Here is something that caught our eye this week:
There’s more to the story
Despite being somewhat entrepreneurially inclined, we have a self-identified tendency to focus on what is going (or could go) wrong in a business. It’s possible this is because our first jobs were in finance in New York when the Great Recession hit. Or our inherent skepticism could stem from experience working with some small businesses with bit more hair on them than we bargained for. Regardless of the reason, our cautionary nature is reflected in many facets of Chenmark. We acquire steady businesses using strict valuation parameters and conservative debt metrics, and operationally, we have a steadfast focus on systems ahead of top-line, go-go growth.
This mindset can be helpful in volatile times, but it can also be a hindrance when growing a company. We often have to remind ourselves to ask not only what could happen if things go wrong, but what could happen if things go right.
A colleague recently shared with us A Tale of Two Shoe Salesmen:
“It’s early 1900’s. Two competing shoe companies want to expand their market reach. So they each send their top sales guy to Africa to scout out the potential. After a day or so, the Salesman #1 finds a telegraph office and types out: ‘Research complete. Stop. Situation hopeless. Stop. No one wears shoes here.’ The Salesman #2 does his research and heads to the same telegraph office. He types out this message to his boss: ‘Research complete. Stop. Incredible opportunity. Stop. No one wears shoes here.’”
This story resonates as our business grows and stretches us in new and unexpected ways. We have a choice in how we respond when confronted with challenges or the unknown. How powerful would it be if we collectively made a commitment to consider “what if?” instead of focusing on “why not?”.
Of course, it’s not always that simple and anybody with actual small business experience knows there is more to the story. The Occasional CEO blog outlined a short manuscript from the rest of the tale
“Salesman One returned on the next steamer to London. He was an aggressive young man who had seemingly saved the company from a disastrous venture. His reward was to oversee a newly-formed sales territory in France. Sober, realistic Salesman One built a booming business in ladies’ dress shoes. He became wealthy and influential, mentoring dozens of young executives. He met and married one of his best customers, a French heiress. Though wealthy enough to have retired young, he never lost his love for selling shoes, concluding his career well into his 70s. “
Salesman Two, on the other hand, didn’t fare so well. He ordered 2,000 pairs of shoes and sold less than 100 in the first year. He spent the next several years tinkering with the business:
“Year 2 was breakeven, thanks to aggressive cost-cutting. Year 3 got better. After seven long years of hard work, trial and error, sleepless nights, staff turnover and one ulcer, Salesman Two purchased the local business from his company–which never sold many shoes in the market and had come to consider their promising entrepreneur more of a backwater distraction. He had an asset that, at least on paper, could make him comfortable, though far from a millionaire. He thought from time to time about what he had given up to take on this venture but, being an optimist, didn’t dwell on what might have been.”
For all we know, in year 20, Salesman Two wholly-owned an extremely valuable asset. Or maybe he bought himself a tough job. Small business is messy, which means we need to channel optimism while maintaining pragmatism. So, is our tendency to focus on what is going (or could go) wrong in a business our biggest strength or our biggest weakness? Probably a little bit of both.