CASE FROM QATAR: FAMILY BREAD-MAKING BUSINESS. #EMBA 27

On the 26^th of March, our Analysis of Business Problems (ABP) course facilitator surprised the class. She brought a live case to the class for to analyze. It was a case of a Nigerian family based in Qatar. They had opened up a bread-making side business and was looking to expand. They had invested significant funds and hopes in the project. However, the husband had been moved back to Nigeria due to a change in job location. He now had to decide whether to continue funding the business with the rest of the family left in Qatar. He really needed the class advice.

I have been involved in a couple of family start-up businesses- the ups and the downs of which could be intriguing. In taking a final decision, there are several issues our dear protagonist and his family have to consider. The below writeup tries to identify some of these points and breaks them down including the consequences of each outcome.

FAMILY/RELATIONSHIP.

There are considerations if the husband/father has to live in Nigeria alone while the wife and kids remain in Qatar. The family relationship has to be seriously considered. From my Christian background, families that pray together, stick together. Are they ready to make deliberate efforts to ensure that the family relationship is not strained? Are they ready for the risks?

Not being around the children often for example, especially when they are still growing up has serious consequences to consider. Such children may not build strong bonds with either of the parents that were mostly away. How would the family ensure regular visits, engagement, or interactions to have a constant positive impact in their lives?

Emotions.

There are lots of emotional attachment in opening a family business. This is even more so when it would be run by close family members. At times, decisions for such businesses are made from an emotional or sentimental point of view. These sentimental reasons have to be weighed carefully versus what makes sound business sense. In addition, the person making this emotional decision may not necessarily be the right person to thoroughly review the impact of their reasoning as there is already a foundational bias.

In this business case in question, one has to consider whether the family has the capacity and expertise to run a business profitably. Do they have the skills to do this while half of the family is based in another country? Is their thinking clouded by the pressure to recoup the investments they have already made- the Sunk Cost Fallacy? Since it was the wife that started the bread-making business, would their quitting impact her ego and that is why the family would want to stay on?

On the other hand, they could end up being successful- maybe that is something to consider as well. This would justify all the time and resources they have spent, putting smiles on the family’s face.

Financial Implications.

As I had mentioned earlier, there would be lots of financial benefits in having a successful business abroad. Earning in foreign currency would be good for any family in the present state of things in Nigeria. Till one has done the background check properly and delved into the startup, one is never sure for certain what the outcome could be.  In this case, it may turn out well.

The key thing is that it has to be successful to make this positive impact. If it does not end up being successful or if the business struggles, the opposite could happen. Instead of earning in foreign exchange, the family has to now spend their local earnings in foreign currency. Now, that would put a strain on their finances unless they have sufficient buffer to cover up.

Therefore, The family has to review the financial implication before they make a decision. What exactly is their risk appetite and how much risks are they willing to take? Should they go in with a fixed cap or walk away amount or continue to pursue their passion irrespectively. Like most people, they would not have the unlimited financial capacity to continue to invest irrespective of the outcome. Should they seek investors within Qatar to act as a financial buffer and springboard the project?

Ultimately, the quality of the financial advice at the family’s disposal would help them make a more informed financial decision.

Conclusion

The family would have to decide and live with that decision, one way or another. It could turn out right and they prosper. On the other hand, they could end up making a wrong decision as well. Here, they would have lost a lot and would have to find a way to move on. However, this write-up is not meant to advise them on what path to take. It just highlight what to look out for before taking this decision. That way, they may end up making a more informed decision.

At the end of the session, there was resounding applause from all of us as the he exited the room.  As a husband and father myself, I took a moment in to sincerely wish him all the best in whatever path he ultimately decides to take.