Authenticity buys you opportunity.
What should have been the easiest deal ever turned out to be the hardest. All because the business got lost in the details.
It was an amazing opportunity — a once-in-a-lifetime chance to crack into a lucrative market that had been buttoned-up for decades.
I was doing market research for an investment company scouring the chessboard for good moves when we stumbled upon Joe’s Lumber. In the grand scheme of the $300 billion forest products industry, Joe’s Lumber was just a bit player — a sawmill and a handful of lumber yards spread over two states.
But as we looked closer, we saw that Joe’s Lumber was in a sweet spot. Its market was like a donut hole, surrounded by much bigger competitors. Because it was encircled by mountains on three sides, competitors couldn’t reach it, so Joe’s Lumber was able to get really good margins on its products.
Joe, the founder, had recently passed away, so his family was looking to make a good exit and leave the business in good hands.
It was a perfect fit for my client, and it checked all their boxes. It diversified their portfolio, and it let them take advantage of a nice tax break. It was a honey hole — a hidden pot of gold.
My team had done our homework. We saw demand skyrocketing. It had once been a sleepy area, but now retirees and urban refugees were moving there in droves to enjoy its mountains, lakes and forests. Our research showed we could double Joe’s sales in our sleep.
That’s why we were dumbstruck when we found out a few weeks later that our client had passed on the deal.
Not because our market research was wrong, but because one of my client’s employees had raised the alarm that some draft government regulations could squeeze Joe’s business if my client bought it.
A few months later, Joe’s widow faced a health crisis, and desperate to pay her medical bills, she turned to one of Joe’s big competitors for emergency financing. They foreclosed, and she died penniless.
They padlocked Joe’s mill and lumber yards, laid off all the workers, then doubled the prices on the lumber they shipped into the area, now that they had a monopoly.
So everyone else lost: my client, Joe’s family, and the entire community.
The proposed regulations never came to pass.
The honey hole dried up.
But the fiasco revealed three timeless truths about how to build a career and a business.
1. Don’t let your own self-interest make you overlook what’s good for the business.
That employee who raised the red flag? He did really well for himself, at first. As a reward for saving the company from maybe making the mistake of buying Joe’s Lumber, he got a big promotion.
But his shtick got old fast.
When other good opportunities came up for my client, he nitpicked them to death, always trying to make his role center stage. After a while, none of the other business leaders wanted him crying wolf on their projects. So they sent him packing.
He didn’t realize that you’re there to do a job, and to communicate what you know, but not to develop your career at your employer’s expense.
2. Manage your risk management.
Don’t look a gift horse in the mouth. And if you’re lucky enough to find a honey hole, don’t spit in it.
There will always be risks with even the best projects and acquisitions. But are all of them really deal-breakers? Except for immediate dangers to worker safety, there really aren’t many problems you can’t take your time to figure out after you close the deal.
Keep your technical specialists in check. Listen to them, but don’t let them run your business, and don’t let their pet peeves make you second-guess your market intelligence.
3. Authenticity gives you wings.
Joe was old-fashioned. He built his business with a smile and a handshake. His word was his bond.
He never missed a pancake breakfast at the veterans hall. When the boy scouts needed materials for their pinewood derby, Joe donated them.
You knew where you stood with Joe. You did business with him over a cup of coffee.
With sincerity, authenticity, and a deep understanding of his community, Joe could overcome any obstacle. He knew who he was dealing with and how to deal with them.
A big corporation couldn’t buy that and couldn’t fake it. No number of hashtags or promoted social media posts could cover for that. So they ran scared from risks that Joe could face head-on.
Authenticity buys you opportunity.
Risk isn’t something to be afraid of. Every business faces it.
How you handle it is what makes you or breaks you.