Running a successful small business means being trustworthy and admitting your mistakes, like Mitt Romney did last week. (Yes, I'm talking about what he said about Americans who don't pay income taxes.)
Like many small business owners, my whole life is about being wrong. Not a day goes by that my mistakes aren't pointed out by an employee, a customer or--most often and gleefully--one of my teenage kids.
Fifteen years ago I was as wrong as Mitt Romney. Back then I was doing a lot of the client service work for my growing technology company. One client, a small manufacturer, asked me to prepare a special spreadsheet analysis of gross profit per product line from a software system we had installed. Yes, it sounds very boring and it was. But it was important for his business. And so I worked on it for days and submitted it to him. Thinking I was through with the job, I moved on to the next. Until my client called me about a week later. Some of the numbers didn't make sense to him. Some of the columns didn't seem to add up correctly. He wasn't angry. He just wanted to clear it up and correct it.
And he was right. I was wrong. But did I admit this? No, I didn't. Did I respond like a man and fix my mistakes? No. I was a wus. Sure I had my reasons. At the time, I was up to my eyeballs in other clients. My company was struggling and every hour counted. I didn't have the time to fix up his spreadsheet. I didn't want to admit my stupid mistakes. I didn't want to incur any extra costs in what was already a low profit project. Did I mention that I was a wus? I denied and made excuses. I avoided his calls. I never gave him a straight answer. I never admitted my mistake. Instead, I pocketed his money and hoped the whole thing would just go away.
And...it did go away. Phew! Eventually the client stopped calling. He gave up pursuing me for answers. I'm guessing in the end he just made the fixes himself. I never found out. That's because he never used us again. A few months later he changed his software altogether and we never heard from him. This was a nice guy--a client at that--and I acted like a wus. The memory has stuck with me for a long time.
I was reminded again of this painful incident last week when Mitt Romney publicly announced that he was wrong about his infamous "47%" non-tax-paying Americans comment that he had previously made at a wealthy fundraiser's house in May. Mitt Romney was wrong. For a while there I had started to worry about him. Because he was starting to sound a lot like me 15 years ago.
This is what he said: "There are 47% of the people who will vote for the president no matter what. All right, there are 47% who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it--that that's an entitlement. And the government should give it to them. And they will vote for this president no matter what. ... These are people who pay no income tax. ... [M]y job is not to worry about those people. I'll never convince them they should take personal responsibility and care for their lives."
I don't really take issue with the details. The fact checkers and pundits can argue about that. And I won't make a stink about where he said it. Raising money from rich people at a rich person's home is nothing new in politics. It's the fact that his statements were insensitive and incorrect and, most importantly, he didn't admit to the mistake afterwards. For a good week or so he danced around the issue. He made excuses. He tried to soften the statement. He was doing what I did with that client years ago. Until he finally did something that I wish I had done. He admitted he was wrong.
It took him a week after the 47% comment was disclosed but, yes, last Thursday Romney said in an interview that he was "completely wrong." Why didn't I just do that? I should have. So should we all.
It may sound trite, but it's true: Running your business is all about credibility. Why else would Larry David always stick his face right up to the other guy's and look him closely in the eye on episode after episode of Curb Your Enthusiasm? He's trying to figure out if that person is being truthful with him. We're all trying to figure this out. Running a business isn't about selling products and keeping costs low. It's about trust.
We trust that a customer is going to pay when he says he's going to pay. We trust that a supplier will deliver product when she promises to deliver it. We trust that our employees will show up as agreed and perform their work as we expect. Legal contracts are there to protect us, but they can't prevent situations where people don't do what they say they're going to do. And by the time our lawyers are pulling out the contracts to review the fine print it's usually too late to fix the problem.
Running a successful small business means being trustworthy. It means doing what you say you're going to do. It means delivering on time and being reliable. It means not taking advantage of the other guy because it benefits you. And most importantly it means admitting your mistakes.
Because we all make mistakes, all the time. In Governor Romney's defense, the guy is speaking to groups of people and members of the media all day. He's human; he's bound to say something wrong or stupid. We all say wrong and stupid things. In business, like politics, it's not about being wrong. It's about how you handle being wrong.
When you're wrong, you don't deny that something was said, particularly when it's captured on video. You don't shake your finger at a press conference and say "I did not...have sexual relations with that woman." You don't avoid phone calls. You don't dance around your mistakes with your customers like I did. Maybe some people have the time and intelligence to weave their web of responses and come up with that alternate universe where the facts are hidden under layers of fabrication and their story actually becomes true in their minds. Maybe some people have the intestinal fortitude to be that way. I, for one, found myself feeling nauseous every time I saw that client's number pop up on my caller ID. I learned that I didn't have the stomach for this kind of behavior. And I'm definitely not smart enough to remember a bunch of excuses and lies just so that I can cover my butt.
Maybe Governor Romney only admitted his mistake because he had a little extra political capital to spend after his successful debate. Or maybe he just did it because it was the right thing to do. The reasons don't matter. It's how you handle it. Smart business people I know and great companies that I do business with admit their mistakes immediately. They take their lumps. They absorb the cost of making things right. And then they move on. Customers may grumble. The media may be joyful. The bloggers and Tweeters may have a field day. Profits may be affected. Heads may roll. But then the situation dies down. And when people look back no one will be able to accuse you that just by mistakenly doing the wrong thing you didn't ultimately do the right thing.
GENE MARKS is a columnist, author, and small-business owner. He oversees the Marks Group, a 10-person technology consultancy to small and medium-size businesses. A certified public accountant, Marks has also worked in the entrepreneurial services arm of KPMG. He writes for The New York Times, Forbes, and The Huffington Post.