My experiences as an entrepreneur and a citizen. Especially useful for somone planning a new venture.
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Ramblings of a citizen and experiences of an entreuprener
This is about my way of life. It has two parts, one is related to the world around me and the other part is my experiences as an entrepreneur. Check out our website www.shaktiindia.com
Saturday, October 13, 2012
The Reluctant Entrepreneur: Decision Logjam
Every once in a while as individuals we face mental blocks. A logjam, we see often at cross roads, happens in our mind. This mental block also effects entrepreneurs and just like at roundabouts or cross roads, it happens when the business is at a decision point.
With sales a healthy 25% up YOY, my first rotomoulding conference to America became a reality. On my return one month later, things were different. We follow the JIT (just in time) production policy, we make to order. As orders were “zero”, production was at a standstill. A quick check on the market conditions revealed that our biggest competitor had dropped prices by 33%. The trade expected us to do the same.
Everyone, dealers, board of directors, employees and myself was looking for a decision. Classic logjam. I was not the best marketing student at the Asian Institute of Management where I studied for my MBA. But one lesson kept coming back to me. Prof Faustino, used to say you do not need managers to sell a product by reducing the price, you need “boy scouts” to stand at a corner and give it a way. While sure it was not my job to reduce the price and sell. What could be done?
As I walked from dealer to dealer, the same sentiments were expressed, SHAKTI would have to drop its price as otherwise customers would prefer the cheaper more established brand. The visits to the dealer while taking time allowed me to inspect the competitors product and I noticed that whenever I bent over to look inside the top was not able to take my weight. We purchased some tanks from the market and studied them. EUREKA!!!! We found the reason for the drop in price, the competitor had simply dropped the weight of the tank 30%.
This revelation did not make matters simple, it raise more questions. The Board believed we should launch a sub brand a la “SHAKTI LITE”, the trade believed we should simply reduce the weight and reduce the price. Both these decisions effected our core policies. We had already committed the product weight to our customers, could we quietly change without informing them just because our competitor had done so? Could we have two types of product on one line, SHAKTI, a quality product at a higher price and SHAKTI LITE a chalta hai product. What would be the effect of this decision on our functioning with industrial customers. Would we become accustomed to offering cheaper products by cutting corners instead of costs? Would we be able to meet our long term goal of servicing industrial customers with such practices? Classic Logjam and in the process sales were being lost.
After much soul searching, discussions with stake holders and well wishers the decision was taken. Stick to original weight, stick to original price and inform customers about the weight feature (advertise). This decision was in line with core policy, deliver to the customer as per promise, we would not have any “chalta hai” products on our line, thus ensuring the integrity and sharpness of our employees on the line, and most of all our customers past present and future would trust us.
The delay in deciding cost us lots of sales, by Mar 2001, we closed just below the previous years close. However subsequent years sales endorsed our decision. We had clawed our way back. The point is could we have decided faster, did we need the time we took.?
I believe that we were fortunate to have a road map, we wanted to be first choice suppliers to OEM customers. For that market, quietly changing specifications to keep costs down is not an option, therefore had we applied that test early to the possible choices we would have had a decision earlier. Unfortunately we delayed checking if our decisions met our long term goals. In a logjam it will be easier to filter out suggestions that do not help the goal. Moral of the story: Every business has to have a long term goal or strategy against which day to day operational decisions are benchmarked to prevent mental blocks.
The Reluctant Entrepreneur: Happy Anniversary
Congratulations to Business Goa on completing three years in a challenging world of business magazines. May you see many more.
We (my company) completed 16 years in manufacturing recently and it is always something special. It is not just a day to cut a cake and sing happy anniversary, but to look back and see where the business has come from and then look in front and head in the direction you wish to arrive.
Usually when you look back all you will see are the good times; the not so good usually are forgotten. One can easily recall the highs but will struggle to remember a low point unless it is especially low and very significant. This does not imply we forget the bad times, it simply means we move on but learning the lesson. I travelled to the USA for a conference, reasonably confident that all was well with sales - a healthy 25% ahead YOY. To my surprise on my return a month later, the factory was almost shut. Since there were no orders production had come to a grinding halt, given the fact that we operated on the JIT (just in time) concept and produced only to order. After a few calls it was confirmed, the competitor had dropped his prices 33% and the trade expected us to follow.
