Character, credit & capacity
By Horace M. Lukens III
taken from Evansville Business Journal, February 2008
Horace M. Lukens III recently retired after 51 years in the property/casualty insurance business in Evansville. He currently is a lecturer in business, economics and finance at the University of Southern Indiana's College of Business.
The "Three C's" of character, credit and capacity can be applied to the entrepreneur as one of the major considerations for determining the success of any business enterprise.
During my years in the insurance profession, one of my areas of expertise was corporate suretyship. A surety bond stipulates that the principal (usually a contractor) will perform the terms of his contract to the satisfaction of the owner. If the contractor fails to perform according to the terms of the contract, the surety (the bonding company) comes forward to complete the project. In order for the principal to secure a performance bond, he must show that he has the proper character, the right amount of credit and the capacity to execute the plan.
Let's examine each one of these characteristics as they might apply to your business or profession.
Character
First, how does "character" apply? For our purpose, character is defined as moral or ethical strength; a description of a person's attributes, traits or abilities. Some useful synonyms are "disposition," "temperament," "personality" and "nature."
Character really means that one will conduct his or her business in a manner that will reflect goodwill on both the buyer and the seller.
The "golden rule" applies here. Many of the problems that we have today in our economic culture can be traced to a lack of character in our daily interactions.
Moral and ethical misconduct will lead to the failure of any business or professional enterprise. Much has been spoken and written about character as it applies to the entrepreneur, but it comes down to two attributes: a pure heart and a willingness to help others.
Credit
Second, what is the role of credit in the entrepreneurial enterprise? One of the most difficult hurdles to overcome in the new enterprise is the acquisition of sufficient capital to fund the enterprise.
The establishment of an excellent credit history is vital to the success of a new business.
The credit score is all important.
Whether we agree with its use or not, it is a fact of life in the business world that your credit score may make the difference in securing financing from conventional lending sources.
Securing a copy of your current credit score should be the first order of business for the new entrepreneur.
In our current economic situation, securing adequate financing for the business enterprise is becoming more difficult. This is why the maintenance of a superior credit history is imperative.
Capacity
Third, does the new entrepreneur have the capacity to fulfill the mission of the enterprise? In this regard, knowledge is all important.
One cannot jump into a business without doing a properly constructed business plan. In the entrepreneurial classes at the University of Southern Indiana, strong emphasis is placed on preparation of a meaningful business plan.
From the final business plan, the entrepreneur can see quickly whether there is the capacity available to make the plan work and have a successful enterprise.
Capacity also means having "walking around sense." Even if one has a superior knowledge of the enterprise and a well-prepared business plan, the success of the business may come down to "just plain common sense."
So put the "Three C's" to work in your business, whether it is a newly formed enterprise or one that has been in existence for a long time.
You will find that adherence to these three principles will make your business and personal life a lot more pleasant.
