In the commodity world, there are times you make a good buy (we like to brag about those) and times you make a bad buy (we like to forget about those). The problem with making a bad buy is that you have to figure out a way to get out of it. Some people will try to wait and hope the market will go up and turn the bad buy into a not-so-bad buy, or maybe even a good buy. But here’s the thing—hope is never a good strategy. Anyone who has been in the business long enough will tell you to take your lumps and get rid of the product as soon as possible. I believe in this idea so much that I’ve elevated it with all of my people to “Rule #1: Your first loss is your best loss.”
The interesting thing about Rule #1 is that it applies to a lot of other areas of business and life. Take a customer complaint for instance. When you have a problem with a customer, the longer it takes to respond to them, the angrier the customer gets. And when you do respond, the longer you take to resolve the issue, the greater the customer’s expectations become. You are always better off dealing with a customer promptly and trying to resolve it quickly, because the pain only grows as time goes on.
Rule #1 also holds true with staff issues. If you have a challenge with someone who reports to you, it’s always better to deal with it head on than to let it fester and get worse. Often, you’ll find the act of addressing the issue did not turn out as bad as you thought it might, and if you are in the position of having to terminate an employee, the sooner you do it, the better for everyone. I can honestly say that, given all the times I’ve had to let someone go, I have never looked back and wished I’d waited longer to pull the trigger. Quite the contrary; I’ve either found out more things that were unflattering to the employee that made me mad at myself for not pulling the trigger sooner, or I’ve had the employee actually express relief that the situation was ending, again leaving me wondering why I waited so long.
Another appropriate use of Rule #1 is in relationships, both professional and personal. When I got married I was given two pieces of advice: “Don’t leave the toilet seat up,” and “Never go to bed angry.” The former is just good common sense that an up-until-recently single guy needs to absorb. The latter is just a variation of Rule #1. Talk out what is bothering you so it’s resolved quickly and you both can sleep soundly. Same holds true with business relationships. You know they’re on a good footing when you can discuss your differences with the other party and put them behind you.
People will ask me what other rules I have, and I share that I really only have one other called Rule #4. Why is it not called Rule #2? That’s because I learned Rule #4 while working with some of the managers at 84 Lumber, and it was part of their list of unofficial rules for business. Rule #4 is “Better you than me,” or in certain positive circumstances, “Better me than you.” So when you come and tell me you have an unpleasant situation that you have to deal with, I will ask you what Rule #1 is. When you say, “I know, your first loss is your best loss,” I will smile at your correct answer and because you know what you have to do. Then I will hold up my four fingers letting you know I sure am glad you are dealing with the problem rather than me.
Russ Kathrein is with the LBM Division of Do it Best Corp. based in Fort Wayne, Indiana.
