Have you heard of "boiled frog" syndrome? A frog thrown into a pot of boiling water will supposedly jump right out again. But a frog placed in a pot of "pond temperature" water will remain in the pot when that pot is placed on a stove where the temperature is gradually turned up until the pot boils. The point is, the frog recognises an event of sudden danger, but not danger that manifests incrementally.
Have you heard of "bull frog syndrome"? A number of years ago a researcher developed the "boled frog" theme by introducing the concepts of the "tadpole", the "drowned frog" and the "bull frog" to explain small business failure.
The "boiled frog" SME is one that fails after some problem incrementally ratchets its way up into an insurmountable disaster. This is also known as "death by a thousand cuts". The "tadpole" is that often talked about business statistic - the start up that never survives past its early stages. The "drowned frog" is the small business that swims from one bright idea to the next, but never really getting a grip anywhere before being overwhelmed and becoming "exhausted".
And the "bull frog" is the business owner who places their own short term selfish needs ahead of the needs of their business. They lease the boat, the flashy car, and/ or the borrow big to buy the big house before they can really afford it.
I have a friend - a turnaround and insolvency guru - who says "the business can buy you another house". He says this because clients sometimes refuse to sell their house or flashy car when they need cash to prop up their business, and in the end, lose the business, the house and everything else.
And I recently met a chap who needed to restructure his finances to avoid receivership - and probably personal bankruptcy. His business had hit trouble and he needed to raise some extra capital against his home. Unfortunately he had recently leased a $250,000 sports car, and the lease was collaterally secured by his home. He could not untangle the various securities in order to free up his house. In trying to hang on to the car, he ended up losing the lot. Had he contented himself with a used late model Holden, he could have rebuilt his business, and maybe in a couple of years he could have looked at taking on the sports car.
And this brings me to "hubris". "Hubris" is often defined as "excessive pride". In fact however, the term derives from ancient Greek tragedies, and really means the belief that you are superior to "the gods". In the Greek tragedies, the hero refuses the help of the gods, or undertakes some task so great that it is stupid rather than heroic, and tragedy ensues. And so the saying "pride comes before a fall".
SME owners - particularly in tough times - should bide their time, build their business, and wait until they are truly successful before seeking the rewards of abundant success. Otherwise the fate of the hubristic bull frog may well be their own.
The Cash Flow Ninjas
