Dale Hulvey is a die-hard entrepreneur at heart and loves to play the game of business.  He’s built many successful businesses over his career and continues to enjoy the thrill of seeking new entrepreneurial opportunities.  He

Many of Hulvey’s business relationships and agreements over the years have relied on a personal integrity and a handshake.  By nature, he is very trusting individual and will usually give someone the benefit of the doubt.  Unfortunately, this self-admitted tendency has lost Hulvey a great deal of money and been the cause of much grief and frustration in past years.       

One of Hulvey’s businesses, Christopher Robert Corporation, provides real estate and property management services.  It was several years ago, during Hulvey’s involvement in the residential real estate business, where he made a costly mistake.  At that time, a key employee convinced him to significantly expand the business, going from a handful of agents to up around the 50 agent mark.  Hulvey had no desire to manage such a large group of real estate agents, but the prospect for both Hulvey and the employee of some potentially large commission overrides was very enticing.  However, obtaining this growth objective would not only require a significant overhead investment, but an upgrade of other systems and training to handle the additional people and subsequent flow of business.  

Nonetheless, Hulvey was optimistic about the possibilities and agreed to finance the expansion on conditions that his key employee would recruit and manage all the agents, in addition to managing the necessary marketing, administrative and operational functions that the business would require.  Mistakenly, no timeline or written commitment was ever established or formalized.  All decisions were based on verbal commitments and expectations.  

The decision was made to move forward.  A new seven year lease was signed, expanding the office space from 500 to 6,000 square feet, along with the acquisition of all new office furnishings, office equipment, etc.  

As the months and years passed by, the grave reality of the mistake became very evident.   Only a dozen or so agents were ever recruited and Hulvey ended up not only being the active broker, but also ended up shouldering all of the other key responsibilities he initially stated he didn’t want.  Additionally, over 4,000 square feet of office space sat vacant during this period of time.  

Hulvey looks back on the experience and sees clearly the crucial errors in judgment he made and admits to several key lessons learned along the way.  First, Hulvey has compensated for some of his tendencies by bringing on a partner who is an ideal compliment and brings a much more objective look at potential transactions and other key business decisions Hulvey is considering.  Second, Hulvey now realizes that with every business opportunity, all parties need to have some “skin in the game” in the form of financial commitment and other legal obligations.  Third, while Hulvey’s personal belief is that a “man’s word is everything,” he concedes that any business deals must be in writing.    

How many of you have witnessed family members, best friends or others who have been taken advantage of in a business relationship because they operated on verbal agreements and good intentions?  Or perhaps you or someone you know has brought on a sales person with a fixed salary, only to end up supplementing their income for months, with little or no return of sales being brought back into the business.  It’s a fairly pervasive issue in business and has unfortunately led to many broken relationships and significant losses of money and time.

How can you prevent this similar kind of situation from happening to you?  First, it’s essential that you get any business or personal transaction involving anything of monetary or consequential substance in writing.  A good attorney should review customer, vendor, partnership and other agreements to minimize your downside liability and give you some peace of mind.  Also, consider what the “skin in the game” is for each of the parties involved.  

Lastly, it’s vital that you understand the extent of your trusting motives and put the systems and people in place in your business to compensate for these tendencies.  While trust and an optimistic attitude are admiral qualities, in business they can be lethal.

Back to Articles