Decisions to be made when presented with tricky situations about whether to make exceptions for a potential customer’s request for unusual payment terms, or on how to handle an ethical issue, or to what type of revenue the business should say “no,” are helped if the leader or leaders of a business have already thought through the company’s principles in advance.
Examples of principles that I have seen guide the decisions of business owners and their businesses include the following:
● We will not take customers who do not provide down payments up front. A down payment shows a customer’s willingness to work with us and pay us for the work we will perform.
● We will not take customers who don’t agree that we can draw payments from their bank accounts according to our standard payment terms. Creating exceptions to this adds risk to our standard operating procedures and increases overhead. That’s not the way we want to do business.
● We will not work with people who lie to us or steal from us, even if it is a small amount. Making small exceptions leads us down a slippery slope.
● I will take two vacations a year with my family. The constant pressure from the needs of business will not compromise this.
● We will maintain bookkeeping and financial standards that inform management about the financial health of the business. These are the navigation tools we need to steer the ship.
● We won’t be a business that gives raises only when someone tells us he or she is quitting. We will proactively pay our team members fair wages, and we will benchmark wages annually to know what is fair compared to peers, whether employees ask for pay increases or not.
Whether you’re running a business, being an employee, or managing your family or personal life, each day you make decisions that you think are the right step in the right direction. After a couple of years, you might look back at the path you have walked and wonder, “How did I end up here? This isn’t where I intended to be!”
Establishing principles at the beginning of your journey is akin to drawing a map to show the way forward. Having these guiding principles in place and adhering to them provides a reference in case following your compass each day proves difficult or seems to be steering you a little bit off course.
When you have ideas in mind about the future you’d like for your business, your employees, and yourself, or when you have principles and a framework to guide decisions when the right answer is unclear, I encourage you to share those with your team. Don’t assume the people around you know what is in your head. This is why companies choose to write mission statements, vision statements, and guiding principles. The goal is to get everyone headed in the same direction you are headed (vision), for the same reasons you are going there (mission), using the same recipe (principles).
Principles and direction can always be changed. You can start a business deciding you’ll take certain types of customers or offer certain types of products, and adapt when that doesn’t go as planned. But the goals, boundaries, and ethics of a company typically stay fairly constant over time. These principles will provide the best guidance if they are acknowledged in advance and referred to often to keep the company, and you, heading down the right path.