Sunday, May 18, 2008

The relationship bank

Now I think this applies as much to personal relationships as it does to business relationships but I'll examine this in light of a business relationship.

 

So you "network" with someone new and you exchange business cards and promise to contact each other in the future, as we all have at sometime or other. Now what has really happened is that you have both opened up a "business relationship bank account". In most cases neither party actually uses it because they go their own separate ways and never talk again (great networking eh?) but let's say that the parties do want to develop this relationship into something.

 

So both parties now start conversing, meeting and getting to know each other. In other words both are making deposits into their "relationship bank account" in more or less equal amounts. Now let's suppose one party needs something from the other party. To do this they must make a withdrawal from the "relationship bank account" but that is no problem since they have plenty of credit built up. Once they have made this withdrawal they will continue to make deposits to pay back this loan and continue improving the health of the account.

 

In a perfect world this continues on with both parties investing more and more in the relationship and making withdrawals when required. However, as time goes by each party is happy to keep the "relationship bank account" open and making payment because they know they are getting a return on their investment. Neither party's account is ever in the red and the relationship continues to flourish.

 

Ah, now to the real world. Typically, these days when someone opens a "relationship bank account" with you in business they want to make withdrawals immediately. They want a line of credit before they have even invested dollar one! Also, in many cases the contributions they make are so small that the other party begins to question whether they are getting taken for a ride. So many people in business want to have a relationship with your business but then either don't contribute to that relationship or want to start making withdrawals immediately.

 

If people don't try and make withdrawals immediately from the account they try and deposit bad cheques. You know this when you hear, "Oh, yes I'll do that and get back to you" or "Let me arrange something and let you know". What happens? You hear nothing. These people aren't interested in making "real" deposits into the account. Clearly they don't see any value in holding up their end of the bargain so they simple deposit bad cheques that that are worthless but are easy to write. Come on, if you don't want to contribute to our "relationship bank account" just say so and we'll go out separate ways.

 

Unfortunately, many people in these sorts of relationships don't look at the relationship with a "banker's eye". By that I mean they need to assess whether the partnership they have formed is actually providing them value. If they are providing credit to the other party and making the bulk of the investments in the relationship are they getting a good return? At some point they should say, look this isn't working out so either you invest more in our mutual "relationship bank account" (with interest and penalty fees for being a fathead) or I'm closing the account.

 

Sadly, most "business relationship bank accounts" you have should be closed if you examine them pragmatically but for "emotional" reasons people don't. If you feel you are getting the short end of the straw somewhere, examine the relationship in terms of an investment. Are you getting good returns? Are you likely to get good returns in the future? If not, cut you losses and invest elsewhere because relationships of all forms are a two way street!