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| Sunday, 7 March 2004 |
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Business |  |
| News Business Features Editorial
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20 Golden Rules for Success Dependence on single factor by S. R. Balachandran In a business, depending on a single factor could be very risky. The factor may be 1. Product 2. Supplier 3. Customer 4. Employee 5. Machinery Dependence on a single factor would bring your business to a standstill, if the supply of that factor fails, may be due to reasons beyond your control. Therefore, you must have alternative measures to overcome them. For example, almost all grocery stores and supermarkets now have electricity generators, so that products kept in cold storage will not get spoilt due to sudden power failures. This is a corrective action taken by these enterprises. I am aware that four to five years ago, food stocks worth millions of rupees were spoilt and thrown into bins due to electricity cuts. Therefore, you should carefully identify your business's limiting factors and take corrective action to avoid facing the following: 1. Collapse of the business 2. Paying high prices for items or their alternatives. 3. Loss of buying power 4. Possibility of sabotage 5. Paying damages due to non-performance 6. Loss of reputation. The following steps are suggested to overcome these difficulties: 1. Diversify your business so that one single factor does not affect it 2. Enter proper contract agreements so that sudden stoppage is not possible, and the lead time granted will help you to recover. 3. Purchase (products and services) from another party. 4. Train suitable people. 5. Enter collective agreements to avoid stoppage. 6. Secure material control on suppliers (purchases) and customers (sales). e.g. You can buy controlling shares in a company which supplies you raw materials or you could purchase controlling shares in a company which has numerous sales outlets. 7. Develop the theory of outright purchase of properties, machinery and technical know-how without depending on external sources. In India, an ice-cream supplier who discovered that a continuous supply of quality milk was necessary for him, opened his own farm and thus ensured the smooth supply of milk. Later he sold not only ice-cream, but also milk products such as curd and ghee on the excess supply of milk. I wish to stress on the fact that proper identification of limiting factors and alternative action taken thereby for the uninterrupted flow of business is vital for any enterprise. |
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