How Business can get out of Debt Trap?

 

Debt trap is now strewn all over business enterprises. Small businesses, large ones and even multi nationals have unwittingly got into the debt trap, modern day version of apocalypse. Debt trap occurs when a business gets into a vicious circle where it borrows more money to pay up the debt already owed. Finally the burden of debt brings in disastrous results for the business, society and for the economy. So how business can avoid disaster and get out of debt trap. Here are few suggestions:

1. Contact the banker/financier for working out the current loans. Work out is a method where banks acting on their own re-schedule loans and offer concessions regarding interest payments, declare moratorium over whole or part of the accumulated interest and grant flexible terms on amount and timing of instalments due

2. Go for re-structuring of the current debt on your own. This method is different from the first one as you will be taking initiatives in managing debt and submit your proposal for negotiating the terms of the current debt. Of course, such re-structuring must have the approval of the banker/financier

3. Replace expensive finance with cheap finance. In most cases business, particularly small business tends to borrow more when the interest rates are fairly high. Interest rates generally move up and down depending on the state of economic growth. During high economic growth interest rate also hovers in high zones. Business, encouraged by positive atmosphere prevailing in the economy blindly ties up with debt at expensive rates. When economy moves into recession interest rate falls into low levels. Therefore during recession small businesses must make an effort in replacing loans booked at high rates with cheap alternatives

4. Talk to your creditors who have supplied materials for business operations. You can ask them for an extended time period to pay out the amount owing. In the case of expense creditors, generally this concession is not available. For example, electricity companies do not negotiate on arrears and tend to cut supply lines. You also have a tall order in negotiating with statutory creditors such as Revenue Department

5. Reduce operational cost as much as possible. I am afraid you cannot do this overnight. But if you put an effort you can cut corners in operational cost without much harm being done to your production line

6. Dispose fixed assets that are no longer wanted. Many business enterprises dump huge amount of finance buying up assets without doing a proper evaluation as regards to their usefulness; added to this, business generally does not bother about re-sale value of fixed assets at the time of acquisition. Hence, you have a double whammy: on one side the economic value of the assets in the current scenario is less and if disposed it could fetch much less than the original cost of purchase. You have to take hard decision and sell at some prices even though you have to take loss eventually

7. Budgeting is your weapon of mass protection; you should put in operation budgeting with a short term roll-over. I suggest that the budget exercise is rolled over every month till such time you are out of the debt trap. You must budget both the income as well as expenses on equal keel. You have to put extra effort in increasing sales revenue and pitch on chasing receivables to get the cash flow in

8. Finally let cosmics be your pull and push factor. Cosmics are aspects residing in every person and as an extension in every business. Cosmics can function as pull factor when you go for negotiation with your banker/lender or that particular customer who is promising you a big order. Cosmics play the push factor when you are impelled to change your business outlook, make a face –lift, bring in courage and confidence to weather the storm and at last succeed in getting out of the debt trap.

 

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

How to Control Capital Expenditure in Business

 

Today large amount of finance is tied down as capital expenditure in business enterprises. The percentage of capital expenditure is huge in utility industries like oil and gas for valid reasons. Elsewhere in service industry and small business enterprises there is a rising trend in capital expenditure without justification. Let me give you do and don’t on how to control capital expenditure in business:

What is Capital Expenditure?

Before charting a road map of do and don’t in capital expenditure, let us first find out what exactly fits the term capital expenditure which is often shortened as Capex. Any purchase & improvement of land, purchase & construction of buildings, purchase and installation of plant & machinery, tools & equipments, furniture & fittings come under the definition of Capex. These assets are classified as fixed assets in finance. After the initial phase of acquisition, fixed assets are to be maintained; this results in revenue expenditure. When it is necessary fixed assets are to be overhauled; this results in Capex once again. There are similar words used in business meaning overhaul: improvements, upgrades, refurbishing, extension, and face-lift are some of the most common.

