Big business has its lawyers, contracts and intellectual property, but small business has neither time nor money for such abstractions. The work must get done, the product must ship on time; hence, deals are done in small business on the basis of reputation.
Now nothing in this world is perfect, and problems invariably arise. Being that your business lives or dies on its reputation with suppliers and customers, you must take swift action to correct mistakes and compensate partners when you are the responsible party.
It doesn’t matter whether you lose money in the course of fixing the mistake, because the money involved has little value compared to your reputation — which is your most precious asset. Like a Japanese samurai performing harakiri, or a medieval knight falling on his sword, you must take the hit in order to protect your honor in the relationship.
Recently I was deeply disappointed when a supplier made a mistake and acknowledged the fault as theirs, yet they asked me to pay to fix their problem. The money involved was paltry and after much thought I decided to pay for the supplier’s mistake for the sake of expediency.
But I am always saddened when I discover a business partner is not as trustworthy as I had thought, since it invariably signifies the beginning of the end of the relationship. Like a romance turned sour, the breakdown of a business relationship is often painful to both sides concerned.
On these occasions, you must be prepared to let go and move on, because if your partner will not take responsibility for a small mistake, you can be sure they will throw you under the bus when an even bigger problem arises in the future. Since they have taught you that they cannot be trusted, they are now a risk factor which you must mitigate and, ultimately, eliminate from your business.
The silver lining is this particular instance is that I got to test the moral character of my supplier for a very small sum. This is cheap insurance against future risk.