Monday 13 June 2016

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.

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