“Trust But VeRiFy”

Doveryai no proveryai (Äîâåðÿé, íî ïðîâåðÿé) is an Old Russian proverb that means “Trust But Verify.” Ronald Regan stated it in a more American-esque fashion when he said, “Trust But Cut The Cards.”

There are times in our lives when we must make difficult, even dangerous decisions. Uncertainty is everywhere. Decisions involving career choice changes or major business decisions can be cause for cautious anxiety. Taking out a second mortgage on the family homestead to buy a business or taking on a new business partner can be downright scary.

In the 70s I teamed up with a couple of business partners and proceeded to enter into the foundry business. Our first approach, before building an all new facility, was to attempt to purchase an existing profitable business. Luckily, we had the cash and wisdom to hire a seasoned old war-dog of an attorney that was also a CPA to protect us from our egos. When we entered into the negotiation phase and were allowed to see the books our combination CPA and legal counselor quickly called for an audit commenting to the seller that to do a deal we would require “verification of what can be verified and protection from what can’t.”

The brilliant simplicity of his demand - “verification of what can be verified and protection from what can’t” - represents the key to removing the uncertainty from the majority of the decisions we will ever be required to make. Before making a commitment we need to feel comfortable we are making a wise decision therefore we need proof and guarantees that the path we are about to travel will deliver us to our desired destination. This “need” requirement defines the seller’s mission - to supply the needed verifiable facts and/or guarantees to satisfy and offset the buyer’s fears and anxieties.

Oh, if it were only that simple! The majority of tough decisions we are required to make are seldom handed to us in a neat bundle tied with pretty ribbons of verifiable facts and guarantees. We are usually left to our own resources to search out much of what we need to make sound decisions via arduous due diligence. If this wasn’t bad enough, enter the wild-card of emotion. Most of what we like to consider as logical decisions are tainted my emotion. We like to think of ourselves as logical beings but we are not - we are emotional beings and left unchecked our emotions can get us in trouble. Emotion and passion are positive qualities but they must be grounded with logic. Our attorney/CPA counselor was

living in a black-and-white world of financial numbers when he demanded “verification of what can be verified and protection from what can’t.” Life’s decisions would be much simpler and safer to make if we had the luxury of only dealing with hard numbers. Life would also be a lot less exciting.

When faced with making a difficult decision ask yourself, what is the worst that can happen and then ask yourself if you are willing to live with the consequences of a worst case scenario? If the answer is “yes” then work toward the best but plan for the worst. Don’t dwell on the worst but be cognizant that it could happen. Start up businesses fail, partnerships dissolve, career change plans backfi re - “it” happens.

If you’re entering into a business venture seek competent legal counsel. Do your pre-crisis estate planning before there is a crisis! Two buddies that form a lose partnership over pizza and beer can end up being arch enemies three years later when the business turns sour. Without a pre-conceived exit strategy life can get difficult. Also, if the business is a success everyone needs to know where they stand before there is money and assets to squabble over.

Also, discuss your options for protecting your personal assets with your attorney before entering into a business venture. In the exuberance of starting a business we seldom concern ourselves with thoughts of financial disaster. Reality is, by doing precrisis estate planning an attorney’s advice can make the unpleasant experience of crawling from under the wreckage a lot less painful.

When troubled with a decision go with logic and your gut. Sleep on it and ask yourself about an impending decision as your feet hit the floor in the morning. Hopefully, early morning clearness will give you a gut feel for the decision. There is always risk in making a decision. After all, Lady Godiva put everything she had on a horse.

Ernie Mitchell, Moose Lake Hill, Orr, MN, © All Rights Reserved 2010.