Rather than blindly following our competitor which would be suicidal, we opted to study the reason for their drop in prices. A few days and several samples later, it was clear the competition had dropped price but also dropped weights without informing the customer. Agonising decision making followed. Should we also match their strategy, should we produce “SHAKTI LIGHT” a cheaper/lighter version of our brand, to differentiate between a good product and a cheap product? We finally decided to maintain our weights and our price but began to focus our advertising communication on our product weight. We felt that this strategy was in line with our original goal of being a trusted supplier and our industrial customers would easily spot such methods of short changing the customer. It took some time but by the next anniversary we were buzzing again. The lesson: With age methods or technology may change but the goal should be constant.
In life we reap what we sow, so also in business. One can either have a policy of paying suppliers late or in time. Once, as the milk lady was leaving the factory, she mentioned to me that she was called the following day to collect her payment. I asked her to return with me and checked with the accountant how much time it took to calculate the milk bill for a month and what was the need for the lady to make another trip. He accepted my logic and made the payment in the next few minutes. This set the tone for how suppliers should be treated with respect to payments. A few years later when we faced a cash crunch each and every supplier supported us and help us out of the situation. This would not have been feasible without the track record we had managed to build up The Lesson: sow good practices early; you will reap rich dividends later..
Every anniversary we take time out to recognize the employees who have spent time with us as a team – three, five, ten and fifteen year milestones are awarded. Those recognized feel a sense of belonging. On the other hand it helps new hires aspire to attain these milestones and give them a sense that there is a future. The lesson: The recognition of long serving employees helps team building.
Business Goa will take a little time off to party hard but when the music stops, everyone will be ready to face a new year of challenges head on. Once again Happy Birthday “BUSINESS GOA”
Read: Breakout Nations by Ruchir Sharma - an interesting take on who or which country will emerge on the economic canvas.
Wealthsavvy: Branding
Grow A Home Business:
In my last column, we proved that the average housewife practices world class management practices instinctively. In most cases she would not be highly educated either. The means there is a hidden wealth generator in almost every household.
Some years ago, the crash of the airbus 320 in Bangalore was the beginning of the end of successful Company. The founder died in the crash and soon things went from bad to worse. The professional CEO of one of the divisions was soon out of a job where he had spent many years. Unqualified family members were introduced, an occupational hazard for any professional.
The CEO's wife till then had been a home maker, bringing up the two sons while the CEO kept the home fires burning. When the CEO lost his job, his wife instinctively decided to help out and support the family. She began by trading in sarees. A simple formula, buy good quality low priced saris from an acquaintance in another State and sell for a small profit in Mumbai. The selling would today be called direct selling chain marketing style. Except that in those days there was no chain and neither were there any training sessions.
She leveraged her skill at choosing a good sari into a business proposition. Buying a sari is something every indian housewife would be comfortable with. She leveraged her appreciation of the "value for money" concept every housewife swears by. Finally she leveraged her network, her acquaintances on the bus to the market, other mothers at school, the neighborhood and voila she had a business going. Since she offered a value for money proposition, the word of mouth marketing ensured a steady stream of customers who came searching for her. Initially she brought in cash and as the quantity increased, she increased the volumes by picking larger stock on credit. This reduced transportation costs, enabled her to offer a better variety and she was on a roll. She was a business woman and a home maker to too.
The husband soon moved to another city to start his own business. The wife had to leave her thriving business and move, she did this readily as her primary goal was to provide for her family. In the new city, with the kids out of her hair having enrolled in professional courses, she decided to assist her husband in running his factory. Her stint as a business woman and home maker was an asset. Home makers have tremendous intuition.
You cannot keep a good man down, modified it can read you cannot keep a business woman down for too long. She saw opportunity when a leading cosmetics company offered beauty parlous on the franchise model. With her prior business experience an new found operational/administrative stint, she was soon doing well enough to pick up a second franchise. It was all the way up from here.
If we look at the situation, we will see that almost anyone can venture into an entrepreneurial space and the housewife is very well positioned, based on her multitasking abilities performed everyday. No big project no heavy investment, yet the goal is met.
The lady in our story leveraged what to my mind is her network. We will look at what she did and try and draw a frame work and add some features so that this story which just happened into a story that could be written time and time again.
While the business was small when the lady moved to another city she could not capitalise on her hard work. She closed the business and moved. What if she could actually sell her “business” to another like minded lady? She would have made her money selling each piece of sari but also when she transferred her knowledge to someone else she would have what can be termed as capital gains, To do this she should have taken a small step at the start. She should have sold the sari's she brought under her own brand name. Let us say "Champa", her customers would then relate every sari they purchased from her with the fledging brand name. When she decided to quit the new owner would buy from the same source and the old customers would be assured about the quality because of the brand name.
