Legacy Business; Modern Failure – Two

In Part One I gave the foundation of the failures of Legacy Businesses.  In this article I give some of the particulars as to how a business which seems solid on the outside is a disaster on the inside.

This is an imaginary company, (based on an actual one).  For the purpose of this article I refer to it as Question.

The company was begun in 1878 by  E. Ques.   It started as one small business, but so much effort was put into it, that it expanded.   Over the years it began to operate a number of different concerns at different locations.   E. Ques who was committed to the company did not leave it to his children who were uninterested but to his Nephew, D. Ques who worked with him for many years, and was committed.

D. Ques, like his uncle stayed in place until he could find a proper person to guide it, and passed it to his grandson P. Ques.

P. Ques was the best of the breed, as it were and although not as competent he was not totally unconcerned or incompetent.   He passed the business onto his son, who left it to his son, A. Ques.

It was now  1950 and the company had survived for many decades.   The leadership was not as vibrant, the family members fat and rich and lazy.

The company survived despite the many flaws in that  it was a near monopoly.

To offset much of the deficits valuable land was sold which appeared on the balance sheet as a ‘profit’.

Any astute eye could discern that the Company was not all that profitable, for the sale of land contra products ought not have been placed as a ‘profit’.   However, there was no astute eye.

By 1970 the company had been passed to B. Ques the son of A. Ques.   The 1950 business model did not change, and the products remained fairly fixed.

Various sectors of the business were rented to other concerns and it is this actual rental which keeps the balance sheet balanced  as it is incompetently managed and is actually losing money.

This decline is not noticed by the Owners nor the public,  as the rentals and occasional sales keep the company afloat.

It is the analysis of this operation which makes up the third article.