Compounding business relationships
This is Jimmy; don’t be like Jimmy.
Do you take the time to cultivate long-term business relationships, or are you more transactional, like Jimmy? If you are the latter, then you could be missing out on one of the most effective hacks in generating smooth and profitable future business. I’ve spoken about this before, but after being buffeted by Covid headwinds for the last few years, the importance of this concept has crystallized in my mind.
It is well known that it is difficult for the human brain to comprehend the outsized benefits of compounding in a financial sense. It is equally challenging at the start of a business relationship to compute the exponential growth possible if we build a solid foundation of integrity and trust from the outset.
I’m a Partner here at ARG, but I’m first and foremost a Business Development Manager (BDM). I speak from experience when I say we too often let our own agendas and short-term KPIs impede us from acting in a way that would lead to the formation of something more meaningful and lasting. The compound benefits of business partnerships that flourish when treated with due respect and long-term vision far outweigh near-sighted wins from more transactional interactions.
This concept was something I was first introduced to by the polymath, Naval Ravikant. He takes it further by highlighting the importance of compound interest in relation to your reputation. The difference between doing business with someone with a good reputation and high integrity, as opposed to someone you do not overly trust, is huge. In the Almanak of Naval Ravikant he states:
“All the normal negotiations in business relationships can work simply because you trust each other”
This statement resonates deeply, particularly in the wake of Covid and all its related challenges. I worked side by side with my channel partners around Australia to overcome all the unprecedented issues in the building industry. We were all angry and frustrated at times, but that sentiment was directed outward, whilst we dealt with the problems at hand constructively. Only when you have been in the trenches with a business partner can you gauge the strength of the foundations you have laid and realise the full benefits of the compounding.
So don’t be like Jimmy. You may get a few quick wins, but you’ll begin from a standing start every day. Invest time and energy into cultivating long-term, compounding relationships and a steadfast reputation. The benefits may not be realised immediately but will pay off huge in the future.
Ryan Chapman is one of the Partners at ARG. We are a property partner to many finance and investment strategists throughout the country.