This is a common mistake many women in a small business make, no branding. They make masalas, or chocolates and rarely have a brand name so recognition is near impossible. There is no way a customer can be assured he is buying the same quality in the absence of a brand name. This is pretty strange behaviour for a housewife who generally swears by certain brands. Branding Branding Branding is the key even for small businesses.
The other factor is scale. Why did the lady not enlist more housewife's to sell, She would buy larger quantities and farm them out to other ladies who wold then extend the network, The advantage is that for any business to survive over the long term scale is important. What would happen as it did in this case if the lady had to leave town for an extended period of time. The business collapsed. Had she sub agents in place they would have kept the business running and she would continue to coordinate sales and purchases. The same logic can be extended to pickles and chocolates or what ever, the idea is to grow to survive. Growth is imperative to survive.
So ladies if you are already running a small business home business go ahead, BRAND & EXPAND, you have nothing to lose but your small business, you will gain a bigger business though.
Automobile Fuel Efficiency “*”
We are all familiar with the “*” (asterix) that follows all car fuel efficiency claims. The auto companies then hide behind the “*” which states ideal conditions which cannot be replicated on any road when dealing with customer claims of below par performance. This will soon be a thing of the past as the Government of India has started the process to institute “FUEL MILEAGE STANDARDS AND LABELING” for cars,. The norms, to be implemented shortly, will force automobile manufacturers to paste government certified fuel efficiency labels on each car they sell and improve efficiency of the cars they sell every year,
The sticking of labels will come into effect soon, the standards, however, will be implemented by 2015, giving car manufacturers time to improve the technology. The labels will certify the fuel efficiency of the car model under standard conditions and where it stands in comparison to other cars in the same category. This means car companies will have time to think of ways to actually improve and not cheat unsuspecting customers using the current “*” method..
The standards will have two parts. After 2015, manufacturers will not be allowed to sell models that fall below the government's 'one star' rating forcing the companies to produce better cars. The way the standards are defined, the companies would have to ensure that they sell enough efficient cars so that they meet the corporate fleet average standard set by the government. For 2015 it is 18.15 km per lt and by 2020 the bar will be raised to 20.79 km per lt.
This average combined with the new norms of declaring the fuel efficiency under normal conditions, and not under ideal conditions will make not only more efficient cars but also auto companies more accountable for performance which is easy to measure.
As one can imagine such standards had been opposed by the auto majors on several grounds - ranging from bad road conditions, congestion to bad fuel quality, which are also the reason given when a vehicle does not meet even 80% of the ARAI tested fuel efficiency declared. They are the words that the “*” implies.
Thankfully from a customer point of view the Government did not bend and soon, Indian cars and technology will be at par with the European market by 2020. Since there are huge penalties and ofcourse litigation it can be expected that auto companies will raise the bar and meet the new standards.
I brought a TOYOTA LIVA, based on the reputation of the Company as it was a new introduction. The advertisements screamed 18.3* kmpl. I was told that post 1000 km the mileage would rise from an abysmally low 10.5kmpl. Nothing happened. Testing by Company engineers on two occasions who literally had to be dragged by a team of wild horses proved that the car mileage was surely nowhere near the satisfaction mark. But surprise surprise, the engineers verdict was the car and engine had no problem. They insist that the “*” after 18.3kmpl means that the ideal conditions cannot be duplicated on the road and therefore any mileage below 18.3 is acceptable. When it was pointed out that other cars in the same category and same stable give atleast 16kmpl (80% of ARAI standard) as per testimonies on the radio, then if a car gives 11/12 kmpl it is under performing. This drew a blank and they resorted to “no problem” with car. Well litigation is on the cards and the news of the fuel mileage norms is a ray of hope.
Now imagine that the fuel efficiency and labeling standards were in force, TOYOTA would not be allowed to get away with declaring a higher than achievable rating ie 18.3kmpl. They would have to state the mileage achievable under normal conditions. The moment they do that they will have issues complying with the fleet average of the Company as a whole, ie the 201 5 Company average of 18.15kmpl.
2015, the wait will be worth it for all automobile customers.
Wealthsavy: The Home maker
We have all come across “Japanese Management Techniques” atleast once in our lifetime. The techniques include viz, KAIZEN, JUST IN TIME, 5S, KANBAN etc . When teaching students or employees, the belief was these concepts would not succeed as there was no exposure to japanese culture.
