![\"big](\"https:\/\/flevy.com\/blog\/wp-content\/uploads\/2013\/05\/big-banana.jpg\")
<\/a><\/p>\nI mean seriously\u2026 what compels people to stop?<\/p>\n
I then recalled a story I read in the paper many years before about how The Big Banana was comprehensively smushed by the 1990 recession.<\/p>\n
Having undergone a major $30 million redevelopment (a significant sum of money for a banana I am sure you agree), it reopened in 1989 and promptly into provisional liquidation just 12 months later.\u00a0 Clearly the economy could not support that investment in a roadside tourist trap? Yet, many years later, the big banana still manages to attract tourists and locals alike.<\/p>\n
The business model of The Big Banana has been copied throughout the country.\u00a0 At one point my father even owned a book solely about big things\u2026 Big Bottle\u2026 Big Cow\u2026 Big Strawberry\u2026 Lobster\u2026 the Big Macadamia (now that\u2019s just nuts)\u2026 Many have now disappeared, consigned to history and a decade where excessive was always best.<\/p>\n
In so many instances, the desire to build the biggest ever banana\/sheep\/orange\/thing was primarily the obsession of one man.\u00a0 Business rationale seemed to take a back seat to the desire to build.\u00a0 On the face of it, you have to admire their determination to achieve the seemingly impossible.<\/p>\n
So ask yourself\u2026what are the \u201cbig\u201d things in your business life where you turn a blind eye to what is obvious to so many people from the outside?\u00a0 Nearly everybody has a blind spot (some people call them the elephant in the room). It can be people, products, attitudes or an acquisition.\u00a0 And, like the owners of the big banana, they have the ability to drive you to the edge of financial oblivion (and sometimes over it).<\/p>\n
\u201cBig Bananas\u201d can ruin your business. For example:<\/p>\n
Big is not always beautiful.<\/b><\/span>\u00a0 A \u201cbig banana\u201d might be an aesthetically pleasing business idea.\u00a0 It has credibility, instant recognition with the public \u2013 all the things that make a business succeed\u2026 right?\u00a0 Wrong.\u00a0 Big and recognisable means there is a weight of expectation on how you charge for services and invest in the business that will often not match your financial reality.\u00a0 Most people can recall a business that \u201clost\u201d some of its mojo as it grew in size and complexity. Customers drifted away when it was unable to live up to the reputation it had earned as it grew.\u00a0 Remember your core business philosophy when you started out. Make sure these principles are adhered to; otherwise as you grow, your customers may also start to see big is not being the beautiful business they loved to deal with in the past.<\/p>\n Large is not always efficient.<\/b>\u00a0<\/span> As businesses expand and grow, so too does the need for administration.\u00a0 Without careful planning, you lose the efficiencies you had when you started out.\u00a0 Let\u2019s look at a simple example – a plumbing business. \u00a0When you start out, typically you are a sole trader.\u00a0 You do all the work, all the books at night, and things are fairly streamlined, as you have no desire to work more non-billable hours than is the bare necessity.\u00a0 As your business grows, you suddenly find yourself with 5 trucks on the road, a full-time dispatcher, somebody doing finance and accounts, part-timers chasing unpaid invoices, business development and administration.<\/p>\n You have gone from a business where 1 person does everything, to 5 tradesmen requiring 4 office staff to keep the operation running.\u00a0 What efficiencies are you losing as your business grows?\u00a0 How can you manage your business more efficiently?<\/p>\n Attractive is not always profitable.<\/b><\/span>\u00a0 Just because a business looks good on paper, doesn\u2019t mean that it will still be attractive in the future.\u00a0 When you look at purchasing a business, you might see good profits, a solid balance sheet and a stable client list. But you need to look over the horizon.\u00a0 Ask questions.\u00a0 Is the business sector at a cyclical peak and margins steadily decline?\u00a0 Is future demand likely to remain strong?\u00a0 Why is the owner getting out now?\u00a0 Astute owners will always try to exit a business at the peak of the cycle. You need to ensure the attractive proposition of today doesn\u2019t become a nightmare.<\/p>\n Debt is your friend.<\/b><\/span>\u00a0 Not really. Debt is a useful tool to enable investing to generate a positive return.\u00a0 But using debt must make sense to you as well as the bank.\u00a0 Despite banks being willing to lend for some surprising projects, they do have an expectation that their loans will be repaid. Therefore you need to be honest with yourself.\u00a0 Are the income forecasts realistic?\u00a0\u00a0 Normally a business funded by debt needs to generate sufficient income to cover operating expenses, debt repayments and income to the owner.\u00a0 If your modelling does not stack up, debt may not be your friend.\u00a0 Be prepared to walk away.<\/p>\n Many big things like The Big Banana still exist.\u00a0 The Big Pineapple, the Big Sheep, the Big Koala, the biggest man-made islands (\u201cThe Palms\u201d and \u201cThe World\u201d in Dubai), the Big Basket (Ohio)\u2026 Some say, the are \u201cpoints of interest to lighten the heart of a weary traveler.\u201d I prefer to call them object lessons. Determination can create the most amazing things.\u00a0 But for me, these big things will always demonstrate the risks of taking on the unknown.<\/p>\n","protected":false},"excerpt":{"rendered":" On holidays recently we drove past The Big Banana.\u00a0 Majestic yet somewhat tacky at the same time, it had once again lured coach loads of people in to see what bananery delights awaited the unsuspecting visitor inside\u2026 I too was lured in \u2013 not that I like bananas that much, but more from morbid curiosity.\u00a0… Are You a Banana Skin away from Financial Oblivion?<\/span><\/a><\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"","neve_meta_content_width":0,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","footnotes":""},"categories":[1],"tags":[161,4,162],"class_list":["post-428","post","type-post","status-publish","format-standard","hentry","category-general","tag-big-banana","tag-business-model","tag-efficiency"],"_links":{"self":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/428","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/comments?post=428"}],"version-history":[{"count":5,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/428\/revisions"}],"predecessor-version":[{"id":440,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/428\/revisions\/440"}],"wp:attachment":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/media?parent=428"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/categories?post=428"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/tags?post=428"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}