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.