One day in an interaction with like minded people it dawned on us that while these concepts are universal , it is the japanses who packaged them. We realized that the ordinary indian home maker has been doing the same, day in and day out without a Japanese background or a degree in management.
The simple question to be asked to demonstrate this little known fact is, Do you have tea in the morning? If yes, on how many occasions did your mother or wife announce that there would be no tea because she had forgotten to replenish the stock of tea or sugar or milk or LPG? The answer would make the world’s leading practitioner of the famous quality concept six sigma, Motorala, blush. Almost never.
Yet, do we see a sackful of tea leaves or sugar in the house, or barrel of milk? No, usually a small glass bottle which is magically replenished JUST IN TIME. The idea that one does not keep too much tea in the house and that it will lose its flavor is age old. This fact can be repeated for sugar or milk. Adding another dimension, does the home maker run around the house to prepare the tea. Or are the ingredients all placed in such a way that they are with arms reach.
If we are to draw parallels, then JUST IN TIME is the concept behind having a small quantity at a time, the tea once made will be just sufficient for the whole house hold, neither will it be less nor will it be more which would be a waste. The PEEP (Place for Everything & Everything in Place) formula of 5S ( a housekeeping technique) is evident with the ingredients needed frequently being kept close at hand and those needed one in a way, possibly in the store room a little distance away. The bottles of masala are neatly labeled and the prospect of a wrong condiment finding it way into the food is far fetched. As is a stock out, unless there is a shortage in the market itself.
This proves beyond doubt that the “homemaker” is a born manager. We will work with this natural manager to try and leverage this natural talent into a skill capable of ensuring the economic SAVVYness. A home maker economically strong will automatically mean financial independence and greater emancipation.
Andrea : The last line is not according to me the best, u can rewrite it as I cannot do so till evening ie submit tomorrow
Sunday, July 1, 2012
MLA Alina- Technology Can Help
Twenty years ago working for an IT firm in Mumbai, GIS or Geographical Information Systems was new. Utility companies in USA were converting all their paper maps to digital and then superimposing data on them, eg convert a map and then put the entire electrical or water pipe line on that map. This way when a new connection was required, sitting in their office they could decide the nearest transformer or pipe available and send exact material required. A huge saving.
Today the technology has advanced and rather than use digitised paper maps as a base, google images are used so they are pictorial and identifying areas is easy. In Goa, RP 21 has gone into cold storage again. For the first time, google images were super imposed with survey data to give you beautiful and informative maps of Goa. These maps are available to all and easy to identify the different land uses viz no development, orchard , settlement etc by following the colour codes. However, this is data. If we can use data to further good governance then we are exploiting technology for the benefit of all.
The benefit of the DRP-21 which is already available to the AAM ADMI is the digital Maps. The RP2001 was based on Manual topograpic sheets and these were not easily available to the AAM ADMI. Since this information was privy to a few, exploitation, manipulation and corruption was rampant.
Today it is possible for every citizen to have access to the maps including survey nos, classification of land viz slopes, khazan, a orchard etc. This is power to the people.
Let me give you an example. Our sole lady MLA Alina has made a statement on being inducted into the State Cabinet. She was given the sensitive portfolios of Environment and Forests, both under severe pressure at the altar of development. She promised that she would protect every inch of forest land and that nothing would be given for development. This is easier said than done. We all know that rampant mining is being undertaken in forest land. How can she ensure that no further mining happens in the Forests under her watch?
RP-2021 has a built in solution. Take the digital map of Goa with survey nos marked. Overlay the info of legal mine leases from mining department. Now lay this on the latest Google images of Goa. All the mines will show up as ugly red blotches (mining pits) surrounded by green (forests), those not in the Authorized survey nos are illegal. The Shah commission used this technology. The current illegalities can be marked and tracked to see that they do not expand or no new area is opened up. All this can be done sitting in an AC office. No need of walking around the forests.
This technology can be used in various other ways. Take the PWD, the contractors have a term “sixer”. We all know what a sixer is in cricketing terms, the ball goes over the ropes without touching the ground. In PWD lingo, a “sixer” is a job executed without touching the ground. Be it constructing a road, building gutters or whatever. In every case, as required an estimate is prepared, a tender is announced, bids are finalised, inspection is done and payment is effected. The missing aspect is that the actual work is not physically completed.
