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Edition 81 – Shiny Objects

What is it with the owners and managers of family businesses and their ability to be distracted by shiny objects?

2017 is turning into another year of me observing family business owners and managers take their eye off the ball, only to be clean bowled by the simplest, easiest of deliveries.

Personally, I believe it is either:

  1. Boredom; or
  2. Impatience.

that contributes to the pursuit of the shiny object.

Boredom, as a result of being in business for a number of years, doing the same old thing and getting all excited about venturing into a new field of endeavour (inside or outside the business) that generates a heightened level of interest in being in business.

Impatience when owners and managers decide they’re just not making the progress they believe they should be, so venture into riskier endeavours in the hope that returns will accelerate and profits grow.

Whether it is boredom or impatience, it all boils down to a lack of strategy.

You see, if you are not spending the time in your business at least once per year looking at:

  1. Where you have come from.
  2. Where you are heading to.
  3. What opportunities you have in business.
  4. What challenges you face – known or unknown.

Then you really are putting at risk not just your business, but the financial and personal livelihood of your family.

Here are some of the shiny objects that I’ve seen lob into play in the last twelve months from the owners and managers of family businesses.

  1. A business owner who saw the “potential” of taking on a project equal to 50% of annual turnover with a margin of half their normal work. The shiny object was the lure of the big pay cheque – yet it could send the business broke.
  2. A high level manager who pointed out to me a diminishing revenue stream inside the business – except that I reminded him that the drop was nothing to do with a change in the type of work the business does, but the fact a large client dropped off the radar. The shiny object was asking the wrong question and giving the wrong answer.
  3. The business owner who decided to invest in property right at the time the business needed capital to fund future expansion. The shiny object was the ability to touch and feel real estate – whilst neglecting to provide capital capacity to fund the business, which in turn funds the loan that purchased the real estate.
  4. The launch, by one family business, of a new, fabulous product that could be a real game changer – except that agreements weren’t signed off, production budgets weren’t prepared and, unforgivably, a key legislative and industry requirement was overlooked.

Two days, at most, is all it takes to determine the strategy for a family business. Yet, most owners and managers of family business don’t feel they have the time to spend putting thought and attention to strategy. It’s amazing how much time they’ll spend on chasing shiny objects, however.

This Week’s Tip

How much opportunity could you find inside your family business if you spent two days drilling down on it? How could that benefit the business and your family?