Last week I received an e-mail talking about a New York businessman who had supposedly bought a real estate property in Portugal. The previous owners had passed away 15 years ago without heirs and the property had been vacant since, so taxes were due and the sale’s price was used to cover them. This Portuguese countryside farmhouse had an old barn with welded steel doors nobody actually knew what was inside. The story went on to say that the new owner cut through the welds just to find over 100 classic cars with total worth of $38MM. And there were pictures showing the dusty, rare collection of cars.
Some of you have already heard this story, as it started circulating back in 2007. Over the years, people got creative and the story grew. Obviously, this is a typical example of misleading information based on true facts. The cars are real, the story is not. See more here: http://www.intuh.net/barnfinds/
It strikes me how easy we fall into such distorted stories. The same exact thing happens in the business world. I could tell dozens of true stories of clients and people I know who invested in promising deals only to discover the investment was gone long before they realized it. Usually, it all starts with a friend who approaches you with a very good business idea that requires little investment compared to the huge potential. You have the money, he has the idea: perfect match. Letting aside dishonest components, most of the time lack of experience in launching or operating the business appropriately is the number one reason for a business failure.
Don’t get me wrong, it is possible to turn an opportunity like this into a successful and profitable business. And there are plenty of good examples out there. But, in a very complex and ever changing world, doing business successfully is always a challenge. To overcome the hurdles one must be prepared. Large corporations have Directors subjected to fiduciary duties who are usually careful in evaluating each and every opportunity before making any move. They hire attorneys, CPAs, investment and business specialists, just to make sure they fully understand the situation. And even then, from time to time they do make mistakes. Small and mid size companies not always surround themselves with the adequate information and protection. And that opens the door to rely on distorted information, made up worksheets, Portuguese barn like stories. Before investing in any business, take the time to evaluate the opportunity, or hire someone truly qualified to help you with such a task. Trust me, it pays off as it is always better be safe than sorry.