The Importance of Being Earnest

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According to entrepreneurs, personal reputation is an important growth tool.

The relationship between a CEO's personal reputation and his or her corporate image is a reciprocal one — especially for small companies.

Keith Alper launched Creative Producers Group Inc., a St. Louis-based corporate communications and events agency, nearly two decades ago. About seven years ago, after joining a bank board, he gained some unexpected insights into reputation.

Alper saw how individuals could meet financial requirements for a loan, but still be turned down due to a bad character reference. "Until then, I didn't think about how much personal reputation can affect someone in business," says Alper, whose company now generates about $10 million in revenues. "I've come to realize that who I am is also my corporate reputation. People see me as the business."

Intangible asset

A good reputation can pay off in any number of ways:

Customer acquisition. Jay Bower, president and CEO of Crossbow Group LLC, a $3 million marketing-services company in Westport, Conn., purchased his company in 1999 from a former employer. When he called on old clients, they recalled not specific projects that Bower had done for them in the past, but his character: "They remembered that I was vigilant about meeting deadlines and budgets and called me a 'straight shooter,' " says Bower. "Reputation is the key to closing deals — that's what people are buying."

Squelching rumors. After Jacques Habra fired six employees for insubordination, they circulated false stories that he was involved in improper financial transactions. Yet Habra's solid standing in the community helped to resolve the situation quickly. "Most people knew these were garden-variety misrepresentations, and even reporters made a point to position relevant stories in my favor," says Habra, managing partner of Web Elite, a $3 million Web-software-development company in Ann Arbor, Mich.

Accelerating a comeback. Eric Luoma sold Cactus Flower Florists, his Scottsdale, Ariz.-based, family-owned business in 1998. Two years later, against Luoma's advice, the new owners instructed florists to pull out of community and civic organizations, such as the chamber of commerce.

"The floral business is very relationship driven," explains Luoma, who had remained with the company as a senior executive. "The new owners didn't understand how important it was to be a steward in the community."

The following year the company went bankrupt, which Luoma chalks up partly to that mandate: "Once we decided we weren't going to be leaders in our community, it was difficult to be leaders in our industry. People want to do business with companies that do the right thing."

Luoma bought the company out of bankruptcy in 2001, and one of his first moves was to become visible in the community again. "Business owners and leaders have welcomed me back to the community and have started directing business to my company again," says Luoma, who expects his $9 million company to be back in the black soon.

A legacy. "I want to be a role model for my children," Alper says. "If I have a reputation for being honest and fair, that's a great gift I can give to them."

Managing your reputation

Many business decisions are made — or at least influenced — by your reputation:

  • Whether vendors or partners give you a break.
  • Whether a potential customer hires you.
  • Whether an employee joins your company.

The challenge is to be constantly aware of how your behavior affects stakeholders' perceptions of you.

Decision making. Every business owner encounters gray areas, and knowing what kind of reputation you desire can help with those difficult decisions.

"Honesty is my real stickler," says Robert Dube, CEO of Image One Corp., a $3 million company in Oak Park, Mich., that provides print-imaging equipment and service. "I believe as long as you are honest, everything else will fall into place."

For example, one of Dube's customers leased some equipment — a "dream deal" because the contract was large and ran for several years. But an employee pointed out to Dube that the customer was spending more money by leasing than purchasing the equipment outright. "It wasn't illegal, but it didn't seem entirely right either," says Dube. "So I called the client and changed the terms of the contract in their favor. I think the profit we're losing will come back tenfold down the road."

Be aware of attributes. Think hard about what personal attributes work well for you and how they relate to business.

Being aware of those attributes will help you consistently deliver against them, says Bower: "For example, 'sincerity' was one word I heard often from clients. Clients believed me when I said something, which is important because in the consulting industry, a lot of people are blowing a lot of smoke."

Toning down. One adjustment Bower has made is to tone down his sense of humor. "I've found that it's more important to project seriousness of purpose," he explains."People sometimes equate humor as a way to not deal with issues on the table. And though I think a sense of humor and seriousness of purpose can co-exist, I'm much more thoughtful than I used to be about when and how to apply one vs. the other."

Similarly, Dube has also altered his M.O.: "We've been in business for 10 years, and during the first five, I would glorify my business to other people. But now I avoid any hype."

Writer: TJ Becker.

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