Great Ideas for your Small Business: Be Talked Out of a Bad Idea
Bruce tyson manages money for a living. Big money. As president of Weston Capital Management Inc., in Los Angeles, California, he manages about $150 million for wealthy entertainment- industry clients.
Tyson is extremely bright, fiscally conservative, and a careful listener. He serves as a sort of financial adviser/shrink for his clients. Tyson’s favorite great idea? “Be willing to be talked out of something,” he said.
It turns out that he spends quite a bit of time talking clients out of investing in harebrained schemes. For example, a young client wanted to lend her boyfriend $50,000 of her inheritance to buy out his partner in a Santa Monica restaurant. Tyson diplomatically pointed out to her that this was a bad idea for several reasons.
First of all, the loan would have been collateralized by an expensive car, which is known as “moving collateral” and often disappears without a trace. Tyson also knew the restaurant didn’t have a liquor license, and the chances of getting one were slim. It was located in a very popular area of the beachfront city, and local officials had been opposing new liquor licenses in order to cut down on crime and congestion.
Of course, his client was not happy with his advice, but she listened. Good thing, too. A few months later, the restaurant went under—and so did the romance.
Another client called Tyson requesting a check to buy her boyfriend a sailboat so they could sail around the world. “Do you sail?” Tyson asked her.
Silence. “No.” “So I said to her, ‘Why don’t you go sailing for a week with him and see how you like it?’” She did. She didn’t like it. She didn’t buy him the boat, and the wind went right out of the relationship’s sails.
I guess that you could say that the real moral of Tyson’s great idea is “don’t mix romance and money.” But seriously, willingness to step back and think through a serious financial decision takes maturity. Listen to your advisers. You pay them well to be wiser, saner, and more prudent than you.