term relationship buyers, resistant to being rustled away by your competitors.

I was thinking about this recently after going into a local independent take-out sandwich place for the first time.  A sullen counter hand frowned and grunted, “Can I help you?” as I entered, before I had a chance to figure out the posted menu, which was hand-scrawled on the white-board behind him.

I do have a variety of responses to people who address me in that way, especially when their expression, body language and tone of voice would be more in line with, “What the hell are you doing in here?”  But I had no desire to make an issue of it at that point.  After a pregnant pause, trying to figure out the handwriting and what to eat, I made my order.

The atmosphere wasn’t good, but there were enough people coming and going to indicate that my sandwich might be worth waiting for.  It seemed as if the job culture required servers to be sullen when dealing with customers, but jocular with each other.  They really seemed to be having a good time until having to deal with those who were there to exchange cash for food.

There was something wrong with this picture.  Some of the customers may have been  regulars who had gotten used to this routine.  I have to think, though, that there would have been a line outside at lunch time if people had felt they were in a welcoming and friendly place.

The process of receiving the packaged sandwich was confusing, known only to the regulars.  But I did make it to the checkout, lunch in hand.  The cashier was having a bad day.  But, at last, I did see a smile.  It was drawn on the styrofoam cup placed in front of her, with words of appreciation for tips for “exceptional service.”

It’s a no-brainer that the owner would pull in a lot more cash, and the staff would make more money, if they were to give customers friendly, courteous and, dare I say it, respectful service.

In my favorite sandwich place I always have to stand in line.  The food isn’t any better and it costs a bit more, but it’s wildly popular.  The difference is in the atmosphere.  Customers really are made to feel welcome.  And you can bet that the owner has no worries about losing regulars to the competition, or the impact of the down economy on his business.  He’s built up such a rapport with his relationship buyers that nobody’s going to steal them away from him.  And there’s a lesson in that.

I have attended a lot of seminars on “how to get paid.”  It’s always important to figure out the mindset and methodologies of collectors and attorneys and to keep up with developments.

It’s a mantra with attorneys at these events that, before they file suit in a debt action, they always do their “due diligence”.  Most of them will say this up front.  By this, they mean that they find out beforehand if it is going to be worth their client’s money to go after the defendant firm.  After all, if the assets are all tied up and the defendant company is on its last legs, there’s not much point in filing suit.

Collection attorneys have a different take on this than other legal professionals.  Some of them run high volume operations and can live on the income from doing so, but the real money is in the percentage of the cash collected.  They deserve this, because they absorb some of the risk of collection, unlike your general legal practitioner, who gets paid on an hourly basis no matter what, and may be satisfied with a judgment.  I know this because I’ve frequently taken on clients with exposed, collectable assets, but where uncollected judgments are shown on their D&B credit file.  Collecting money – post-judgment – can be challenging and general legal counsel are not always very effective in this endeavor.

In their drive to collect a commission, collection attorneys can sometimes overlook the fact that a judgment will push the firm into bankruptcy.  I question the fact that they always do the “due diligence” that they claim they do.  As a recent example of this, a business owner called us in for emergency help.  The firm was at the end of its tether and owed a substantial sum to a supplier, which had resulted in a lawsuit.  The plaintiff and its attorney were unwilling to accept anything other than the full balance claimed.  No cents-on-the-dollar deal and no payment schedule, despite a full account of the debtor firm’s true situation.

The defendant firm was heavily indebted and on a knife edge with its bank loans.  We informed the supplier’s attorney that a judgment would put it over the edge.  But our settlement proposal was turned down.  The disheartened business owner did not want to prolong the agony by retaining counsel to delay the inevitable.  A judgment was sustained and, as sadly predicted, the big SBA loan was called.  The firm was forced out of business and the bank claimed all the assets, leaving the plaintiff with zero.

The supplier cried loudly that his attorney should have advised him to accept our deal, the inference being that he had not adequately done his “due diligence”.

The key to resolving disputes, especially in crucial game-over situations like this, is to communicate with the plaintiff’s counsel the true facts of the case.   He or she has to know – if they have not done their much ballyhooed due diligence – why your firm does not have the ability to pay the sum claimed in full.

You have to be able to show that you have something better than a judgment to offer them.  And to do that, they have to actually listen to you and read your carefully crafted proposal, before making the appropriate recommendation to their client.  For the creditor, this may translate to getting some cash immediately, or in the form of a stipulated payment plan, to help cover their costs.  As well, they will likely get your willingness, once your company is turned around, to give them the value of your future business.

Considering the alternatives, the plaintiff will likely conclude that this is the best you can do.  But its attorney has to do sufficient “due diligence” and actually pay heed to your perspectives and proposals if each side is to benefit.