The other interesting or common method is to tender jobs repeatedly or overlapping, eg, build a gutter from Margao to Panaji, and another from Nuvem to Porvorim. Now if one had the data of all tenders and one plotted them on a digital map, it would be easy to see if the lines overlapped repeatedly or part of the job were new while balance was overlapped. The Government can use this technology to nail a few bogus contracts not only in Goa but across the country. These ghost jobs are the bane of our country.
Recently the Government has come out with a list of illegal religious structures. One of the arguments that will be put forward is the fact that these structures existed from time immemorial and thus cannot be demolished. Using Google maps and the time line feature which is available with every paid subscription, one can actually get an image of the spot a few years before. If you drag the cursor backwards you can literally go back in time and see when the structure actually came into existence. There will be no doubt.
This can be used to track illegal construction, illegal filling, illegal conversions sitting in the TCP office. No need for foot patrols except to verify and demolish.The TCP department which has a paid subscription of Google maps can literally have a birds eye view on the implementation of the regional plan.
Technology can sure help make the “ZERO TOLERANCE TO CORRUPTION” a reality.
Sunday, March 11, 2012
Disproportionate Assets: Election Affidavits and their uses
The
famous mafia dons in the US went to jail not for murder but tax
evasion. For murder charges like always it can be ensured there are
no witnesses. However financial transactions leave a trail. The
payment for conversion of land is one example. The Ex Mumbai congress
chief now has to explain how he generated Rs 351 crores of assets
with a salary of just 45000/- per month. His counter argument will be
just Rs 351 crores after so many years in the service of the people
doing social work. The has court even asked on what basis was his son
lent huge amounts of money when he had no legitimate income.
In India, unfortunately while it is a known fact that one has to pay under the table money to get your work done or even get a job, the law does not distinguish between the giver and the taker. Despite the fact that it is possible the giver is under duress and hence pays. The law says that if caught both are equally liable and therefore punishment is to be meted out to both. This ensures that the transaction remains a secret. One solution is to decriminalise bribe giving. If this is done, once the transaction is over, the bribe giver can scream blue murder. For now that is not an option, so we will never know how or who contributed to Kripashankar's 321 crores.
Coming closer home, the political establishment is surprised by the “Association For Democratic Reforms (ADR)” comparative report of affidavits filed by sitting MLA's in 2007 and now in 2012.. Unfortunately for the politicians who believed public memory is short, ADR has pulled out their last election affidavits and compared them with the current affidavits. To the common man the results are not surprising, Our politicians businesses have grown so well despite the world facing an economic downturn in the same period, that their personal assets have double or tripled in the same period. Affidavits are a tool which over time will become the gold standard for catching politicians who have assets disproportionate to their known sources of income.
When the Chief Commissioner of Income tax, met the members of Confederation of Indian Industry (CII), he was very categorical in making out a case where some industries were not paying tax according to their income. He appealed to the businessmen to come forward and pay their taxes before the IT department visited them. When queried about another big business, “politics” he was cautious. He felt that since the politicians were well connected the department had to be very sure, before acting. He promised action if any one could tell him where the politicians unaccounted cash was stashed.
The ADR comparison of the 2007 and 2012 affidavits reveals these crores very easily. One study mentioned that the politician had to have an income of 40 lacs per month for five years to be able to drive his assets to the current level. This assumes, he has no other revenue expenses and everything earned goes to capital formation. Actually to have a 40 lacs post tax income he should have atleast 60 lacs income a month (7 crores a year), hard to believe. The Economic Times has a report that says the top CEO in India earns an average of 2 crores. This itself should tell you something.
Another candidate in an interview disbelievingly says that this is private business built over the last thirty years. Strangely in 25 years the assets were 5 crores (affidavit of 2007), in the next 5 years they grew by an astonishing 30 crores. Is there a story somewhere, in these figures?
In the revelations of the election affidavits, we have more proof that paper work will spell the death knell of the corrupt. I am sure that the Chief Commissioner of Income Tax can look at this list of affidavits and say “Euraka” I have found more than a 100 crores. Will he be able recover it for the amm admi? Only time will tell.
In India, unfortunately while it is a known fact that one has to pay under the table money to get your work done or even get a job, the law does not distinguish between the giver and the taker. Despite the fact that it is possible the giver is under duress and hence pays. The law says that if caught both are equally liable and therefore punishment is to be meted out to both. This ensures that the transaction remains a secret. One solution is to decriminalise bribe giving. If this is done, once the transaction is over, the bribe giver can scream blue murder. For now that is not an option, so we will never know how or who contributed to Kripashankar's 321 crores.
