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“It’s in your contract!” Business relationships gone sour can cost

  • By Warren Harmer

  • Thursday, January 31, 2019

“It’s in your contract!” Business relationships gone sour can cost - blog post image

Over the last few weeks we have been moving office at The Business Plan Company. Only a small move, but through mishandling, the experience with our previous office has been instructive in how not to nurture your business relationships. As the foundation to the success of your business, relationships with suppliers, your team, co-workers and clients are crucial. Many times, the good-will between us in business can gain new clients, soften negotiations, retain key staff, even get discounts or contract extensions. In purely financial terms these relationships are worth thousands or even millions of dollars. We all like working with people who are easy to work with, helpful, responsive, flexible and fair.

Yet the approach to business relationships can so often be different to personal relationships, as if in business, the person on the other side doesn’t matter anymore.

We spent nearly three years in the previous office, enjoying the helpful team, professional presentation and well-maintained facilities and but for the mismanagement of negotiating a lease extension, would still be there. It all started falling apart with the sales rep. When discussing the renewal, she decided to take the hard line, telling me the current space was the best on offer, that the rent was going up and basically it was that or nothing. Taking that on face value, I decided to look around and quickly, found something better, newer, cheaper and more flexible. When I looked around I found that most of the other companies were more open to discussion about what the business needed, more interested in how it could work in the long term and more open to customising the agreement. The nail in the coffin came when the sales rep (now clamouring to save the lease) told me she’d made a mistake and I was actually being overcharged in the first place.

To rub salt in the wound, the moving out process was painful and costly. Carefully worded and deliberately ambiguous contract terms gave the landlord licence to extract every last cent even after the lease had expired; vague terms which actually meant ‘full renovation’ and thousands of dollars in ‘transition’ fees. No discussion was to be had.

Such a shame that all their years of hard work had dissipated. Playing hardball can sometimes push clients away as it sours good will and any feeling of generosity. How often would you make extra effort to help someone when you feel they have pushed you to the limit? In our case, it certainly put a stop to future referrals; our client base has thousands of potential tenants for them, none of which will ever hear a recommendation from us.

This experience highlights the balance of nurturing relationships with good will, flexibility and both sides winning. Contracts are important but are the backstop that you hope not to have to go back to. When your conversation gets to the point of saying “it’s in your contract,” you know things aren’t going well. No good feeling is generated from those words.

By: Dr. Warren Harmer

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