Nine usual excuses to stay stuck
(Part One)
My column on risking failure (July 24, 2015) generated substantial reader mail, so I will continue this discussion for the next several weeks. Many family businesses claim that they want to diversify into new ventures and try novel methods, especially in an increasingly competitive world, but somehow find it hard to do so.
“When Asean 2015 is fully operational, our family business needs to go into another industry,” says a textile manufacturer in Laguna.
“Bangladesh and Vietnam incur lower costs, so it would be hard for us to compete. We want to go into retail, but we are scared to make the first move.”
“Our restaurant has not been making a profit for the past year,” says the founder of a medium-scale business in Manila. “My son does not think that there is a future, and he wants to set up his own business in fitness, build a public gym. But we need a successor to continue the restaurant, because sayang naman, pinaghirapan namin ito. (It would be a pity if we don’t have a successor. We worked hard for this business). Besides, what if the gym fails?”
Before embarking on a new venture, it is prudent to do a feasibility plan and weigh alternatives. But often, the problem lies at the start and how to even get going.
The following are common reasons for family businesses to stick to the status quo. We disprove each one.
Uncertain Economy, Lack of Resources
“The economy is unstable, so it is not wise to do something outside our area of expertise.”
The world is in flux. The US is just recovering from the 2008 recession, while some European countries like Greece are still in upheaval. Asia has weathered the crisis well, but with the advent of Asean 2015 and other disruptive forces, no one can say for sure when the economy will stabilize.
Also, what do you mean by “stable”? Stability is a matter of personal perspective (even economists disagree). For one family, the climate may be right, while for another, it may still be too risky.
“We don’t know the right thing to do, and it is too expensive to hire experts.”
Researching a new venture does not have to be expensive. Use the Internet. Websites, chat rooms, fora provide information on enterprises. Famous experts may be expensive, but many capable ones are not. Try scientists or professors at universities, or specialists from TESDA. If you want to create a company website, hire IT college students.
“We don’t have money to do something we have not done before. What if we lose everything?”
Unless you are a tycoon or a multinational company, no one can probably start big. Start small. Figure out how much money you can seriously risk, and perform due diligence. If you say that you cannot afford to risk anything, think again. Compute the unnecessary expenses your family or your company may incur: office renovation, dining out, gadgets, travel, fashion.
You may not spend a lot of money all at once, but you spend small amounts in a frequent manner. Instead of small expenses, reflect on the option of pooling resources into a single, well-studied venture. Realistically, you can probably afford to do this. Start small, adjusting along the way.
Too Much Planning
“We have been planning for two years, but we still don’t have the right plan of action. Sigurista kami (We are shrewd). It is dangerous to begin something we are not sure about.”
No one is perfect. No business is risk-free. It may be risky to do something you are uncertain about, but two years of planning seems to be an overkill. It is good to spend some time planning and tweaking details, but in the end, if your plans say you will stand a good chance, you have to take the plunge.
The key is to “fail fast.” Fail fast so you can recover, learn from your failure, and then repeat. You will make mistakes, but you will recover fast. Former New York Mayor Michael Bloomberg, best known for the financial machine that bears his name, has this oft-quoted passage in his book “Bloomberg by Bloomberg”:
“We made mistakes, of course. Most of them were omissions we didn’t think of when we initially wrote the software. We fixed them by doing it over and over, again and again. We do the same today. While our competitors are still sucking their thumbs trying to make the design perfect, we’re already on prototype version #5. By the time our rivals are ready with wires and screws, we are on version #10. It gets back to planning versus acting: We act from day one; others plan how to plan—for months.”
(To be continued next Friday)
Queena N. Lee-Chua is on the board of directors of Ateneo de Manila University’s Family Business Development Center. Get her book “Successful Family Businesses” at the University Press (e-mail [email protected].) E-mail the author at [email protected].
