9 Words That Scare People
“It’s my company and
I’ll do what I like!” These words used
to scare me as a lending banker because they showed that the speaker didn’t
really understand what running a business was about.
A lot of business owners are extremely successful; good for
them. They’ve clearly found a “winning
formula” that results in people being willing to buy that business’ product or
service at the price charged. Of course,
they may be the only player in the area, resulting in a monopoly. However, that won't last forever…
The problem with people who take the “It’s my company…” view
is that, whilst I acknowledge and respect that they’ve built that business up,
it’s not simply theirs to do with as they please. They have the option of running it, handing
it over to their children or selling it and retiring on the proceeds - all very
noble acts.
What the business is not
there for, however, is to act as their personal playground or lifestyle
financing mechanism. You may be able to
pay for a lavish lifestyle off the money you make from your business, but that
is the result, not the purpose of running a successful
business. It makes one wonder about the
priorities of the owner. It also
suggests why it is that so few small businesses survive the “second
generation”.
A business exists to solve a problem and to make money. If the owner is constantly taking out cash to
pay for that Porsche, or Mediterranean cruise holiday, that’s less cash left in
the company to pay for more profit-producing essentials or to provide cashflow
when times are bad. As a result, either
the owner then has to go to the banks to ask for more money, or put any spare
cash they have back in to keep it afloat.
Of course, they could just close the business...
As a lending banker, I was taught to observe what was going
on when I visited a business. Did the
owner have the latest Mercedes parked outside the entrance whilst the exterior
of the premises was in disrepair? Was
the lobby paved with marble, with a fountain in the middle, whilst the work
areas were shabby and dark? Whilst this
last might be an exaggeration, it illustrates how company cash may be diverted
to “trimmings” rather than the essentials.
Modern office equipment and computers are essentials; marble fountains
aren’t.
If money was being spent on trimmings and I was lending, was
that what was happening with my depositors’ money? I don't know how they would have felt about
their money (which they trusted me to lend sensibly) being spent on
non-essentials, but I doubt they’d have been happy (unless the loan repayments
were on schedule).
A business owner has both moral and civic responsibilities;
moral to be seen to be doing the “right/honest” thing; civic to ensure that
that what they do supports the local community or environment. At times, these come into conflict with the
need to pursue profit, but as awareness grows and it becomes easier to speak
out and publicise wrongdoing, business owners will find hiding is more
difficult and that it is not just “their business”.
I have spent more than half my life delivering change in different world markets from the most developed to “emerging” economies. With more than 20 years in international financial services around the world running different operations and lending businesses, I started my own Consultancy to offer solutions for improving performance, productivity and risk management. I work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email . My website provides a full picture of my portfolio of services. For strategic questions that you should be asking yourself, follow me at @wkm610.
Labels: Financial, Selling, Social, Strategy
posted by William Martin @ 14:14
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