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Kelly Totten

Accounting Consultant & Virtual CFO for Creative Service Firms
Portland, Oregon

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Honesty vs The Bottom Line

Being authentically me in my business can mean decreased revenue. Even within ethical boundaries, it's often challenging to make the right management decisions.

Written Oct 23, 2008, read 1693 times since then.

I'm an honest person. Ask anyone who knows me to use two words to describe me and chances are they'll be "direct and honest". My former boss added loyal to the mix (I suppose I am, but it sounds too much like a description of a dog!).

Over the summer, I spent a good amount of time working with Karrie Kohlhass (ThoughtShot Consulting). One of the first things she said was "we have to present your authentic voice". If your marketing is authentic, you'll find the right clients. Interesting.

This week, I attended a webinar by Kent Lewis (of Anvil Media fame). The webinar was "Building Brands and Managing Reputations via Social Media". One of the things Kent stated was you have to be honest in your communications.

So I'm feeling pretty good that even the marketing peeps think honesty is the best policy. Now, with that in mind, I have to put my money where my mouth is and behave in my business honestly and directly.

I have a client who is having a tough time in the current economy. I've been working with them for a couple months and I've saved the owner thousands of dollars in taxes this year. I assume he's happy with my work and paying my fee. However, I've been struggling with the client lately because the package they signed up for isn't the package they need now.

They signed up for a large monthly package and now they really only need a quarterly package. What's a girl to do? I can keep taking the money and call it compensation for the money I've saved them. That's an okay thing to do; it's ethical. But is it authentically who I am? No. I struggled with this in the back of my mind for a week. You see, I do have capacity right now, so cutting back my revenue is not a good thing at all.

I met with the owner today. I called the meeting to talk cash conservation (and revenue generation). I honestly expected him to say we should revisit their agreement with me. He didn't. As we were tying up the meeting, I did it. Honesty came before my bottom line. I told the owner that he isn't using the full package he originally bought and due to his current circumstances, he should consider moving to a smaller package.

If a client needed a larger package to accomplish their goals, no one would hesitate to upsell. I rationalize that the reverse should be true as well regardless of the impact on my personal bottom line. It really goes back to treating others like you want to be treated. I would certainly value someone who put my needs ahead of their own pocketbook and I assume that's true of others too.

In this case, the owner was amazed that I offered up this solution. Of course, I took the opportunity to suggest that he refer my great, honest service to all of his friends. Maybe my honesty and authenticity will lead to a better bottom line after all (or at least some good karma).

Learn more about the author, Kelly Totten.

Posted by Judy Dunn, Seattle, Washington | Oct 25, 2008

Kelly,

Thanks for sharing your story. Karma aside, I truly believe that the decision you made showed your client so much more about you than just your skills and expertise in your field. You demonstrated your core beliefs, your values, your character, and not just in your website's "About Us" page or your mission statement, but in your actions.

In our copywriting and graphic design business, Bob and I have had dozens of opportunities to sell a client something they wanted, but didn't need. And sometimes it was something they needed, but could get in a much less expensive form somewhere else. So we would refer them to another vendor.

Over the long term, this kind of honesty pays off because of the trust and credibility you build. We have had those same prospects come back to us because they knew they could trust us to give them advice that was in their best interests.

Good for you for staying true to your core values!
Posted by Kelly Totten, Portland, Oregon | Oct 25, 2008

Judy, thanks for your thoughts on this topic.

The funny thing is, I've consulted with clients on similar issues in the past. To me, they were a little more clear and usually involved how to handle a dissatisfied customer. I always have advised: make the situation right for the customer....try to see it from their viewpoint.

To me, this felt different because the client is happy and did sign up for the package. Now that I think about it more, it's really the same advice I've been giving owners for years.

As with many business issues, I think it's easier to see the right thing to do from the outside looking in.

Of course, as an accounant, it's always fun to recommend reduced profit for the greater good and future potential. Clients are usually surprised to find that I don't give the advice most other accountants would give.
Posted by Jim Carney, Bellingham, Washington | Oct 25, 2008

Fear. Were you afraid you would lose this client or at least a better revenue stream? Or was it that you were "hoping" that this would bring in more clients and more revenue? So I would ask is your business practice based on fear or on honesty? We lease out office space on one year contracts. We have month to month at 10% more. We like the annual people... they have the funds, stable, and usually renew. The month to month are always looking for the breaks, the discounts. With a virtual office it is easier for us to come up with this solution... Pay the annual rate but if you have to leave we will add the month to month rate for the months used.
Maybe you could build that into your pricing. You get this package but we review it quarterly or semi-annually to see if that is still the best package for you.

