04/21/2013 11:00 EDT | Updated 06/22/2013 05:12 EDT

Want to Grow Your Business? Be Trustworthy

It is frequently said that people do business with people they know, like and trust. But how do you build that trust? Because as Steven M. R. Covey explained to a group of Home Hardware leaders, there is an economic cost factor when trust is not there, or worse still, lost.

To make his point, he asked us to think about someone we trust and someone we don't trust and to compare the difference in how we do business. When you don't trust someone, and feel they have a hidden agenda or you are not sure what their "game" is, so the whole process takes longer as you suss out what is at stake. Whereas when you trust someone, there is a different, fully-charged dynamic that is built on mutual respect.

From a business perspective, time is money and so there is a price tag attached to that lack of trust. And these days there are so many ways people can "rob" you -- be it through fraud, time or identity theft, office politics to unproductive meetings.

Covey, to give an example of what happens when trust is an integral part of a relationship, told the story of how Warren Buffet bought one company where he met with the owner for two hours, shook hands on the deal and less than one month later closed the sale.

He also observed that people like to be trusted. For example a coffee vendor who lost customers because he was having to stop and give change, decided to have a box where customers could pay for the coffee and make change for themselves. Not only did he regain the lost customers, but people left higher tips.

So how exactly do you build trust in yourself, your team and your business? Covey explained that there are five waves of trust and there is a ripple effect, which starts from the inside out. In other words, you have to start with yourself.

Building your credibility is how you create trust. If you say you are going to do something, you do it when you say you will. If you find that someone has been overcharged, you tell the person and refund the money. You are true to your word.

Covey showed a tennis clip of when Andy Roddick, all set to win a match, noticed a dent in the clay which meant that the last call was wrong. Now he could have walked away and ignored this so he won, or he play with integrity and speak up. He chose the latter, and went on to lose the match, but win the respect of the crowd. It is also when your intent is clear and authentic that people around you believe and trust in you.

As a leader, you want to instill these characteristics in your team, and like the coffee story when you show people you trust them, they will go out of their way to prove your faith was justified.

Competence also plays an important role in gaining trust, shared Covey. Having integrity and credibility is not enough if you don't deliver a quality product or service. Competence and performance can be learned and improved, especially when we focus on lifelong learning, always questioning and trying to do our best.

To illustrate that trust can be restored after being lost, he talked about his 16-year-old son who got his license and wanted to drive the family car. Covey agreed but pointed that there were four rules -- no drinking, no speeding, seatbelts on and no fooling around in the car.

And for a month or so, his son stuck to those rules. Then late one night they got a call from the police. His son had got caught speeding 135 mph in a 40 mph zone. Now he got fined and his parents made him pay the $550 fine himself but the judge didn't suspend him. However, his father did. For three months he was not allowed access to the car -- and when he showed that he could be trusted again, he won back the keys.

You could see the many parents in the room just nodding their heads, recognizing that there had to be consequences to his behaviour, but it is not so easy when it is an employee or a supplier who has crossed the line. Do you give them a second chance?

Much depends on the original relationship, but it is not that simple and it is much harder to win back trust, just proving that it is far better not to lose it in the first place.