Maybe it is time to create a safety network for small business owners? I have met several entrepreneurs and sole proprietors that have been fooled by “scammers” and other types of fraud. A special group of these parasites are calling themselves “business developers.” These guys hide behind a valid title – but they only use it as a cover for their shady activities.
They’re fast talkers and promise all sorts of things – and then the hammer drops . . . they ask you for an advanced fee, a consultancy payment, so they can start to, ahem “work” if you will, on your project.
Then the circus is on the road including pranksters, clowns and magicians, all wearing different “hats.” They get very “busy” for a period of time and then they start to play hide-and-seek with you and eventually (yep, you guessed it) – they disappear! Below is an excerpt from a piece I wrote titled, “Five Lessons Learned From My Startup and Why I’d Do It Again” which includes some lessons I’ve learned so far:
“There are many external barriers. For example, we faced bureaucracy, rules, the jante law and fraudsters who seek to cheat you. I have been a bit naive, but personally I think that in the long run it is still a good idea to give people the benefit of the doubt.”
I think it’s the buyer’s responsibility to check that everything is in order (i.e. act according to the “caveat emptor” rule). But it’s important to note that the “buyer beware” rule does not include fraudulent behavior. Take this, for example, from Answers.com:
“This rule is not designed to shield sellers who engage in fraud or bad faith dealing by making false or misleading representations about the quality or condition of a particular product. It merely summarizes the concept that a purchaser must examine, judge, and test a product considered for purchase himself or herself.”
We have seen several versions of these robberies, (e.g., ponzi schemes and advance-fee fraud) come and go. During the summer period, July through August, and vacation time in Europe, you often get fake invoices and order confirmation documents from scammers. I received an “order confirmation” from a fake yellow pages directory and a phone call from telemarketer who wanted to force me to say “yes” to his questions, so he could record it as evidence for a purchase of their online directory. Here is one key finding from Ernst & Young’s European fraud survey 2009:
“Our survey respondents believe the likelihood of fraud and corruption is set to rise further still. 55% of the respondents expect corporate fraud to increase over the next few years.”
So, what can we do to prevent future frauds from happening? Any suggestions? Well, I have been discussing it with an entrepreneur to try to set up some kind of support network for small business owners who have been victims of fraud so we can warn fellow business owners and keep them from going through the same scenario. The goal is to create something positive out of all of this negative. It’s time to learn from old mistakes and share the new experiences with others. As Friedrich Nietzsche said so eloquently:
“What does not kill me, makes me stronger.”
One idea could be to create a member forum together with one of the associations of business owners. Personally, I am thinking of joining a BNI (Business Network International) chapter in Gothenburg, Sweden. My goal is for this post to be seen as an open letter to small business owners around the world, as an attempt to start an ongoing thread and conversation on this issue, and to create a proactive defense program for the producers in the long run.
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About the Author: Martin Lindeskog is a “trader in matter & spirit” and a small business entrepreneur in Gothenburg, Sweden. He is a board member of the Swedish National Association of Purchasing and Logistics (Silf, Western Region). Martin also writes a long-standing blog called Ego.