Prosperous decisions are logical not emotional. This simple sentence is probably hard to swallow for business owners and I completely understand why. It was your passion that cultivated an idea which grew into a blueprint that ultimately matured into your business. It was your drive, self-sacrifice and yes, your emotion that has built your company into the success it is today. After spending the past decade studying and working with high level decision makers, I can confidently say that the best decisions are made without emotion.
We don’t have to look very far to find examples of corporate greed (emotion) influencing high profile and brilliant leaders causing the demise of either them or their companies. Kenneth Lay of Enron, Dennis Kozlowski of Tyco and let’s throw in Martha Stewart just for fun. Now granted, these are very extreme examples, but it was illogical and emotional decisions that caused their downfall.
Working with small business owners on a daily basis, I also see many examples of emotional decisions trumping logical ones and hurting the bottom line. A prime example of this is the business owner that gets burned by a few customers and decides to stop extending credit. This strategy may seem like a resolution, but it’s going to hurt in the long run. Providing services on credit attracts new customers and keeps current customers satisfied. Credit makes business arrangements convenient and the majority of customers don’t expect to pay before a job is completed or at the time of service. When ease of use is combined with quality service it leads to customer retention and increased profits.
When invoicing for services rendered, make sure to have clearly defined payment terms and due dates. If payment is not received, have a plan in place and a collection agency to fall back on. Don’t burn extra resources and time chasing bad debt based on frustration or emotion. Let your collection agency do the work for you.