I like what you alluded too. It may be honest practice... but is it if you "don't" say something that is also true.?
Posted by Molly Gordon, Suquamish, Washington | Oct 25, 2008

Kelly,

I applaud your choice, not only from an ethical perspective, but from a business perspective.

As Karrie pointed out, using your authentic voice in marketing means attracting and converting clients who are a good fit. To abandon your authentic values in the course of delivering the work would undermine that good fit.

The revenue you lose in the short run will come back in the form of referrals and repeat business. In addition, by acting honorably, you save yourself the stress and expense of trying to be what you are not.

Finally, self-employment can be quite an emotional challenge. It's almost impossible to meet that challenge unless we can feel good about our choices.

I'd rather worry about where my next dollar is coming from than not want to look at myself in the mirror.

Thanks for starting such a key conversation.
Posted by Kelly Totten, Portland, Oregon | Oct 25, 2008

Jim, I'm not sure I understand your comment. Was I afraid of losing the client? No. I'm an accountant and it's my job to both be honest and help make businesses more profitable. I was afraid. I was afraid that if I stayed on the plan that the client signed up for that I wasn't keeping up my end of the deal. I wouldn't be providing the best option to make them more profitable. How can I be honest in what I do and give them the best advice for their business if I exclude my services from the equation? I could have held them to the contract they signed, but it wouldn't have been in their best interest.

I do have an exit clause in my agreement that they could exercise and pay a penalty to exit the agreement. I felt that it would be the best business practice to draw their attention to the issue, reduce my bottom line, and keep the relationship going with them.

There's a good chance they never would have questioned my agreement or would have assumed they didn't have a choice if they wanted to keep working with me. I didn't act out of fear; I was trying to do the right thing by my client.
Posted by Brandi L Pierce, Lynnwood, Washington | Oct 25, 2008

Another thought on this topic would be to create a business savings during months of higher revenue and never abandoning ones ethics or authentic values based on the need for money.

It's hard being self employed and even harder to have a ton of savings. If you can find a way to save enough to carry your through a barren quarter, you will find you are able to handle client relations and your bottom-line a whole bunch healthier.

We don't know each other, but just in reading your thoughts I get a sense of pride in knowing of you, Kelly. Very few vendors would have done for us, what you did for your client. I hope this trend catches on. I definitely think there needs to be more of us out there.
Posted by Laurie Lonsdorf, Lansing, Michigan | Oct 25, 2008

Kelly,

You definitely made the right move by using an honesty-is-the-best policy. We often forget that the word "service" means more than simply the work we perform in exchange for payment. To be of service means contributing to the good of others. By following your heart--or your authentic voice--you did your clients a tremendous service.

Because you were able to tailor your package to fit their needs, you will be able to continue helping them through their economic struggle. Had you not made the recommendation, they might have had to take more drastic cost-cutting measures at some future point and discontinue working with you altogether.

The goodwill that you created will reflect back on you through word of mouth. And because I can't resist putting on my marketer's hat, I'm going to remind you how important it is to ask your client for a testimonial about the experience. That will speak volumes to future potential clients about your good work.
Posted by Pamela Ziemann, Bellevue, Washington | Oct 26, 2008

I think it would be interesting for Bizniks who are interested to document how much more revenue we are making because of decisions based on honesty.

Your article is a good start Kelly. We can see a direct cause and effect.

When I coached people in this morning's BCC class, students were giving 'ok' presentations that turned into heart opening, connected, brilliant talks as they got more honest with every run through. We could all see the effect, but I think a lot of people still want "bottom line proof" that honesty will turn into revenue.

If you have any ideas on compiling rock solid testimonials, I'd love to hear them.

Thanks for your article and being a role model Kelly.
Posted by Cassandra Lanning, Bothell, Washington | Oct 26, 2008

Kelly, I was so happy to read your article. It really struck a chord with me because I face the same challenges in my businesses. I have always been honest with people in all aspects of my life, but the business aspect definitely proves challenging. I once had a client tell me that I will never get rich being so honest. But my experience has always been that if I give to my clients, they will give to me. I am so happy to hear that we share the same perspective. You are a breath of fresh air!
Posted by Kelly Totten, Portland, Oregon | Oct 28, 2008

Thanks for all the support and great comments.

Molly - I agree, looking yourself in the mirror is key. A MAJOR reason I'm self employed was that I couldn't stand the politics of the office. My need to be direct and honest was not in keeping with the game playing. It's funny how some organizations allow such behavior on the inside, but are thrilled to have the opposite from a consultant.

