“It’s unbelievable,” he said, looking down at his feet. “I trusted them. They seemed to be genuinely interested in building a real business. But, all they wanted to do was make a quick buck. And, the quicker the better.”

 I assured my new friend that he was not the Lone Ranger, not by a long shot. In fact, in the world of prepaid calling cards, it is an all-too-frequent story. I have heard the same story, with a plethora of sub-plots, in board rooms, airports, cocktail lounges, hotel lobbies, trade show floors, courtrooms, shuttle busses and other places I can’t remember.

First, a little history. Prepaid calling cards sprung up a dozen or so years ago in the US. From Day One, the experts and analysts predicted that they would have a short cycle. In defiance of the best analytical minds, the prepaid calling card industry not only survived, but thrived. There have been up times and down times, but the exceptional ability of motivated entrepreneurs to fill customer needs has prevailed, and, although the face of the industry is different, the core business has gone forward and does not appear to have a Day of Reckoning coming anytime soon.

One of the drivers for this has been the low barrier to entry that prepaid calling services (notice that I changed the definition of the industry a bit?) offers. Many motivated business people have recognized a need, or a market, and developed a solution that took off with consumers. The percentage of start-ups that endure is low, probably in the single digits overall, but there have also been some spectacular successes, along with some ignoble failures.

The low entry requirement offered by prepaid calling services has enabled energetic, well-intentioned entrepreneurs, but has also facilitated the dark side, the shady quick-buck hustlers. There is nothing unique about prepaid calling services; every industry has its share of rotten apples. But, those of us close to prepaid calling services are acutely aware of the charlatans that have infected our ranks, drawn by the lure of big markets that can be quickly grown to massive size. So quickly sometimes, that the fatal flaws don’t have time to discharge their Darwinian duty to cull out the mistakes and scams. Instead, they are often able to “pump and dump.”

Which gets back to my new friend. His is a story that is all too familiar. He built a business based on a niche market where he had distribution and offered products that appealed to that market. He worked hard and smart, and built his volumes responsibly, earning a reputation for good consumer value, competent service and honest dealings with partners and distributors. He attracted well-deserved attention, and was soon offered a deal that was almost too good to be true.

Without getting into the gory details, his new partners became drunk with the cash flow and opted to take a quick buck by diverting revenues to their bank accounts instead of reinvesting the proceeds and executing the agreed upon exit strategy. My friend got next to nothing for his efforts and accomplishments, save a sullied reputation that may never be restored to its original sheen.

This tale of woe illustrates a couple of very valuable, albeit, expensive, lessons.

First, this is a recent story, so, despite competitive pressures, regulatory incursions, technological sea changes and a dismal economy, there are companies out there that do succeed.

Second, any degree of success is likely to draw scam artists like the One Ring draws the Eye of Mordor. If you are fortunate enough to find yourself the center of attention by a series of new BFFs, be cautious. In fact, be paranoid. Check out your new suitors carefully. Look at their past history, and if you can’t find one, be suspicious.

Finally, don’t turn over control of the things that made you successful until you are sure that your new partners will run your business as you did. Or, until their check clears the bank.

Don’t take all this as an indictment of the prepaid calling industry; it is not. In fact, if anything, it illustrates how energizing this industry is, and the potential that exists. If it were not a dynamic industry, the sharks would find a different ocean.

Think of your business as a jet plane. In the right hands, it can take you wherever you want to go, swiftly and in style. In the wrong hands, it can go crashing into the ground, or worse.