Coming closer home, the political establishment is surprised by the “Association For Democratic Reforms (ADR)” comparative report of affidavits filed by sitting MLA's in 2007 and now in 2012.. Unfortunately for the politicians who believed public memory is short, ADR has pulled out their last election affidavits and compared them with the current affidavits. To the common man the results are not surprising, Our politicians businesses have grown so well despite the world facing an economic downturn in the same period, that their personal assets have double or tripled in the same period. Affidavits are a tool which over time will become the gold standard for catching politicians who have assets disproportionate to their known sources of income.
When the Chief Commissioner of Income tax, met the members of Confederation of Indian Industry (CII), he was very categorical in making out a case where some industries were not paying tax according to their income. He appealed to the businessmen to come forward and pay their taxes before the IT department visited them. When queried about another big business, “politics” he was cautious. He felt that since the politicians were well connected the department had to be very sure, before acting. He promised action if any one could tell him where the politicians unaccounted cash was stashed.
The ADR comparison of the 2007 and 2012 affidavits reveals these crores very easily. One study mentioned that the politician had to have an income of 40 lacs per month for five years to be able to drive his assets to the current level. This assumes, he has no other revenue expenses and everything earned goes to capital formation. Actually to have a 40 lacs post tax income he should have atleast 60 lacs income a month (7 crores a year), hard to believe. The Economic Times has a report that says the top CEO in India earns an average of 2 crores. This itself should tell you something.
Another candidate in an interview disbelievingly says that this is private business built over the last thirty years. Strangely in 25 years the assets were 5 crores (affidavit of 2007), in the next 5 years they grew by an astonishing 30 crores. Is there a story somewhere, in these figures?
In the revelations of the election affidavits, we have more proof that paper work will spell the death knell of the corrupt. I am sure that the Chief Commissioner of Income Tax can look at this list of affidavits and say “Euraka” I have found more than a 100 crores. Will he be able recover it for the amm admi? Only time will tell.
Monday, February 6, 2012
FDI: KIRANA v/s WALMART:
To my mind the current handling of the
FDI issue has similarity with the Colva Margao taxi service. Hundreds
of commuters are put through immense hardship on a daily basis when
they commute from Colva to Margao and vice versa. 10 to 15 passengers
are stuffed in each Ambassador Taxi and transported like cattle. The
logic of not introducing a bus service on this buzy route is simple,
the few taxi drivers who eke out a living on this route will have
their livelihood effected.
It is a pity the Tonga walas of Belasis
Road in Mumbai, had no such benevolent policy walas. Otherwise today
in Mumbai we would be moving around in horse drawn carriages. Another
example is the Premier Padmini, why was a car manufacturer exposed to
the ravages of competition and be allowed to die, was the company not
taking care of a few thousand mouths all along the louzy roads in the
form of unskilled roadside mechanics.
The current FDI policy therefore seems
to sacrifices “Greater Good” for a few. Actually “seems to”
is the correct word because in reality nothing is sacrificed everyone
benefits. The Kirana store by itself is going to die a natural death.
Why? Simple, look at the cost of real estate across the country, can
anyone in his right mind consider starting a Kirana store in Patto,
Gurgaon or Nariman Point. Given the cost of the shop, the scale is
just not there. The other aspect is aspirational, every kirana store
owner has his kids studying and not many want to finish and go back
and take over dads kirana store, they will prefer starting an air
conditioned computer store but surely not run a kirana store. The
third reason is that the kirana stores in the lesser developed areas
are not going to be threatened by a big store, their customers do not
buy for a month at a time, they buy just for the day, that is why
Re1/-sachets of shampoo sell in huge nos in rural India and large
size bottles sell only in the west. Can you imagine how many sachets
a Walmart would have to sell to break even. They will not even try.
So the opponents of the FDI policy are
creating a hype for their own selfish purposes and the CUSTOMER is
not on their radar. If FDI comes in and prices fall why should anyone
complain. Are the opponents of FDI going to give an undertaking that
they will only buy more higher priced items from kirana stores and
ignore the lower price at large format stores. The kiran store is
smarter, go to the METRO store in Mumbai/ Bangalore, the customers
are kirana store owners, they buy from Metro at a lower price better
than the distributor that supplies them and shares this benefit with
their customers to build more loyalty. Win Win I would say.
