Beware of 'over promise, under deliver' suppliers

Last week I received a phone call from a veterinarian who had purchaseda puppy and had a problem.

The purchase had been made so that the dog could be shipped to the MiddleEast for purposes of showing in competition. The purchase cost: $1,500;the shipping: almost $2,000. When the dog arrived at its destination, localveterinarians determined the jaw architecture to be so flawed that the animalwas not fit for competition.

Too trusting

My client wanted to know how he could get his $2,500 out-of-pocket fromthe breeder. I had a number of questions regarding proof.

"Do you have a written receipt for the dog?" He did not. Thebreeder had seemed honest and it didn't seem necessary.

"Did you tell the breeder that you would be incurring extensivecosts to ship the animal for purposes of showing it?" Of course hehad, but naturally there was no proof of the conversation except for thepurchasing veterinarian's word.

"Did you have an independent American veterinarian examine the dogfor soundness prior to incurring the shipping costs?" He had not.

I had images of this gentleman presenting his case to small claims court,armed only with a foreign veterinarian's written soundness report and facinga blanket denial of all accusations by the breeder. I also had an imageof a judge, after rendering a miraculous verdict in the doctor's favor,ordering the breeder to refund the $1,500 as soon as the dog is returnedto the breeder (at an additional shipping cost of $2,000 to be paid by thepurchaser.)

For this honest and trusting gentleman, virtually every problem imaginablehad arisen in terms of proving his case. I felt after hearing this unfortunatetale that a number of lessons could be learned from the story which couldwell be of value to veterinarians in their dealings in general businesstransactions of all types.

Thinking ahead

In any business dealing, it is critically important to try to imaginewhat would happen if something-anything-went wrong. If buying a practicewith a partner, what would happen if an irreconcilable disagreement erupted?If leasing a practice building, what would happen if the building were soldto a new owner?

Brainstorming possible negative scenarios is not an exercise undertakenfor the purpose of discouraging risk-taking. Rather, it is done for thepurpose of risk minimization. It should be thought of as an insurance policyagainst accepting unnecessary risks.

Some dangers can be minimized and some eliminated. Others merely haveto be accepted in a commercial transaction. Imagining all the risks andknowing which of those categories each falls into is an essential businessskill.

This principle applies especially well to determining how much property,casualty or auto insurance should be purchased.

In an animal hospital, potentially viscous bites and catastrophic fallsare a constant risk. If a practice owner can imagine what the damage awardwould be if the practice were found liable for a deep hand bite to a heartsurgeon client, that amount is probably what the policy limits should be.

Written documentation

Any lawyer will tell you that the more paperwork you have, the betterthe chance of proving your case.

Documentation constitutes vital proof and when something goes bad ina business deal, the most common problem in trying to recover damages usuallyrevolves around proof.

If you are dealing with a person you have known for a long time and havecome to trust, documentation may not be quite as critical as it would beotherwise. However, when dealing with a seller or other person in the worldof commerce, it is vital to get at least some written memorialization ofthe deal. If a new drug rep promises $500 in free goods, jot down the promiseand have him initial it. If your new X-ray machine lease comes with a threemonth no payment inducement, get the promise in writing.

Contingent payments

There is nothing that causes a supplier to lose interest in a customerfaster than payment in full. This is especially true in the world of construction,but definitely is also true where services of any type are to be providedor a purchase is made on a trial basis.

The smaller a down payment is, and the greater the amount withheld pendingcomplete satisfaction, the better.

If new flooring is to be installed in your veterinary clinic, a fullhalf should be retained until you are satisfied with every aspect of theproduct and its installation. Pay no more money until you are sure thatthe seams meet and are adequately glued, that the cove base is the correcttype and color, and that no bubbles exist. If problems arise and the floorcompany has been paid in full, it may be nearly impossible to get them tocome out and make the installation right. The same goes for any productor service.

These suggestions are not meant to imply that all transactions shouldbe approached with cynicism. However, in today's low profit margin market,there is a greater incentive to over-promise and under-deliver than everbefore. A good friend of mine capsulizes the concept well when he frequentlyadvises, "trust, but verify."