Assets revert to the Natural Owner

Throughout the business cycle it seems inevitable that assets change hands between a “natural” to the “unnatural” owner and revert again to the “natural” owner.

What do I mean by this?

When doctors and lawyers buy vineyards, sure and soon enough they end up selling them back to the seasoned wine operator.

Sometimes people are romanced by starting, owning or buying a business which they have no business being involved in.

This can also include people who shouldn’t be in the stockmarket or own multiple residential dwellings in order to become high-flying landlords or starting a restaurant.

I’d love to hear some of your examples.

A recent conversation which started up while drinking beer with friends was relating to the housing grant stimulus being offered and a coming “boom” in new home starts.

One of the pre-requisites to receiving or qualifying for the grant, was that a slab (concrete foundations) needed to be laid by the end of December 2020.

So, my buddies start talking about getting into the concreting business.

I interrupted and asked “what the hell do you blokes know about concreting?”

Their reply was along the lines of, “what’s to know?” and “its easy”.

I needed to chime in and remind them that the guys which you see in the business today, actually belong there.

They are the “natural” owners of those businesses.

They’ve been talking concreting with their “old man” over the dinner table for years.

They know the costings, pricing and margins better than any of us.

I’m not raining on anyone’s entrepreneurial parade but it seems obvious that certain businesses should be run and owned by those with a pedigree in that industry.

Pedigree trumps competence, finances and passion.

If your friend ever decides to invest in Alpaca Farming or a Forestry Schemes, start a Nail Salon or an online bikini company…….and they have no business being there, perhaps you should say something.

7 July 2020

by Rob Zdravevski

rob@karriasset.com.au