A man confessed: “My business did really well last year. Unfortunately, my CPA just told me what I owe in taxes, and I’m in shock. I don’t have the money! I reinvested it in my business. If my wife finds out about this it will send her into a tailspin. Should I just handle it without telling her?”
What would you advise this businessman?
Here’s what I’d say:
It doesn’t matter if you are the CEO of major corporation, a government official, a small business owner, a church leader, or a marriage partner. You have people who trust you. We’ll call them your “trust audience.”
And we know at least two things about trust. One, it takes a long time to build. Two, you can lose it in a moment.
A crisis of trust erupts when you don’t live up to your trust audience’s expectations. Consumers expect safe products. Citizens expect their elected officials to actually serve them. Church members expect exemplary behavior from their leaders. A spouse expects honesty from her partner.
Interestingly, how you handle a trust crisis in large part determines how extensive the damage. Mishandle a trust crisis moment, and you may never recover.
However, if you handle it honestly, you can minimize the repercussions. In some cases, a genuine, humble response can actually allow you to emerge with even more trust.
In any trust crisis, you have to look in the mirror.
If the looming problem is the result of willful actions (i.e., you intentionally did something wrong), there’s only one path to restoration. Immediately admit what you did. You can’t rationalize, make excuses, or blame others. You have to take full responsibility for your actions. Then, you need to start working to make things right, no matter how long it takes. This is hard. Really hard. And there are no guarantees.
But let’s suppose you didn’t willfully do wrong. You made an honest mistake. (Stealing money or having an extramarital affair wouldn’t apply here.) Or maybe you were negligent or careless…perhaps due to arrogance or laziness. Even though you didn’t intend a certain outcome, your actions resulted in the breach of trust. This is the person who installed the wrong part, forgot to relay the message, messed up the order—or failed to set aside enough money for taxes.
What steps should they take?
- Forget a cover-up. Deliver the full set of facts to your trust audience. If you know what went wrong, say so. Give a full and honest account. If you do not yet know where the proverbial wheels came off, promise to work full time to find out what happened. But turn the spot light on. In your case, this means a full disclosure of the facts to your wife.
- Begin a clean-up. You messed up. Own it. Make it right. In order to restore trust, your trust audience needs to be convinced that you’ve done everything in your power to clean up the mess you have made. The good news is that most folks will have a pretty fair assessment of what you can and can’t reasonably be expected to clean up. If you’ll give it your best effort, most people will meet you halfway. In your case, I’d say work with your CPA to contact the IRS and work out a payment plan for the taxes you owe.
- Promise a check-up. Dance partners with sore toes won’t be eager to dance with you again until you’ve taken lessons. What are you doing to make sure you don’t mess up in this area again? In your case, that means working with your CPA to set up a special tax account for your business. For every dollar that comes in the front door, a certain percentage will go into the tax account for the payment of the taxes you know you’ll owe.
Nothing I’ve suggested here is easy to implement. But there’s no asset as valuable as trust.
Pay the price to get it back.
If you’re like most people, you have lots of financial questions. Make sure you’re asking the right ones. Email me at bmoore@argentadvisors.com and I’ll send you my free list of “30-Something Questions for People Who are 60-Something.”
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