Edition 96 – Fatal Assumption

How often have you assumed something in a business relationship that later proved to be a wrong call?

I’ve been working intensively with one of my great family business clients of late and we recently came across a fascinating example of how assuming their client had all they needed has cost this family business a considerable amount of money.

This family business sells products into domestic and commercial situations. A lot of what they supply is custom designed and built. Some of it is off the shelf, everyday gear that anyone who needs it could source from multiple providers.

My family business client was looking through the database of commercial clients over recent years. Their commercial sales manager had moved on in the world and we were analysing what the family business sold and to whom over a three year period. This exercise drew up a somewhat famous company that had engaged in a small purchase of the everyday gear that could have been sourced by others, however they had chosen to deal with my family business client. The purchase was not large – under $1000.

From what we can gather, the phone enquiry came in the door, the order placed, the product delivered and then ….. crickets! No one bothered to keep the relationship open. No one bothered to make the effort to go and visit this business afterwards. Someone assumed that a business that “only” spends $1000 is really not worth bothering about. So, it was assumed the somewhat famous company had all they needed and that was that. It turns out this was a fatal assumption.

The director of my family business client reached out to the somewhat famous company, three years after the product was sold. There was an issue with the product that was easily fixed. So, a quick site visit was planned to repair the fault and keep the client happy. The director decided to undertake the visit himself so that he could double it as a sales call. Except, it turns out that he was around twelve months too late!

Somewhat famous had moved offices in the past year. In the process, they needed new product – some of it everyday gear but a lot of it custom designed and built. All of it could have been supplied by my client – but none of it was. Would you like to know why? Somewhat famous did not even consider my client could provide the product – so never thought to ask them and call them in. The fatal assumption of “that’s all they need” meant that no one bothered to inform the client of all the services and products that could be offered to them – and didn’t bother to stay in touch.

By the way, the cost of this – let’s just say early six figures and if you’d spent that sort of money on a car, you’d have a really nice luxury or sports motor for your money. Boom!

The former commercial sales manager’s assumptions were fatal as their lack of interest in pursuing the relationship meant they killed it off even before it had had the chance to flourish.

I see plenty of family businesses make similar fatal assumptions, most days of the week. Sometimes it is out of laziness. Others it is sheer complacency. However, all of it impacts profitability and the value of each and every family business that does it.

This Week’s Tip

“Imagine the opportunity that could be sitting inside of your family business, right now,
with your existing clients, if you stopped assuming and started asking?”