William
Sargent, 35, the author of the following essay, is chairman of Spitting
Image productions and Managing Director of Viva Pictures. He became a financier
in the television industry after taking a degree in business and legal studies
at Trinity College ,
Dublin London British
Academy
My
biggest mistake was trying to do business on the strength of a handshake
without doing my research first. In 1983, I had just sold a company that
distributed video equipment around Europe , and
I was looking for new opportunities. Quite idealistically, I decided I should
be trying to put something back into Ireland
The
first two cases involved importing various video-related goods. On both
occasions they refused to pay the agreed price on delivery. Both sets of people
reckoned they could renegotiate the package because the goods were already in
the country. And because I had paid the freight bills to get them there, I
didn’t really have the option of shipping them back again. On the third
attempt, the problem was that both the people selling the equipment and the
potential customers were never honest with us in terms of their ability to pay.
Instead of a business, we had a number of people saying they could do things
which they couldn’t, and at the point when I owed £40,000 to the Irish banks, I
called it a day. I paid the money back, but as a result, when we started The
Frame Store, my wife and I didn’t have the capital to take a big enough stake.
It went on to become one of the most successful companies in the industry, and
in order to own the stake we deserved, we really had to pay for it.
Funnily
enough, I still do business on a handshake. I never want to go into business on
my own: I always look for a partner. I have neither the aptitude nor the desire
to run a business on a day-to-day level. I work as a strategist, identifying
opportunities and creating relationships, preferably in niche markets. If
you’re going to make money in the long-term, you’ve got to stick with someone
you trust, because you don’t control the cheque-book and therefore you can be
fiddled. After five years, it could cost you a substantial amount of money, so
you might as well find out in the first twelve months if that trust is going to
be betrayed. Trying to enforce contracts only creates ulcers; it’s virtually
impossible. If, instead, you recognize that you’re never going to get what you
set out to get or that you made a mistake, you save yourself a lot of angst. On
that basis, I decided quite early on that I would try to do business with
people on trust. Most times it works …
The
Germans and the Japanese understand long-term partnerships. They’re not in it
for this year’s deal. That is the reason for doing business on a handshake. It
is an incentive for the person to mislead you; so you find out in time that you
shouldn’t be in partnership. No person has all the skills to create a
successful business. It has to be a team effort. I’ve learnt to spend a lot
more time on research before entering a partnership. You have to be partners in
spirit, not in contract. And if the partnership can’t be based on a handshake,
then when the pressure is on, your business will fall apart.
