Business Fundamentals a.k.a Business 101
At the start of my corporate career, armed with a MBA, I was like any other greenhorn ready to take on the world – with my jargon that is. I had solved numerous case studies and studied various books to understand the nuances of management.
Alas, all that came to nought. Or maybe.
As they say, Experience, simply put is just a matter of knowing what works and what doesn’t. As I progressed in my career, I was helped through various mentors to understand the business – in its truest sense; accelerating my understanding of the business fundamentals. I would like to share a few -
1) Finance is very simple. All the corporate finance, M&A strategies come to nought if your product doesn’t sell for a profit. Make a product at $1, sell it at $5 with expenses of $3 or less. Essentially, a profit margin of 20% on every piece and you’ll be rich. That’s all the finance you need to know.
2) Don’t try to please all the people all the time – Customer experience definitely is the key to success. But that doesn’t mean you need to please all the people all the time. Know your market, make them extremely happy. Better to have 20% of your market extremely happy than 50% of your market okishly happy/not satisfied.
3) Know what you want and the rest will follow – (I found this awfully strategic to understand. Some people find it sooner rather than later).
4) If it doesn’t generate money, it is not a good business – (This was in response to some Web 2.0 idea that I had thought of). Nowadays, this is better known by the jargon ‘monetize your transactions’. (So simple, yet incredibly hard to deal with. Consider the case of SAAB of GM which had been generating losses for 19 out of 20 years of its operation. Now, who was managing GM again?)
5) Surround yourself with ‘knowledgeable’ people – Now, ‘knowledgeable’ is definitely relative, and hence controversial. But you get the point – its only a positive spiral.
6) The last but the most important – Be ethical and operate with a smile. Ethical courses in B-schools do not solve the problem nor do communication skills courses. The fulfillment of this important aspect can only happen through the person himself.
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Whilst ethics is context dependant, and not always black-and-white, I don’t understand as to how feasible it could be (especially for new start-ups) to act so. Again, what is ethical – heeding to the opinion of the majority and acting accordingly, or following your own judgment about the issue?? And to which population subtypes will this majority belong to anyway (i.e. your consumers, or everyone in the society)? I know that these questions (while also being controversial) are far from your intended topic… but they keep popping into my head whenever I think about pharmaceutical/biotech operations esp. in the developing countries – my favorite being India.
I really like your final statement about ethics – “ The fulfillment of this important aspect can only happen through the person himself ”. However, at this present time where the management of a firm (most of them) isn’t under the control of a single person (e.g. partners/the board the directors etc.), how can any one person follow & implement his/her moral conviction esp. in the business world? ? Am I stereotyping the business community if I say that perhaps business and ethics could never go hand in hand?
Nice summary of your thoughts molded by your experience (I’m no business person to comment on this aspect anyway), which highlights the importance of ‘common-sense’ and character of an effective manager/ management (I guess)?. Your view on finance brings back a comment made by a speaker at one of the entrepreneurial meetings I was at… he said, “start by tallying your estimated expenses and profits (by cutting down estimated profit by half, and tripling your estimated expenses). If your nett (estimated) revenue is at least double your investment, then your proposed project has atleast some form of survival in the real world”. As harsh the conditions might sound, I tend to agree with him (theoretically). Any contradictions?
(p.s. apologies for making my comment ‘ethics oriented’.. you shouldn’t have put that word (as that’s the only word I am familiar with
(and not in a business context either))) ?
@Rose – I, for one, firmly believe in free will till the point that it doesn’t cause harm to others. By extension of that basis, ethics and morality is defined by that person who is doing the act. Society is stereotyped – and it reflects the common ethics of a majority. Right and Wrong is best left to the person doing the act rather than anyone imposing it. That answers your first question.
Organizational level unethical activities, aka Satyam-kind is just pure fraud and they are called ‘crooks’. Did a downstream Satyam employee know that a fraud was being committed – I think not. By extension, he (as in that particular individual) was not unethical or wrong (again, the word ‘unethical’ is subjective
).
“start by tallying your estimated expenses and profits (by cutting down estimated profit by half, and tripling your estimated expenses). If your nett (estimated) revenue is at least double your investment, then your proposed project has atleast some form of survival in the real world” – I have heard this before and was corroborated in multiple business meetings and conversations. There is after all, some truth in that statement and yes, finance is really that simple – you should try it sometime