Optimism – is it a good or bad thing?

When speaking to our clients recently, it is apparent that most have started the year with a sense of cautious optimism.

It’s easy to understand the source of the caution: the economy remains in a mess for the 5th year running, with negative growth back, unemployment continuing to rise and the largest ever national debt. Although there has been much talk of the government reducing red tape, little has been achieved so far and we are still affected by a seemingly endless stream of new regulations from Europe, the cookie regulations being just the latest. And there are menacing storm clouds on the horizon: the collapse of the Euro seems likely within the next couple of years and there is even the distant possibility of a war with Iran, which would cause fuel costs to rocket.

But where does the optimism come from? I believe it’s an inherent trait of business owners. After all, business is all about doing things now with a view to making a profit in the future. Without optimism, business owners simply wouldn’t take the risks necessary to continue in business.

I remember an interview with Theo Paphitis of the Dragons' Den a few years back when it was suggested to him that being in business is all about taking risks. No, he said, it was about taking calculated risks. Nothing was certain and it was foolish to take risks without doing your homework first.

As a litigation solicitor, I am regularly called to help pick up the pieces when things go wrong. Often the business owner comes to me facing disaster: the collapse of their business, the loss of their life savings, or the prospect of bankruptcy and losing their home. The toll this has on their health and family is immense.

What I see time and time again is that they took massive risks without any real appreciation of the dangers they were facing. If only they’d taken the right legal advice at the right stage, the risks could have been avoided or reduced.

As examples, many formed companies with business associates without proper shareholders’ agreements in place, only to find that there was little they could do when they fell out with their fellow shareholders/directors. Others entered into major contracts on the basis of just few phone calls and perhaps a basic written order, only to find that, without a proper contract, they were liable when things went wrong. Many thought they could sort out a business dispute with a major customer or supplier without taking legal advice on their position and what tactics to employ, only to find themselves embroiled in a lengthy and expensive court case. And still others thought they could enter into a long-term lease commitment without taking advice on its terms, only to find when too late that it was heavily biased in their landlord’s favour – something which is totally unnecessary in today’s market conditions.

So, whilst an inherent sense of optimism is vital for any business owner, especially when the economic outlook is so bleak, blind optimism, optimism that is not based on understanding and calculating risks, is simply foolish. When it comes down to it, the main thing that we do as lawyers is to help businesses minimise or avoid unnecessary risks and we’re only a phone call or an email away.

Gary Cousins
Business Solicitor and Optimist
0845 003 5639