Christmas Reading for Entrepreneurs
Our Corporate Finance Partner, Steve Plaskitt, shares his Christmas present recommendations for business owners…
Finding a Christmas present for the business owner who has everything is often difficult. Some recommended reading could be a great way for them to reflect on themselves and management training would be ideal to help them and their companies succeed in 2018 and beyond.
Management training and development
Tait Walker ran a breakfast seminar last month in Gateshead for financial directors to learn more about management training and development. We invited two excellent speakers, David Whitmell from the Alternative Board and Alison Freer from Durham Lane. They shared their approaches to training and development for company owners.
A common theme was self awareness of the true businesses issues. David and Alison both explained their approaches to handle these issues. These ranged from group discussions and reporting back to the group, to a combination of on-the-job improvement, self-help reading and external training.
After their presentations, I asked which books they would recommend as Christmas present ideas for business owners. They suggested two books for entrepreneurs planning to grow their company:
- ‘Growth Mindset’ by Carol S Dweck
- ‘Do it (Tomorrow)’ by Mark Forster
I would also add ‘Thinking Fast and Slow’ by Daniel Kahneman, which is relevant to business strategy. It explains how there are two ways of thinking – one which is fast, easy and intuitive and which we typically use, and one which is slow and hard and therefore often underused.
It also explains how unintuitive it is for people to evaluate risk. Given that risk is such a large part of business decisions, it is so easy for people to make the wrong decision, especially when evaluating their own ability to succeed. The evaluation of risk is also often very hard for business owners to picture and quantify when they are making important investment decisions.
The book gives many examples of how people naturally get probability and uncertainty wrong, and how this can often lead to overconfidence and mistakes e.g.:
- People react to identical situations differently depending on what is already on their minds. Even worse, we don’t value what we don’t see – we think the evidence with which we are presented is all the evidence that there is.
- People also fail to cut their losses as they realise how mistaken their expectations were. We ignore the possibility of rare events, except when such an event has occurred recently or can be easily visualised, and then we vastly overstate its likelihood and ignore other rare events.
- Another classic bias is called the “halo effect”, when somebody very good at some things is falsely assumed to be good at everything. For example, someone who presents well at an interview won’t necessarily be the ideal candidate for the job for which they have applied.
My role in Corporate Finance includes financial forecasting, business planning, undertaking due diligence on company mergers and acquisitions, and assisting business owners with strategic options. You may be able to see why I was attracted to this book and the suggestion that you must think slowly to find the best decisions and overcome your natural quick thinking.
Hopefully you will get the chance to read these books over Christmas and New Year, and be ready for the opportunities and risks ahead in 2018.
Please feel free to contact Steve Plaskitt at Tait Walker to discuss the topics in this blog in further detail.