What? You say, reading my title here. Why would I want to? Here’s a question I received in the www.bplans.com Ask the Experts forum today:

My business sells window coverings and recently got taken by a client who decided to forgo paying for the balance due for product that was installed in his home. We often deal in large-value custom orders and need to protect ourselves in the future. What kind of agreement or contract can we use, and were can we find an example of something that will hold up in court? Should we use a lien agreement?

Ok wait. Let’s talk about this. Have you considered the impact on your business of asking all your customers to sign something like that? You’re selling window coverings. You have competition.

You just reminded me of my post last month The Heat, the Kitchen, and Credit Cards. I was mad at a customer who stole from us, and customer service for the credit card helped me out.

The active point in that was about the heat and the kitchen. You’re in business. You’re dealing with customers. You have to decide whether the occasional bad apple is worth baking all of the apples as they come in.

Here’s a good exercise:

1. Estimate your average monthly sales.
2. Estimate your average monthly sales after you impose safeguards to protect your business from your customers.
3. Subtract the number in point 2 above from the number in point 1.
4. Is the result more or less than what your bad customers cost you in an average month?

Here it is in practice. An actual case, from something that happened in Palo Alto Software in 1999. Some of our non-US customers were making orders and then not accepting shipment, costing us money. Our accounting goddess wanted to make all non-US customers sign a form and fax it back so we could charge them anyhow. Without a signature, we were stuck.

1. The average non-US sales per month at the time were about $35,000.
2. We estimated that if we had every non-US customer sign a form and fax it back before shipping, our sales would go to about half of that, $17,500.
3. The problem we were solving was costing us about $350 per month.

Hmmm. That’s a real case, with real numbers, from back then. Think about margin for error, too. Perhaps we estimated wrong, and our sales would have dropped only, say, 10 percent instead of 50 percent. Even in that case, the cost would have been $3,500 per month to correct a $350 per month problem.

So, getting back to the question, you asked: if you really want to protect yourself from your customers, that’s a question for an attorney. And good luck. First, think it through.

This is another question from the entrepreneur.com ask the experts section, and another one that comes up a lot, so I want to post my answer here too.

Question: I’m 17 years old and my parents own a successful restaurant. I feel I need to be well-educated to take over the business, but I didn’t get the best grades in high school. Would a 2-year school prepare me better since I’m not looking to get a job after college? How do I prepare myself to take over my parents’ business?

You might be interested in seeing what I wrote recently — before I got your question — on this from the parents’ point of view. That’s 6 Tips for Involving Your Kids in Your Business on this blog. I’ve actually managed to build a business (Palo Alto Software) that absorbed several of my five children as I got older.

You’ll see there that I believe education is the priority when you’re young. You’ll get so much experience with time that you’ll be sick of it, but now is the time of your life when you have the luxury of getting education. Don’t think you won’t need it because you have a built in job, you will need it and want it that much more. Furthermore, never assume you know the future.

If you don’t have good enough grades to get into your favorite or most desired college, get into whichever college you can and apply yourself. Or do the two-year thing and get your grades up so you can transfer to a four-year college. You’ll never regret it.

By the way, as you get further into your education you’ll probably figure out what you like studying. Concentrate on that, and your grades will improve. And you’ll enjoy it instead of dreading it. Give yourself a break, keep an open mind on this, and keep trying before you give up.

Having an automatic job in a family business is going to work for you only if you do that job well, the company prospers, and you’re glad you’re there. It’s not a reason not to apply yourself in school.