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Five business lessons from the criminal underworld

Cover of  by Dan Matthews

Think crime doesn't pay? Think again. Dan Matthews goes in pursuit of drug dealers and fraudsters to uncover entrepreneurial side of the criminal underworld.

Don't listen to people who say crime doesn't pay. Of course it does, otherwise no one would do it. While shady dealers, artful dodgers and unscrupulous tricksters have their hearts squarely in the wrong place, many are at least as entrepreneurial as their legit counterparts. The ugly truth is that we can all learn from them.

Fraudsters can be ingenious and gangsters regularly put in long and unsociable hours. Step forward anyone reading this who, hand on heart, has never given grudging respect to those who benefit from creative and well-planned crimes; not many of you, I bet.

The same applies to professions that, while not exactly illegal, are frowned upon in polite society. Strippers, like accountants, serve their 'clients' according to strict principles and even the gossipy industry of tabloid PR is focused 100 per cent on the vagaries of profit and loss.

The real tragedy is that some criminal minds are so well honed that they could rival the fame and fortune of some of our greatest entrepreneurs had they taken the path of righteousness and not been banged up for a 20-stretch.

For those of you who like your markets black, the following five lessons will be enlightening. For the rest of you, don't get any funny ideas - okay?

Jack Straw's scammers: Target your market

Phishing is a scatter-gun approach to fraud. No one under the age of 90 falls for it any more and so the success rate is falling to nearly zero. But the people who phished the Blackburn Labour Party with an 'emergency message' from local MP Jack Straw adopted sophisticated principles of email marketing and got a better response rate as a result.

Posing as Jack himself, they wrote: "I misplaced my wallet on my way to the hotel where my money and other valuable things were kept. I would like you to assist me with a soft loan urgently to settle my hotel bills and get myself back home."

The message was relevant, targeted, from a 'trusted source' and had a call to action (fake Jack asked for £3,000 to cover bills) - all ingredients that mark a successful campaign. The crims didn't make any money, but Jack's office was inundated with calls.

Anonymous drug dealer: Don't be greedy

It's tempting to push up your prices in the hope of stretching your profit margins, especially when customers are thin on the ground, but do so and you risk being undercut by competitors. Even when it comes to dealing drugs, criminals know the free market is all-important.

Business is all about balance; you buy at one price and sell at another. Customers expect to you to profit from your trade, but they know instinctively when they are being taken for a ride too.

As our man, a seasoned veteran of the street corner, explains: "You want to keep your prices competitive and your profits reasonable. Customers are hard to win and easy to lose," adds our anonymous contact. "If you're in a business where there's a lot of competition, don't be tempted by a quick gold rush. You'll pay for it later."

The Wire: Maintain strong leadership

Season Three of HBO 'cops and gangstas' series The Wire tells of a Baltimore police unit and its work to take down murderous gangs of teenage hoodlums. In the beginning, the Barksdale gang is the unit's prime target and is the dominant player in the city.

Despite the best efforts of the unit, it fails to build a watertight case against the Barksdale gang before internal strife, negligence and a lack of cohesion cause the gang to fall on its own sword.

This series, in particular, sheds light on the fact that even successful businesses can collapse under the weight of mis-management. The most important lesson comes from the top, and the conflicting plans of bosses Avon Barksdale and his friend Russell 'Stringer' Bell.

The pair argue about the direction of the gang: should it continue with street dealing operations or switch focus to legitimate property deals? The lack of management cohesion causes the organisation to lose its grip on the market, allowing smaller competitors - rival drug dealers - into the game.

Lap dancer: Be a bully

Essentially, lap-dancing is all about the hard sell. The majority of men who walk into strip bars are not regulars; they are on stag dos, birthday jaunts or have had few too many and fancy some rare excitement.

Most are not the leering, cheering types you see in the movies and the dancers more often than not need to exert some pressure in order make a sale. The real pros are able to convince a punter to part with his cash without him getting uncomfortable - it's direct selling at its naughtiest.

"So, you walk into a strip club. A girl comes over, asks you if you want a dance," says our dancer. "Often, the answer is no. But the best dancers are bullies. They cajole, harangue and embarrass you into accepting a dance. These girls aren't sweet and cute. They're piranhas."

Millennium Dome diamond thieves: Go for broke

When a gang of diamond thieves tried to rob the Millennium Dome in November 2000 they did so with the intention of doing 'one big hit' then melting away forever. Though they were caught and received hefty prison sentences, they did so chasing their dreams.

The lesson to take from this episode (apart from 'don't use a JCB digger to commit a robbery') is: go for the big wins, even if the odds are stacked against you. Even small businesses can scoop major contracts with blue chips and government groups - so don't be afraid to try.

The men who took on the Dome's security system were going after 12 diamonds on display there, including the monster 203-carat Millennium Star. Had they succeeded the group could have made anything up to £300m for the gems and simultaneously become the most notorious robbers since Ronnie Biggs and co.

By achieving the legal equivalent of snatching a famous diamond, your business could reach heady highs and leave you with clear conscience.

Dan Matthews is author of The New Rules of Business

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