The views expressed by Entrepreneur contributors are their very own.
This may sound crazy for an entrepreneur, but I have all the time had a soft spot for honesty. I hate lies and misrepresentation because they inevitably cause more problems and create unnecessary challenges, each in my personal life and in my business endeavors.
Admittedly, this is not a common approach in the business world, where the mantra of “fake it until you make it” still resonates loudly, where the overwhelming majority of business owners are afraid of any form of failure and obtaining an request for forgiveness, incompetence or abuse of power requires legal recourse.
As a former VC manager, I’ve seen entrepreneurship in the startup world, where smoke and mirrors are the commodities. Let me inform you, it’s almost never about outright lying. It’s more often about twisting reality to create a narrative, like cherry-picking the best growth metrics to advertise your organization, gaslighting customers despite legitimate complaints, making guarantees that are nearly unimaginable to maintain, etc.
Some firms, like Theranos, manage to idiot everyone—even investors—and develop into huge, if sometimes short-lived, success stories. But most startups can’t sustain the charade. In the U.S., half of all startups don’t make it past their fifth yr.
Of course, failure is not all the time as a result of dishonest practices. There are countless legitimate the explanation why a business can fail.
But I know what it means to seek out yourself at a critical juncture when your enterprise is under threat, and I know how tempting it is to attempt to talk yourself out of it with a seemingly innocent lie in the hope of saving face until things improve.
In fact, I’ve been there a few times. And each time, my business and I have emerged stronger by owning as much as our problems and addressing them with brutal honesty and transparency. I hope my experience encourages you to do the same—not only because it’s the right thing to do, but because I think it’s good business.
1. Transparency in crisis
My startup, Supliful, is a white-label CPG platform. Our clients are entrepreneurs—influencers, businesses, and online business owners who wish to launch their very own private label brands without any hassle. So when our business gets in trouble, the trouble ripples down the chain, impacting our clients’ businesses.
One such recent instance was in January 2024, when we faced a variety of operational challenges while moving to a larger warehouse in response to rapid business growth. Our order lead times were exceptionally slow, resulting in complaints from our users. On-time delivery is at the heart of what we do. If we have late deliveries, we make our customers appear to be idiots in the eyes of their very own customers – that is a sure-fire business killer, not something that could be fixed overnight.
Instead of promising the unimaginable, ignoring complaints, or giving up, I arrange an “ask me anything” session with our clients. I got in front of them, allow them to express their concerns and complaints, and truthfully admitted where we were falling short. Then I addressed the issues directly, explained our current situation in detail, and provided a realistic road map for how long it might take to resolve the issues.
Our clients are also entrepreneurs, so they understand what it’s prefer to struggle to grow a business. They also liked the transparency and appreciated that they were fully aware of exactly what was going on with their success provider, giving them a clearer picture of not only our business, but theirs as well. Most importantly, we also delivered on the roadmap we promised them.
2. Admitting your mistakes
Much earlier in the Supliful journey, we had one other issue with an equally critical a part of our offering – we encountered a serious quality issue with one of our products. Customer complaints were piling up and it became clear that one of our suppliers was not meeting the required standards.
Again, we could try to comb it under the rug, claim there was nothing fallacious with the product, or come up with excuses to deflect blame. But the reality was that ensuring a quality product for our customers was our responsibility and no one else’s. If a supplier does not meet expectations, it is our responsibility to seek out a higher one.
We looked closely at customer feedback and openly acknowledged the problem. We sent sincere apologies, explained the steps we had taken to handle quality issues, and took financial responsibility by offering refunds or exchanges, regardless that our business was already struggling.
Looking back, the price we paid to maintain our customers was a useful investment – some of the individuals who were the angriest at the time are now some of our biggest customers. Again, customers appreciated our honesty, transparency and commitment to solving the problem. Internally, this has led us to seek out more reliable suppliers, ensuring higher product quality in the future.
Honesty is good business
Today, transparency and honesty are cornerstones on which our company is built. For example, I recurrently share business data and performance updates on LinkedIn—even when the numbers are bleak. Brutal honesty doesn’t have to be a reactive thing to do when the shit hits the fan.
Sharing our story publicly and addressing issues head on builds trust with all partners. It gives latest business owners the confidence to work with us and it gives our long-term customers the confidence to remain with us. It has also paid off in business growth.
Sure, sometimes honesty hurts. It’s challenging to confess to mistakes, especially when you know they’ve negatively affected others. But doing so is crucial to achieving the end goal of building a solid, sustainable business that may weather any storm.