WHY I NEED TO STOP THINKING LIKE A
SMALL BUSINESS OWNER
I am the
owner of a small boutique Ear, Nose & Throat Centre in Delhi, being an ENT
specialist.
When the
young audiologist in my Centre enters his room in the morning and switches on
his AC at 18 degrees, while I suffer in silence under a fan rotating at speed
2, my vision is diverted immediately to the whirring Electronic Meter and the
huge bill that will land on my table a few days later. While he nonchalantly
plays with the infinite distractions on his phone my day has begun on a sour
note.
I am
reluctant to hire bright people because they cost so much! There is always a
need to grow your business- so while my local Kirana store owner struggles to
cope with the fickle loyalty of his customer base, and hauls his son out of
college to manage the store for him when he is admitted for a serious lung
infection, chains like Big Bazaar and
LocalBaniya hire smart talent and grow big at his expense.
I hate
taking loans! My father was in the Army (as was I), and we grew up in a regular
Indian middle class family. The Army allowed you to live in genteel poverty –
though your needs were taken care of in style, you never had enough loose cash
to play around with. Loans were anathema since you had limited capability to
pay back. I remember two occasions to make my point. When my Maruti car booking
materialized (in the year 1990 while I was a Major in the Army), my cash flows
did not permit me to take a loan since I could not have afforded the EMIs. So I
happily traded my booking for a premium (many thousands at that time) and
bought a Sony music system with it – I still use that system! In 1992 my Army
Welfare Housing Organization (AWHO) house was allotted in Bangalore – again,
since the cost of the dwelling unit was about 28 lacs, I could not have
afforded the EMIs needed to pay back my loan. I finally surrendered the booking
at a loss! When I read a biography of Richard Branson, I was struck by one word
used frequently in the book – “leverage”. It seems all that he did was
exaggerate the value of his businesses to get more loans! A few days ago he was
listed as among the top 20 richest persons in the UK with a family wealth of
4.1 billion pounds! When I went to pay my respects by signing in the register
placed for the late Col Nair at the Leela Kempinski at Chankyapuri I was
reminded that the debt burden of the company at that time was Rs 5,125 Crores!
The Anil Ambani group companies have an accumulated debt of Rs 1 Lakh crores! As
do most of the richest persons in the country. Is there a lesson for small
business owners here? Are we too shy, too scared to leverage our businesses and
grow with borrowed capital?
This is what
my CA normally tells me sometime in December - “Sir, we are generating too much
profit this year! We will end up paying too much tax!” So what do I do? Stop working? Create less
profit? No, I withdraw large sums of cash periodically to create what my CA
calls ‘’cash in hand’’! And now I look for shysters to raise fake bills against
the ‘cash in hand’ so that my tax burden is reduced. It is not the CAs job to tell you how to use
your ‘’too much profit’’ to grow your business – it is yours. When you go to the
banker looking for a loan, one look at your balance sheet and the savvy banker can
see through your game in seconds. And
now that I have generated that cash, what do I do with it? Buy a property/ buy
gold? So what have I done? I have effectively buried the profit from my
business that I could otherwise have used to grow bigger and better.
It is
currently felt that a Doctor, especially a surgeon, is as good as the
technology that she can learn to master. The use of technology is rapidly
changing the way we look at and treat diseases. This behooves the surgeon to do two things –
attend surgical workshops and conferences as well as buy books pertaining to
that field and secondly, invest in the buying of that equipment – both come at
a huge personal cost. The day a surgeon stops doing that she has effectively
declared her retirement. Similarly, a
small business owner needs to constantly train and retrain herself to
understand how the world around her is changing and to make use of that change.
Satya Nadella, CEO Microsoft says ‘’ I buy more books that I can read, I sign
up for more online courses than I can finish…” You might like to say that since
he has become CEO Microsoft it is easy for him to buy all those books and
attend the online courses, but I’d like to believe it was because he did all this that he could become CEO of Microsoft. If
you are in any knowledge based enterprise, you have to invest in training
yourself.
Currently
all of us reside in two places. One is the physical world we can smell and
touch. The other is the virtual world out there, becoming bigger, smarter and
stronger every day. My refusal to engage with the virtual world is
inexplicable. Just as we use architects and interior designers to design and
beautify our shops and offices we need software programmers and web designers
to create our virtual world. I attend social functions, sometimes travelling
long distances just to show my presence at a friend’s daughter’s wedding and
crawl back through the nightmarish traffic to reach home late at night. Social
media lets me create a vibrant social presence from the comfort of my home. If
I can employ a marketing person to take care of my small enterprise, it makes
that much sense for me to employ a digital marketing person as well. The reach
of the internet is obviously huge, the audience is much bigger!
So what’s my
message? Ok, here’s what I think
- THINK REVENUE NOT COST
- Grow your business, spend money , but wisely
- Once you are big enough, hire someone to bring down your costs and pay him a small percentage of the costs reduced
- HIRE PERSONS SMARTER THAN YOU
- And listen to them!
- LEVERAGE YOUR ASSETS, USE BORROWED CAPITAL TO GROW
- Remember your revenue has to just beat the EMI
- SAY NO TO CASH!
- It is a nuisance and a headache you can do without
- INVEST IN YOURSELF – TRAIN YOURSELF ALL THE TIME; READ, READ, READ
- Attend courses, learn online
- USE THE INTERNET WISELY
- Don't be shy of the net - use it to help you.
I can only become big if I think big!
All the best!
Dr (Major) Rajesh Bhardwaj
Director, MedFirst ENT Centre.
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