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Is Your Handshake Your Word?8/17/2016
In years gone by a business ownerís handshake was their word, is this still the case today? We have seen many examples of business deals of today that suggest this isnít the case. Many years past banks would loan money on a handshake and a simple contract. Business between small businesses was done on a handshake, a code of honor that the work would be performed as agreed verbally and the handshake sealed the deal. Young men were taught their handshake is their word and never go back on a handshake. Your handshake must be firm and have meaning.
Baby boomers can remember this. A personís handshake was their signature, an acknowledgment your honor was on the line. This isnít to say that many handshakes were not honored and deals didnít get completed as promised. Which is why we are in a very litigious society today, handshake deals that fell through and there was no legal recourse.
Today there are many examples of large businesses that promise payment to small businesses and fail to deliver, even with a signed contract. This is even a planned business strategy by some large businesses, to promise to pay then donít. They will even admit they wonít pay and suggest you take legal actions for payment. Small businesses donít have the financial resources to miss payments to suppliers and payroll to fight a large corporation in court. The large corporations know this and intentionally take advantage of small businesses. Itís very sad to say that honoring a handshake today is very risky business, a business personís word today means very little and most donít seem to care.
Today we see win at all cost, even if it means disregard for personal honor and self-respect, your word means nothing and many truly donít care as long as they win, or the other business or competitor loses. We believe this is being taught and perpetuated by many law schools, law firms and MBA programs, our CEOís of today.
The short sidedness of this is, there are only so many suppliers and contractors you can put out of business before you have no one left to fulfill your business needs. Years gone by larger corporations took pride in making sure their small suppliers were financial healthy and stable. Making sure they could fulfill their contract obligations, today that doesnítí seem to be the case.
Even today small businesses will promise one price and then bill another to other small businesses, knowing there is little recourse beyond legal actions. Nonpayment of overbilling can hurt a small businesses credit ratings and often the credit ratings of small business owners. Eventually this practice with backfire as word spreads that the business is not to be trusted.
We find a handshake is still honored in the trades, andless honored by the higher educated businesses that have been subjected to education of distrust and win at all costs by using their attorneys and law firms, who counsel them to push the legal boundaries of our laws, trust and honor. We need to get back to the days where a firm handshake means something, itís your word of honor you will do what you said, and stick to it.
Phillip Day, President
Academy of Financial Literacy, Inc
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