How Thinking Outside the Box Helped a Steel Family Business in Chile
Photo by Jonas Leupe on Unsplash
A Chilean Family Business was able to fulfill a business need they didn’t even know they had, by thinking outside of the box.
According to the Radiography study of Family Businesses in Chile, which was compiled by the Family Business Association (AEF) and forecast with the data from the Ministry of Economics’ Longitudinal Business Survey (ELE4), 48% of all companies registered in Chile are family-owned.
These family businesses combine to contribute to 60% of the country’s GDP and 40.6% of employment, making them key to the country’s growth.
Unfortunately, the same study revealed that 85% of these family companies don’t make it to the third generation. Differences, family conflict (common in these structures), and resistance to new generations’ ideas in the business are all contributing factors.
Being open to new opportunities and thinking outside the box can be crucial at the moment to make your business grow or fail.
Lisette Viveros, Relationship Manager for Large Companies in Bci Bank, provided us with a perfect example of this.
One of her clients fulfilled a business need that they didn’t know they had, by trying the ideas of a new generation and thinking outside the box:
“I have a client from a steel family business in Chile”, explained Viveros. “Founded by the father, this company has a long history and is now run by the third generation in the family. It has a long history founded by the father and now it is run by the third generation.”
Viveros introduced the current CEO to Opportunity Network and, after explaining it to him, he thought it was really innovative and fascinating.
However, he believed the platform wasn’t a fit for his industry, which he knew to the core after growing up in a family strongly focused on steel manufacturing.
Complementing the traditional ways
Viveros insisted, explained the advantages, showed examples, and shared other people’s stories on how the platform had worked for them. Still, all the response she could get was: “The heart and soul of my business is steel. Steel runs through my veins.”
The Chilean third-generation CEO explained that he needed to do business the old way: by meeting potential business partners face-to-face. He was certain that was the only way he could perceive their real intentions and whether or not they were trustworthy.
“When I’m buying steel I need to meet my provider. I need to see the product. This is too ethereal, this doesn’t work for me,” he said back then.
Opportunities that expands to all the company needs
As a Relationship Manager, Viveros has a daily challenge to provide her clients with the best advice to grow their business. And sometimes this involves going beyond the client’s core business and thinking outside the box.
She was certain that this family company could leverage from the over 7,000 live opportunities in Opportunity Network, so she approached her client with a new angle.
“How do you transport steel? By trucks?” I asked him. Alright, How many tires do they use?”, Viveros asked.
In this way, she found out that her client was using around 12 tires per truck, depending on the amount of steel being transported. And to whom was he buying these tires? A Chilean provider.
What if he could directly get in contact with the manufacturer?
Gaining valuable insights to win key negotiations
With this question in mind, the CEO joined Opportunity Network and sourced for a specific type of tires. To his surprise, he found the Chinese manufacturer of these exact tires.
He used this card to re-negotiate the price with his Chilean provider: “This is what it costs abroad, and this is your asking price. Either you match the quote or we stop our business”.
The result? The Chilean third-generation CEO obtained something that none of his predecessors had: a fair price for a large recurring cost and increase benefit because of this.
Thinking outside the box: the next frontier for family companies’ new generations
In a market where only 15% of family companies make it past the third generation, innovation is key to survival and growth.
Every new generation should help businesses move to the next level. Finding new trusted partners enables the upcoming leaders to close the necessary game-changing deals without risking the family’s legacy and, therefore, making it into the lucky 15%.
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