Working on your business
I've just returned from a few days away - a mixture of work, and catching up with extended family. As part of the mad round of social commitments, we visited my wife's cousin who has recently taken up the post of Harbourmaster for a small estuarine port in a sleepy little town. One of his duties is to organise the water-taxi which regularly takes visitors across the estuary, to the main island - I took this picture as we accompanied him on one such excursion.
The harbour authority is a commercial enterprise but it has never made much money. My wife's cousin, now some nine months into his first year in the position, has managed to generate a substantial uplift in revenues, simply by looking carefully at the business model, and thinking about the sources of income. And when I use the word 'substantial', I mean the kind of figure which leaves his co-directors gleefully rubbing their hands together.
It turns out that harbour authorities may well be subject to the same kinds of blind spots that can afflict IFAs when they are dissatisfied with their net profit:
An unhelpful emphasis on minimising essential overheads, instead of looking more creatively at the underlying profitability of the work being undertaken - my wife's cousin discovered that core revenue items (taxi-fares, berthing tariffs, Pilot fees) had not been reviewed for many years, and has put in place a process for bringing them up to date;
A disregard for the potential of strategic alliances - in this case, offering to manage a local private marina for a fixed fee resulted in a substantial supplementary tranche of revenues in the current year;
A reluctance to focus on the bigger re-engineering of the business - the new Harbourmaster took it upon himself to have the main navigational channels dredged for the first time in many years, with the result that larger ships are now able to berth. And larger ships pay much larger fees for the privilege.
It struck me that, in this one case-study, one had four
examples of strategies which, in combination would result in a much more satisfactory business model:
A focus on profitability rather than cost-cutting
Regular, incremental improvements to income
The building of good, collaborative joint-ventures with the right calibre of partner
The larger tactical development, with the intention of capturing new revenue streams
What is fascinating about this example is that I would never have considered the role of Harbourmaster as a kind of model for entrepreneurship. One would expect the IFA, in command of his or her own business model, to be in a far better position to influence the overall profitability of the proposition.