Risky Business? Lessons From The World Of Cinema
Running a business? Ransomed nuclear warheads and rats that can cook likely won’t make their way to your list of concerns, but popular movies that include these – and other – issues can nevertheless offer case studies in how to avoid costly missteps.
If you build it, have a plan
The movie: “Field of Dreams” (1989)
The problem: Ray Kinsella (Kevin Costner) follows his dreams and plows under his corn field to build a baseball field. Ray’s brother-in-law Mark (Michigan native Timothy Busfield) warns Ray that he is on the brink of financial ruin as a result of his decision and is at risk of losing his house, land and baseball field.
The solution: Starting a new business can present many challenges. It is crucial for new business owners to work closely with experts to ensure that their dreams become realities. Happily for Ray and his family, his baseball field became a financial success due to a combination of proper pricing and selling a product that people wanted.
Use a shagadelic pricing strategy, baby
The movie: “Austin Powers: International Man of Mystery” (1997)
The problem: After being cryogenically frozen for 30 years, Dr. Evil is unfamiliar with the fair market value of a nuclear warhead. He initially plans to hold the warhead for a ransom of $1 million, until being told that number is laughably small for an item of such value. He then increases his asking price to $100 billion dollars.
The solution: It can be difficult to determine how much your assets are truly worth. Get an expert to provide an independent and objective valuation of your assets before making significant decisions so you don’t leave money on the table. The right team of experts can help you structure the deal to minimize taxes and maximize your selling price.
Make reporting concerns less spooky
The movie: “Ghost” (1990)
The problem: Sam Wheat (Patrick Swayze) is a banker who detects some discrepancies in some of his client’s accounts. Sam decided to conduct his own investigation and is murdered by thugs hired by his former friend Carl Bruner. Bruner also steals Wheat’s security codes to the computer system in order to conceal his money laundering.
The solution: Provide employees with a hotline that will allow them to anonymously report suspicious activity. These types of hotlines are frequently staffed 24/7 and typically also have a web application for online reporting. Encourage your employees to report their concerns to HR or internal audit rather than conducting their own investigations.
The due diligence you deserve
The movie: “The Dark Knight” (2008)
The problem: Wayne Enterprise is considering an affiliation with Lau Security Investments in Hong Kong. During an analysis of the financial records for Lau, Bruce Wayne (Christian Bale) and Lucius Fox (Morgan Freeman) become suspicious of Lau’s consistent eight percent growth and cancel the merger.
The solution: Before concluding any merger or acquisition, it is critical to perform due diligence. Properly executed, due diligence allows you to identify the potential risks associated with the transaction and decide if you want to go through with the deal. It can also tell you if your target is a good fit with your existing business.
Anyone can cook … and prepare a transition
The movie: “Ratatouille” (2007)
The problem: Chef Gusteau is dead! His heir apparent, Skinner, wants to use Gusteau’s name to sell low-quality frozen foods. Luckily, Alfredo Linguini, with help from Remy, discovers that he is Gusteau’s son and discontinues the frozen food line.
The solution: Don’t make the same mistake that Chef Gusteau did – it is never too early to begin transition and succession planning for your business. Properly executed, a good plan helps you maximize the value of your business, ensures that you are prepared for the next phase of your life, and addresses contingencies that might arise.
A Netflix subscription won’t ever replace a Harvard business degree, but today’s cinema is replete with examples of how the right business decisions can fend off a great many problems. You just have to know where to turn – and a qualified consultant is a great place to start.
Wayne Pahssen is the West Michigan regional managing principal at Rehmann. He is an advisor to closely-held businesses and their owners providing consulting, tax planning and wealth management services.
Jenell West is a forensic accounting manager for Rehmann Corporate Investigative Services. Her knowledge has been used in cases involving inappropriate cash disbursements, missing cash receipts and she has provided internal controls consulting.