Don’t Deal with People who Win When You Loose
Warren Buffett announced this week that he’s stepping down as Chairman of Berkshire Hathaway at the end of the year — after 60 years at the helm. Incredible run. And of course, everyone’s been sharing their favorite Buffett quotes.
There are two that really struck me this week.
The first is: “You can’t make a good deal with a bad person.”
And my hot take today is: If you’re an SME in turnaround mode, don’t engage with people who win when you lose.
Recently, I’ve come across administrators taking appointments that were set ups. The administrator wins whether the business survives or not. If it goes into liquidation, they convert assets into fees. Either way — they win.
I’m talking about a handful of these advisors only — the good guys share my gripe because they lose work to over-promising bad guys.
I’ve also seen private lenders offering outrageous terms, clearly structured so that if the borrower defaults, they make their money back — plus, plus, plus.
It’s like they’re betting on failure.
My advice? Two things:
First — before you engage any kind of advisor, get recommendations from someone you trust. Someone who cares about you — and is willing to put their own reputation at risk by making that recommendation.
Second — hiring a turnaround advisor will be the most important hire you make in the life of your business. Ask for references — and check them out.
Another Buffett gem: “When you find yourself in a hole — stop digging.”
Sometimes, the business can’t recover. And that’s hard. But don’t hand the shovel to someone who’s just going to dig the hole deeper — and charge you plenty for the privilege.
Buffett was also a big fan of “skin in the game” — he believed managers should share in the risks and rewards to keep their interests aligned with owners and investors.
At Hermes, our business model is: we win when the client wins. That’s how it should be.
Now I don’t know your business, and I’m not a corporate advisor. But I do know this: if you’re in a sensitive situation, deal with people whose interests are aligned with yours. People with real skin in the game. Don’t engage with people whose business model is to win when you lose.
That’s my hot take. Let me know what you think.