Laurie - Great point on the testimonial. Thank you! I always forget to ask for them when it's "timely".

Brandi - I do have a rainy day fund and that does help. Although, with the current economy, I'm sure the rainy day fund is not big enough. ;)

Pamela - I do think it's difficult to get "proof" of honesty helping the bottom line. If any of my leads point to that, I'll be sure to document it and post about that too.

Cassandra - I too am happy others share my feelings on this issue. I would rather not be rich and, as Molly stated, be able to look myself in the mirror.
Posted by Sonya Neblett, Asheville, North Carolina | Oct 28, 2008

Hi Kelly,

I just wanted to give you a shout out and say...you go girl! I did a post on being honest as well just last Friday on my blog and I agree wholeheartedly that it is sooooooo very important. Being honest seems like a risky proposition because we are afraid we'll lose something (that paying client, that cool job, etc). It moves people out of their comfort zone and shakes things up. But I believe the fallout from it, if there is any, is for the best in the big scheme of things.

Feel free to check out my post if you get a sec...http://trulytwistedmarketing.com/honesty-a-risky-proposition

It's nice to know there are other people out there on the same wavelength!
Posted by Alma Gray, Akron, Ohio | Oct 28, 2008

Your client obviously trusts you...and rightfully so. You did the right thing.
Posted by Kelly Totten, Portland, Oregon | Oct 28, 2008

Sonya - I read your blog post and left my comments there. I think you are right about the risks in being honest.
Posted by Christopher A. Grimm, Seattle, Washington | Oct 30, 2008

This how I look at your situation is in the definitions for honesty and integrity. Honesty 1. the quality or fact of being honest; uprightness and fairness. 2. truthfulness, sincerity, or frankness. 3. freedom from deceit or fraud.

Integrity 1. adherence to moral and ethical principles; soundness of moral character; honesty. 2. the state of being whole, entire, or undiminished: to preserve the integrity of the empire. 3. a sound, unimpaired, or perfect condition: the integrity of a ship's hull.

I think this comes down to a higher level of what it means to us indivdually and how we deal with people or clients in our businesses. Ultimately, the bottom line will always be better when we are a givers of our true selves and not a takers of someone else's treasure. We are all more likely to be givers when we can trust each other in that indeed we are getting all of what the other offers us - nothing being held back. We need to be honest in all sense of the definition, but more importantly we need to have integrity which is more about being whole with those around us and not holding back a part of ourselves or our knowledge.
Posted by Frith Barbat, Seattle, Washington | Oct 30, 2008

Kelly, thank you for this post. Years ago MCI called me and said I was paying too much for my service with them and they'd like to switch me to a cheaper, better plan. I was stunned. They went through financial crises after that but I stayed with them for what they had offered me - honestly. My work as an interior designer could give me opportunities to talk clients into things they don't need, but I never do it. I could make more money if I did, but my work relationships are long-term and based on trust and if I jeopardized them, I'd be not only out of business, but unable to live with myself. I applaud your decision and thanks for starting a discussion about honesty and the bottom line.
Posted by Carol Skolnick, Santa Cruz, California | Oct 30, 2008

I ONLY want to do business with honest companies and individuals...so it makes sense that I would want to be honest in business myself. My bottom line is authenticity over income. Great article.
Posted by Bradley Chrysler, Bellingham, Washington | Oct 31, 2008

From a customer's point of view I believe you made the right choice. You gave up short term gain for long term loyalty and for sure, tons of referrals. You will see even more revenue in the long run with ethics like that. Good job
Posted by Charlene Kingston, Higley, Arizona | Oct 31, 2008

I love your solution. Because my business involves consulting, I feel that my client's best interest is my best interest. I've made similar decisions in the past. I've found that it very often results in great client loyalty and increased references (not to mention more enthusiastic references). Even if this would not happen, I would still know I had done the best I could for my client. Bravo for spelling it out so clearly, Kelly.

Finding the shortest distance between your message and your audience
Posted by Kate Phillips, Seattle, Washington | Oct 31, 2008

Thanks Kelly, great topic.

I encountered this problem at times in real estate (in my former life as an agent); I remember advising people "not" to buy or sell a house when I felt the home wasn't a good fit or value, or the timing was wrong for selling.

Although I would joke that I must be a terrible salesperson, it never even felt like a quaundry. It's just the old Golden Rule, to do unto others... It does come back around, in loyalty and referrals. And mostly, in a good night's sleep!