In
every business there are going to be hard times only those who are
finding a way out within the business can have long term success.
Many of us give up or start looking at greener pastures elsewhere,
this inevitably leads us to look at greenfield businesses or
something we are new for. I have a couple of case studies which i
could share.
This
is a story of two business people who are in real estate development
business in Chennai. Around the same time both started putting up
apartments in early 80's. One started with his brother and another
with a set of partners. Both later became independent owners of their
respective businesses after parting with their erstwhile partners.
Person
1, had a successful business in promoting residential apartment
buildings, he was very much successful in the JV route and continued
to build apartments each building having about 6-8 apartments mostly.
Person
2 also chose the JV route and started getting good offers and was
into buildings with 10-20 apartments per building.
P1
continued to leave his brand on many buildings with his property
owners getting him more JV partners due to timely delivery, with low
inventory to sell, he was able to accomplish more finished projects
and more goodwill.
P2
decided to go public and get his company listed, for this purpose he
signed up few mega projects. He managed to get his public issue
subscribed and he had money to develop the projects, he wanted.
Unfortunately few bad apples upset his plans and his plans started
going haywire. More over the property market went into a recession
mode. Most of the big projects got struck with unsold inventory.
Forcing P2 to start looking at other means to shore up his revenues.
Meanwhile
P1 continued with his build small model and was able to whether the
recession and was smiling all the way to the bank when most of his
peers were struggling with unsold inventory.
What
tells us here is persistence to the business and finding a niche can
help the business person weather the short term bad times in the
business, in this period if we start looking at other ways to ensure
revenues or become too ambitious, then the result will be like the
person 2.
Similarly
there is another story of continuation which paid off in the case of
one and how it affected the other in Liquor wholesale business in
Bangalore.
Businessman
1 who was a first generation entrepreneur, managed to come close to
the management of a Liquor concessionary in Bangalore and was able to
get a good patronage, he built a house for himself and started seeing
good cash flows.
Businessman
2 who was an employee in a liquor wholesale, took up an agency from
the same concessionary and started establishing his business, he used
to even accompany the consignments and ensure prompt delivery.
Suddenly
the concessionary changed hands from one business house to another.
Both the persons referred above were able to build bridges with the
new concessionary and continued with their business. B1 was bit by a
bug and wanted to start a steel re-rolling business, which looked
very profitable at that point of time (Mid 90's). He went about
establishing the same along with a technocrat. When the technocrat
left in the midway, our man started focusing on this new venture
more. Leaving the liquor wholesale to his trusted boys back at
Bangalore. While B2 with focused approach was able to increase the
volumes and was able to earn more profits. B1 with cash flows from
liquor business getting diverted to the steel business naturally lost
favour with the concessionary and was given less preference in terms
of supplies.
B2
built a house, bought more properties established his brother in IT
business. B1 languished with the jolt given by P Chidambaram as the
FM to the steel re-rolling industry in the United front govt and lost
both the liquor business and in steel business.
Both
are real stories, which goes to show how one could flourish even in
adverse situations if they stick to their core business and what will
happen when we start thinking of riding two horses at a time.
While
we could ape Dhirubhai or his son Mukesh in thinking about expansion
or backward or froward integration, we have to remember, there has to
be a scale to think and also one business which can give us the
stable revenues to pursue the new businesses. This is more important
in the case of Indian businesses, since our thinking is in terms of
our kids running the show or ethical values being what they are, Only
when systems and values and accountability rule the roost,
One
has to be very careful about expansions and diversification's, it
might be just good to stick to what you are good at.
(Copyright of the images used rests with the respective owners)
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