In the seemingly endless days of "lockdown" gone by, I've been thinking about how challenging times reveal true character.
The overriding feeling that stays with me is that sense of community and kindness. Whether from friends, family, colleagues or strangers, these characteristics seem to grow out of the sense of common purpose we've shared.
But sadly, we've also seen very public examples of following the instinct of self-interest at all costs, and those under the radar exploiting and creating victims of others.
When investments go wrong
There are parallels in the field of private investment into Small and Medium-sized Enterprises (SMEs). In business, including property development, we can divide the company leaders broadly into one of three character groups:
- Those that start with good intentions but flounder when the going gets tough;
- People that start with the full intention of deception
- Leaders that are determined to behave ethically come what may
I call these, respectively, Zeros, Neros and Heroes.
Other features of these three types of SME bosses:
- Zeros: Out of their depth, will run and hide to escape, no humility, excessive ego, control freak;
- Neros: Criminal history, egocentric, narcissistic, hedonistic, control freak;
- Heroes: the leader is a team player. They have a mature corporate mindset and a credible business plan. They have an advisory board and ideally board of directors with voting rights
Rogue behaviour can pop when the pressure is on. The temptation for some is to cut corners, hide skeletons or simply run amok with your money.
Think for a moment of your own greatest hero.
Whether it's in business, sport, showbusiness, philanthropy or some other walk of life this is a truism... Heroes do not need to be flawless - nobody's perfect. But Heroes will have the character traits of honour, self-respect, willingness to learn, intelligence and clear thinking in a crisis.
Let me be as clear as I can be:
ONLY INVEST IN HEROES.
Easier said than done, you will probably say.
How do you tell a Hero from the others BEFORE you give them your money?
Fortunately there is a data science behind investment research. We enhance this to include the track record of key persons controlling the business we may wish to invest in. We firmly believe the success of a company venture, depends on the character and ethos of its founders.
Therefore it's essential for investors to carry out this type of research as a key part of any serious due diligence.
The team at Diligent Eye have studied many investment business failures over the years. When we look at a business for our investor customers, leadership character therein is a huge deciding factor.
In a nutshell, a fundamental mark of experience for investors is awareness of the Zeros and the Neros out there. That's the starting point for backing the business Heroes that all investors long to discover time after time.
Here's to all the business heroes.