One of my ex-Duquesne University students asked me to join him for lunch with a woman whom he knew quite well, and whom also owns a small, but rapidly growing business.

This lady, whom I’ll call “Mrs. Smith”, immediately struck me as a winner. She was energetic, enthusiastic, and clearly willing to listen. “I’d hire her”, I thought to myself.

Her business? She sells business supplies to wholesalers, who in turn sell those supplies to end-users. (And, yes … I know that this sounds like the classic example of “one who will become disintermediated”.)

So why did she want to meet with me? Well, it turns out that, and although she had built a pretty decent company over the years, she really was “flying blind”. That is, she had no experienced person to discuss her business with. And as such, she was almost always making her moves instinctively. So, I asked her to just talk about her business, and in our more than two-hour conversation, I learned of a number of problems --- many of which I perceived to be potentially fatal if not acted upon right away. For example:

• She was not incorporated! As hard as it is for me to believe that a company operating in this 21^st century business climate could NOT be protected by some type of corporate “shield”, she casually mentioned (while en route to what she considered a “real” problem) that she had never bothered to incorporate, much less even form some type of sole proprietorship!

How could this be? Well, she started out as a rep. Strictly a “1099-er”, selling her supplies and getting a commission check.

But along the way, she got pretty good at what she did, and soon, she was employing three other people. You know the rest … VOILA!, she is now doing a MILLION a year in revenues. So how important could incorporation be?

Hell, she never even bothered to file for a fictitious name for her company (all of a twenty-minute phone call --- you dial 717-787-1057 and you ask if the name you want is available. If it is, you grab it. Simple as that), much less then take that name and incorporate it.

She is not alone in this regard. There are probably as many UNincorporated businesses out there as there are ones who are properly registered, incorporated, and thus PROTECTED.

So I told her, “Run, don’t walk, to the nearest telephone and make an appointment with a qualified attorney who can structure you and incorporate you right away”. I also told her that she could choose to “run the gamut”; from a “cheapie” incorporation (maybe $200-$250 bucks) to one that provides what I call, “sleep that very same night” protection (and will charge maybe a thousand or so bucks).

I learned a very long time ago, that you generally “get what you pay for”.

She promised to do this (incorporate) that very same day.

I’ll bet she hasn’t. Which means that she is right now risking everything that she has worked for her entire life.

I’ll never cease to be amazed by human behavior.

• Next, I learned that, and even though she has generated literal millions in new sales for the company (a smaller manufacturer) that she reps, she has no agreement in place with this company.

None.

As such, they can arbitrarily change any of the terms of their deal with her in a New York minute. Overnight, if they care to. They can also go after her customers if they like. And remember --- she is out there building a customer base for them, each and every DAY!

Want a good night’s sleep? Then don’t do a deal like THIS! Imagine coming in to work one Monday morning, having to tell your three employees (and the “downstream” mouths that they feed) that they no longer have jobs because that friendly giant manufacturer that has always built and shipped product for your customers would now just as soon sell directly to your customer base, thank you very much.

Tell me .. .how can someone have the courage and drive to go out and build a thousand customer network of buyers but yet not have the guts to approach the people you are giving your money to and demanding a written summary of the terms and conditions of your relationship with them?

How, indeed.

Again, this is a smart lady. Street smart at least, and that’s what counts in the game of sales. So how can this be?

• Well, it then comes out. You see, she has been “approached” by the “tres charmant” CEO of this company --- “suggesting” that perhaps good old Mrs. Smith might be able to get (notice I did not say “earn”) some equity in his manufacturing enterprise in return for a task that I simply cannot describe in this piece (for it would provide identifying detail) but that would inure greatly to the benefit of that manufacturer.

How lovely! How downright thoughtful!

Her mind immediately goes into “Pittsburgh-Think” … which is, “given all of the options, go and work for someone ELSE. So, she thinks, “Wow. I could be “in” with these movers and shakers! I will be respected, too! While subconsciously, her mind is saying, “And this fulfills my dream! I no longer have to be out here “by myself”. I would have these very smart guys looking out for my best interests!”

Right.

In short, she would go from being an entrepreneur to an employee --- and this is too often what is in the back of the mind of so many “entrepreneurs”. For what they really want is oftentimes to again “join the pack”. To go back to that time when you don’t have to live by your wits.

Hey, I wouldn’t say it if I hadn’t seen it so much … entrepreneurs can be SO insecure sometimes. When in reality it should be the management team at the manufacturing company admiring Mrs. Smith. (Which, is probably the case.)

This town (Pittsburgh) is particularly “guilty as charged”. For virtually all of us grew up in an environment where “Nirvana” was “working for someone else”. Hell, I can remember my dad’s words when I told him, and at age 21 that I was NOT going to work for someone else and instead I was going to start my own business. “You are crazy!”, he roared, “You’ll never make a dime and you’ll never be able to retire!”

• There was yet one more significant issue that “came out’ during my conversation with this lady, and that was this --- she trusted her manufacturer/supplier explicitly --- in her eyes, they were among God’s greatest creatures.

“And yet”, I offered, “these same guys have never once offered you a written agreement.”

“Also”, I continued, “these same guys have never once either told you nor sent you a single word about their strategic plans and intentions for the company. And you are their biggest sales producer”.

(I neglected to mention that she was/is the top producer of revenues in a national network of some twenty similar revenue producers.)

I thought about Ronald Reagan’s old bromide, “Judge entities by their capabilities, and not by their intentions.” I thought to myself, “These people are more than capable of replacing her in their supply chain --- it might take just a couple of weeks!”

And yet – she remains SO loyal to them! They have her convinced that this sweet deal will just go on forever!

Hey, if an employer thinks so little of you that, and as their top revenue producer, they won’t even “cut you in” on their thinking … well, that’s kind of like your wife buying a brand-new car and saying, “honey, I really meant to talk to you first.”

And, if they don’t even have the decency to either offer or provide a distributor agreement, either? Hmmm ….

We finished lunch and I told her that she had to do three things. (And I also told her that she should do them THAT DAY!) These three things are:

• Get corporate protection,

• Tell these people that you want an agreement within a month, and,

• During that month, take every step you can to OWN your customer base --- and for starters, create and send out a newsletter under YOUR name, and no longer even make MENTION of the name of this manufacturing company whom you are so happily publicizing all over God’s Green Earth!

For at the end of the day, “He who owns the customer relationship owns the deal.” (Another gem that my grandfather taught me many years ago.)

WITH her 2,000 or so customers, she has incredible power. She can either “take them down the street”, to another manufacturer, or she can even buy plant capacity on her own. There are a MILLION ways to skin this cat.

But these customers are HERS. She “earned” them, and thus she “owns” them. Barring some legal barrier (and this is where the lack of an agreement works to her benefit), she is free to provide them with any supplies that also provide at least the same, minimum amount of real utility.

Folks, let’s make this a lesson for all. You are in business because your customers allow you to be in business. As such, they must be treated like the “gold” that they are.

Thus, you should TALK to them as much as you can. You should know their wive’s names and the names of each of their kids. Birthday cards are not out of the question, either.

Lose your relationship with your customers and you may as well start laying your people off. For the end is not far away whenever this happens.

And for the umpteenth time, Never assume that some big company is going to “take care of you”.

The only person who will take care of you is the person you shave with (or apply your make-up with) each and every day in that same bathroom mirror.

So go get ‘em --- your dreams are squarely in YOUR hands!