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Listen for hidden meanings in business communications

August 15, 2014
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Listen closely to what someone is saying to you. It can be costly if you are not paying attention.

One word can change the meaning of a communication, whether it’s a contract, analysis, speech or advice, and in the process that one word can distort the communication’s intent.

When I first moved to Grand Rapids in 1972, I was a new business owner ready to take on the world. Little did I realize, the world was going to fight back.

I had engaged a new client: a rapidly growing service business. The business needed financing and, in the course of things, the bank required its financial statements. I complained to the client about his history of bad payment and high living standards. The client stated that he did not care how much I billed him: If the business received financing, he would be in good shape.

The business got the financing and continued to grow, but it was always cash short because of growth and the owner’s need for living well. When I confronted him about his unpaid bill, he said I needed to learn how to listen. He had said he didn't care how much I billed him because he never intended to pay. I had not caught the subtle difference between how much I billed and how much he was intending to pay.

In another incident, I was contacted by a well-to-do elderly business owner to do financial statements for a relative. I declined due to the individual’s notoriety for not paying. The gentleman replied that if I did the work and did not get paid, he would take care of it. So I did the work and, of course, I did not get paid. I approached the gentleman who had said he would take care of the bill. He said he would talk to the business owner for me. I said, “I thought you were going to cover the bill.” He laughed and said, “I thought you might think that, but no, I am going to ask him to pay the bill.” You can guess how much that accomplished.

You have to understand that these people believe they have legitimately won at a game they see as business. Most people see business as trading goods and services for money. These people see normal business practices as only part of the process. They include an element of one-upmanship in that process. They do not consider themselves liars or crooks; they are just smarter than you are.

I have a deal for you: Would you like to buy some fresh-caught salmon and lake trout at my cost? You see ads all the time for products you can buy at cost or less than cost. I hope you know that a company selling at cost or below will not be around long.

Back to my fish offer. To date I have caught one five-pound lake trout. Salmon are caught mainly in the next three months, so my inventory will improve. What is my cost? Gas used was probably about $100; insurance $400; my co-captain/son-in-law, Jeff Noll, 8 hours at $100 an hour; marina slip $35 — that would amount to about $1,350. If I amortize the boat and equipment over 15 years, that would be $4,000. That would come out to an average per pound cost of roughly $1,070.

Who could turn it down? Fresh-caught salmon at cost. Think about it a minute. The term “cost” is meaningless unless you define what cost is and how it is calculated.

Back when my firm had a lot of independent pharmacies as clients, cost was an issue. We had a long-term family-owned pharmacy that discovered it could not buy some drugs wholesale for less than the chains were selling at retail. When cost is more than the competition’s retail price, the grim reaper is on his way. Selling a product “at cost” when the cost is more than a competitor’s retail price is like a dog chasing its tail. No matter how hard you sell, you are doomed to failure.

Words have meaning beyond contracts and business understandings. The new buzzword for ivory tower, political influence peddlers is income equity. I hear people use that term more and more as a justification for faulty economic policy.

I have heard “the recipient doesn't need it” as the justification for not paying a contractual amount. Try doing business in an economy where the funds in a contract can be denied the contract holder if the debtor can avoid liability on the debt based on the debtor’s assessment of the creditor’s need for the funds.

My central point is that, from a young business owner learning about tricky language use to the giants of retail to Washington's halls of bull**** production, the meaning of each word is crucial. The level of education, wealth, political position or cost of a suit does not make a person’s statement true, logical, valid, informative or utilitarian.

I hate this type of saying, but this one is true: God gave you two ears and one mouth. It’s obvious you are meant to listen twice as much as you talk. Listen to each word spoken and, if you feel a statement given to you may have a second meaning, act accordingly.

Paul Hense is the retired president of local accounting firm Hense & Associates and past chairman of the Small Business Association of Michigan.

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