With large format stores in operation,
demand for capital goods viz racks, trolleys, baskets, ofocurse
personnel will be in big demand. Ask yourself, if you were a shop
assistant in a shop in any market in India today, would you not jump
at the opportunity to work in a large format store with better
working conditions, a nice uniform, clean toilets and drinking water.
The conditions of shop assistants in our stand alone stores is
pathetic, not to mention the pay is peanuts. Have those opposing FDI
considered this.
Services for printing, Point of
Purchase material, entertainment industry will get a fillip because
of the demand that will be generated by the large format stores. Any
aspect that is currently utilised by a kirana store will be
multiplied, unheard of items and services will find markets and
finally the customer will be able to get a clean environment to shop
with reasonable comfort or simply pass his time walking around.
Does this all spell the death knell for
the lowly Kirana store. Not at all. Go to England the home of TESCO
and you will find at every junction in residential neighborhoods a
convenience store packed with daily necessities. You cannot will away
competition, but the Kirana store will reinvent itself. They do not
need the services of self centered politicians who are thinking of
their own electoral brownie points. Unfortunately for India, and
fortunately for the opposition, we have a wishy washy Prime Minister,
undermined by corrupt party men and therefore “Margao Colva” taxi
type decisions are taken.
However India and Indians are made of
sterner stuff, so sooner that later decisions will be taken which
benefit the citizen and customer. FDI will be allowed.
Thursday, February 2, 2012
Do Startups need a Plan B?
“Men's mind, once stretched by a new
idea, never regains its original dimension.” Oliver W.Holmes
This is a saying that I repeat often as
it reflects the dilemma of every entrepreneur. Once, he gets a taste
of entrepreneurship he cannot go back to being an employee easily.
This brings us to an important issue - what if things do not pan out
as planned?
Consider this example. A successful
business ran into rough weather. The principals withdrew the
exclusive mandate and appointed another dealer. The deal with a
competing product could not be completed because of a dispute between
the shareholders. All of a sudden from being at the pinnacle, the
business collapsed. One of the scions, let’s call him Ashley, who
was to handle the new venture, found himself out on a limb.
Having been a part of the business for
a few years, can he now look for a job or should he find a new
venture to start. Being an engineer he will surely get a job, but
will he have the required attitude? To start does he have the big
idea, he might have the infrastructure but starting from scratch
calls for a different attitude. No easy answers here for sure. You
can see things did not go as planned.
I am reminded of my own experience when
I decided to start. I believe that my concept was totally wrong in
hindsight. I mistakenly assumed that if I failed I would get back to
working. This was far from the truth; fortunately I did not have to
fall back on plan B. The reason is simple, had I failed I would have
been in deep trouble with the lenders, interest rates in those days
was a hefty 19%. No job would have been able to support that burden.
The jury is certainly out on this
subject. Should one have a Plan B when starting out? Should one have
a Plan B, if the business is running successfully? Would having an
escape plan reduce the focus on problem solving or would the
entrepreneur “cut and run” to Plan B at the first sign of
trouble.
I would like to believe that the best
way would be to burn all your bridges so that turning back is not an
option. It is more like you are in a hole and the only way out, is
up. I would like to modify the old adage, “Necessity is the mother
of Innovation” and innovation is the mantra for the success of any
business. This kind of thinking would not be out of place for an
entrepreneur because as a breed, entrepreneurs have a higher risk
profile.
This logic should not be confused with
de-risking of a business or diversification. Imagine you are making
rotary telephones, today's kids will ask what a rotary telephone is.
It would be bad management if the business did not see the writing on
the walls and switched to digital instruments, that is not plan B-
that is a running business decision.
Diversification is also a method to
de-risk a business and not a fall back option, it is a must. We
started with tanks but slowly and surely diversified into the more
demanding custom moulded roto-moulded parts. This is part of the
business process.
That still leaves Ashley from my
example above. What should he do? Could he have done something
earlier? There can be no back plans for bad management decisions. You
cannot start with a back up plan that factors in shareholder issues.
If the share holders do not realise that “cutting the nose to spite
the face” is a bad management decision, not even God can help such
a business. The only thing Ashley could have done earlier is read the
writing on the wall and started planning his next move. Even so now
that he knows he has to move fast, difficult no doubt but never the
less “better late than never”
In summary I believe we start a
business to succeed and no other thought must dominate that vision.
While running our business we can and must look at issues which can
affect the business negatively and take suitable action to prevent
failure.
Friday, January 20, 2012
GOA CHAMBER OF COMMERCE & INDUSTRY: ANY EXPLANATION?
