There's nothing more important than having a good business reputation. And the best people to help you get one are your competitors

I've long believed that a good reputation is the most valuable asset you can have in business. By reputation, I mean what people think of the way you do business and how they assess your character as a businessperson. Do you compete fairly? Do you run a nice, clean operation? Do you treat your employees well? Do you go around bad-mouthing other companies in the industry, or do you speak about them with respect?

Those are all factors that help to shape your business reputation, which in turn affects your ability to hire people, attract customers, get financing, make deals, and do everything else that goes into building a successful company.

What's interesting is the role your competitors play in the process. Their opinion, I believe, counts more than the view of any other group. Why? Because of their credibility within the industry and with potential customers. Competitors have a unique perspective on you and your company. They face the same pressures and have to make the same choices that you do. If you have the respect of your competitors, you probably deserve it. If they think you're a lowlife, you're headed for trouble.

So it's important to act in a way that's going to earn their respect. Not that you shouldn't compete as aggressively as possible, but you need to play by the rules. Which rules? I have three:

  1. Never bad-mouth a competitor. When I compete for an account, I always ask which other suppliers the prospective customer is considering. Most prospects name the same two or three records-storage companies, our major competitors. "Those are all fine companies," I say, "and you're going to be happy if you choose any one of us. Of course, I think you'll be happiest with my company." Then I talk about our strong points, taking care not to say anything negative about the other companies.

    To be sure, the customer occasionally includes on the list a company I don't hold in such high regard. In that case, I simply say, "Well, that firm isn't really a competitor of ours, but the others we compete against all the time, and they're very good. I just think we're better, and here's why."

  2. Don't be a sore loser. It's always tough when a competitor takes a customer away from you, especially if the account is a big one. What happens? You get angry. You can't help it. But you have to remind yourself that you never know what the future holds. The people you deal with at the account may not agree with the decision to switch suppliers; if they go to work somewhere else, they could bring you another customer. Even the customer you just lost could come back again someday, provided you keep your cool. In any case, you can only hurt yourself by letting your anger show.

    So, no matter how upset I may feel inside, I make sure we treat our customers as well when they leave as we do when they come in. I want them to remember us as a class act all the way, and I want our competitors to hear about it.

  3. Always be accommodating. There are times when we have to deal directly with competitors -- for example, when a customer is moving into or out of our warehouse. That's an opportunity for us to send our competitors a message. Even if someone is taking a big account away from us, we're as nice as can be. We acquiesce to the other company's schedule and handle the process however the competitor wants us to.

    We're equally accommodating when we're moving a new customer out of a competitor's facility. We tell our drivers to be patient if they're kept waiting, as they often are. They can take all day if they have to. We don't want to provoke any fights or arguments, and we don't want to rub salt in a competitor's wound.

What's interesting is the role your competitors play in establishing your reputation. Their opinion, I believe, counts more than the view of any other group. Why? Because of their credibility.

Now, I'm sure some people will ask, "What's the payoff for following those rules?" Often, I admit, it's hard to quantify, but every now and then I get direct confirmation of the importance of having our competitors' respect.

About 18 months ago, for example, I received a call from a lawyer representing an anonymous client in the records-storage business. The client had asked him to find out if I'd be interested in acquiring its accounts. "How did they get my name?" I asked.

"To tell the truth, I don't know," the lawyer replied.

I insisted on meeting with the lawyer, who even then wouldn't divulge his client's identity. He did say, however, that he'd been told there were about 200,000 boxes involved. At the time, I had about a million boxes in my warehouse, so 200,000 was an interesting number. I told the lawyer we should keep talking.

Over the next two months, the lawyer and I negotiated the terms of a possible deal -- how much my company would pay per box, when we'd take over the accounts, and so on. Although the lawyer still wouldn't identify the seller, I could tell from the average account size and the billing method that it wasn't one of our principal competitors. Most likely, it was an older moving-and-storage company.

I also learned that five potential acquirers had been contacted initially. Through the negotiating process, the seller had whittled that group down to three companies, then two. Finally, the lawyer called and told me that we'd been selected to do the deal, but the seller wanted to meet with me first.

He turned out to be a guy named Jack, whose family owned two or three moving-and-storage businesses in Manhattan. We'd taken some clients away from him in the past, and he'd liked the way we handled the transfer. He'd also checked us out with other people in the industry -- our competitors. That's how we'd wound up on the first list of potential acquirers.

We survived the next cut because we were more flexible than our largest competitor. Jack was very protective of his customers, many of whom had been with the company since his father had run it. He put a lot of conditions on the sale, which we had no trouble agreeing to. Our giant competitor wouldn't bend its own rules to fit Jack's, and so it was dropped from the list.

In the end, the choice came down to us and a company we constantly compete against. We won that round because of our financial strength. It turned out that the deal was much bigger than we'd been told -- not 200,000 boxes, but more than a million, almost all of them in very small accounts, my favorite type. (See " Small Is Beautiful," June 2000.) Jack felt we had deeper pockets than the other company had and went with us.

So, in one fell swoop, we doubled the size of our business, adding the best kind of customer base you can find. Financial strength played a role, as did flexibility, but we wouldn't even have been in the running if we hadn't played by the rules and earned the respect of our competitors.

Sometimes it really does pay to be nice.

Norm Brodsky is a veteran entrepreneur whose six businesses include an Inc. 100 company and a three-time Inc. 500 company. This column was coauthored by Bo Burlingham. Previous Street Smarts columns are available online at

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