In
the
face
of
tremendous
industry
pressure
in
bringing
some
transparency
in
the
functioning
of
GIDC,
the
Government
gave
in
and
set
up
a
TASK
Force.
The
term
had
become
popular
after
the
success
of
the
TASK
FORCE
which
worked
on
the
Draft
Regional
Plan.
As
Task
Forces
go,
despite
opposition
from
within
the
establishment,
in
this
case
GIDC
a
through
report
was
prepared
which
listed
the
ills
that
plagued
GIDC.
It
also
suggested
certain
remedial
measures.
This
report
was
endorsed
by
all
the
state
level
industrial
orgainsations,
viz
GCCI,
GSIA
and
CII.
The
Government
slept
on
the
report,
till
the
GSIA
filed
a
police
complaint.
The
Government
acted
quickly
after
that
accepted
the
report
in
totality.
As
per
the
recommendation
of
the
Task
Force,
a
Screening
&
Review
Committee
(SRC)
was
notified
with
a
mandate
to
study
the
ills
listed
in
the
TFC
report
and
recommend
to
the
GIDC
board
actions
that
needed
to
be
taken
to
correct
the
situation.
Industry
was
happy
that
finally
their
cries
to
make
GIDC
transparent
and
stop
the
rampant
trading
in
land
was
heard
and
a
system
to
put
things
into
place.
The
SRC
began
its
working
in
earnest
and
the
appointment
of
a
new
MD
with
an
IAS
background
added
to
the
industry
confidence.
At
the
second
meeting
a
shock
awaited
the
SRC.
The
President
of
GCCI
tabled
a
letter
addressed
to
the
Government
wherein
the
powers
of
the
Government
to
appoint
the
SRC
were
questioned
and
a
recommendation
made
that
the
same
be
referred
to
the
Law
Department
for
review.
While
avoiding
what
transpired
in
the
meeting,
the
questions
that
beg
for
answers
remain.
Was
the
GCCI
not
a
party
to
the
industry
request
to
Government
to
act
against
the
illegalities
in
GIDC?
Did
the
GCCI
not
sign
the
task
force
report
which
recommend
the
SRC?
When
the
SRC
was
formed
why
did
the
GCCI
agree
to
be
a
member?
The
questions
raised
by
the
GCCI
can
also
be
relevant
at
the
time
of
the
formation
of
the
Task
Force.
Then
why
was
no
objection
raised.
It
is
understandable
if
any
“amm
admi”
had
raised
these
questions
but
totally
unacceptable
that
a
signatory
to
the
demand
for
transparency
and
a member of the task
force
report
raises
these
question
so
late
in
the
day.
Why
is
an
attempt
being
made
to
weaken
the
foundations
of
a
committee
that
can
restore
some
semblance
of
legality
and
transparency
in
GIDC?
The
only
explanation
I
can
think
of
is
that
that
if
the
SRC
succeeds
in
implementing
the
suggestions
of
the
task
force
then
transparency
would
be
the
winner
and
if
that
happens
it
can
harm
vested
interests.
The
fact
that
vested
interests
are
at
work
is
amply
clear.
How many GCCI members knew about this letter?
The
fact
that
GCCI
questioned
the
Government
without
taking
the
Managing
Committee
into
confidence
tells
another
story.
Ofcourse one can argue the powers of GCCI President has allow him to
act independently. Surely questioning a Government decision which has
the the President as signatory to the request is foolish but would
need a wider debate. That wide or big picture overview can only come
from the Managing Committee and not an interested party. The GCCI
President has a business in liaison services. I had raised difficult
questions with regard to this conflict of interest between personal
and GCCI business. Rather than discuss, I was asked to quit. GCCI
must
look
quickly
into
its
own
functioning
before
it
is
too
late.
More
members
must
question
this
independent
functioning,
after all they cannot ask everyone to resign.
One
can
argue
that
since
I
am
not
a
member
it
should
be
no
concern
of
mine,
however
as
an
industrialist
with
a
running
manufacturing business,
I
believe
that
attempts
to
divide
industry
for
short
term
gains
is
detrimental
to
the
entire
industry
and
should
be
stopped
quickly.
I
do
hope
good
sense
prevails
within
the
hallowed
halls
of
GCCI
and
they
treat
this
as
advice
from
a
well
wisher.
The GCCI with over 100 years of solid reputation cannot be allow it
to be BROKERED away......oops I meant squandered away. Senior
members, ex presidents, right thinking members are you listening?
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