 

Do List

1. Undertake Capex where the useful and economic life of the underlying fixed assets can be extended. Assume you have a plant and it is almost worn-out; if you can extend its usefulness might as well spend money to do so rather than buying a new one

2. When you experience rise in your scale of business operations you should sanction relevant Capex

3. If there is an industry wide use of a particular fixed asset that you do not possess then it is better you approve Capex. A good example is the acquisition of state-of-art technology in media and communication

4. When your competitor acquires a specific asset that can tip the scale in his favour in terms of sales and operations then it is advisable you do Capex urgently

5. If you have a drawn-out Capex plan to be rolled over a number of years, you must undertake relevant expenditure even though such Capex is not urgent. A good example is re-furbishing done in tourist hotels and cabanas. Often this type of expenditure is known as planned capital expenditure

6. Replacement of fixed assets could also be necessitated by events where the business has no control. An example is loss of fixed assets caused by fire, theft or natural disaster

7. Go for Capex where the assets you intend to acquire would generate cosmic energy which in turn can be translated into enhancement of business image, improvement of staff morale and finally growth in business prospects. This we call cosmics. As you are aware cosmics are present in everything you do including your business

 

Don’t List

1. Never approve Capex where you are adding fixed assets that cannot be used in near future; this superfluous acquisition can be seen in many businesses that fail within a short period of their opening

2. Any wasteful Capex must be avoided absolutely. Most small business enterprises get into this situation because they do not evaluate the purchase decision carefully. More than that they do not plan out the purchase of fixed assets in advance

3. Never acquire un-productive assets; once again this is one of the main causes in failure of small business. An ostensible example is the construction of parapet wall and other security paraphernalia that are not meant to aid in production and operations

4. Do not be overly carried away by value of aesthetics in business; it is acceptable that you should beautify your environ in the business place. But always look at the trade-off between utility and aesthetics

5. No Capex if that only serves only your ego. Grandstanding is good in politics but never in business. If you are egoistic, you will squander your finance, let go of your business opportunities and finally compromise your future.

 

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

In Business, do the Right thing Right

 

Most businesses in United States and Europe are not doing the right thing right compared to their Chinese counterparts. Let us see where these businesses are heading to:

1. Do the Wrong thing Wrong: Thousands of businesses mainly in the small business sector in United States and Europe are getting into corner by doing wrong things in wrong manner. Examples  galore. Let me give three areas of disaster:

1.1 In Finance businesses have ramped up debt equity leverage into un-sustainable zone; at very high interest rate to foot. During recession businesses cannot service the debt and about 75 % of them are in some stage of receivership

1.2 In – house management of operating cost is in shambles, causing break-even point to go up. As sales starts to dip a business is unable to cope up with the current cost level

1.3 Meeting delivery schedule has become a haranguing experience. Most small businesses cannot stick to the order schedules and are facing the un-palatable situation of losing buyers

2. Do the Wrong thing Right: This trend is catching up in several businesses in the North Atlantic region. These businesses are doing the wrong thing; but there is a saving grace: they do it in right manner. Shifting production location is one of the key pointers. For various reasons these businesses have shifted major part of their operations outside the region and have gone into countries like Turkey. On the one hand they have deprived their nationals employment opportunities, and on the other they have chosen well as Turkey is now being added to BRIC list of fast developing industrial giants

3. Do the Right thing Wrong: This is somewhat better than the above two modalities; we find many small businesses tend to do the right thing albeit in wrong manner. Consequently the expected results are disappointing. Good example is the investment made in undertaking ingenuous research in the fields of bio-technology and food processing. But before the businesses could put these into operationalization and garner new business opportunities, the research methodology or process gets leaked into hands of industrialists far away from North Atlantic region. The beneficiaries on the other side employ the methodology/process and mass produce products even at cheap prices. All the fuss about copyright, patents and WTO regulations just disappears like smithereens

4. Do the Right thing Right: At present, I see businesses in BRIC countries get well-versed in doing the right thing right. No wonder the tip of balance is slanting in their favour. A good example is how business houses in these countries are churning out consumer items in cheap prices and slowly edging upwards to the manufacture of capital goods as well. These businesses evaluate not only their economic assets but understand and use their cosmic energy in order to raise their operational level up. Surely, cosmics have given them that extra push that made today’s China a giant in industry and commerce. Unless businesses in United States and Europe are alive to this situation North Atlantic region would fast become an importers’ heaven.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Who can Evaluate Your Business Idea?

 

You have a got a business idea. You think that it is really great. Having mulled it over, you feel that it can be translated into commercial success. All the while, it is you and your idea that mattered. Now comes the third party angle. You have to find someone to look at your business idea and evaluate it for you. Here are persons whom you should approach:

 

1. Charity begins at home so does evaluation of your business idea. Firstly, you sound your family about it. Your wife is an important resource person who, knowing you very well, can give an informal assessment. She may not be a business person but she possesses insight into how you work and what will work for you. Next you should turn to your children who are adults and can understand many things in proper perspective than you. The reason is that you are emotionally attached to the business idea you have developed whereas they can bring a rational approach to bear upon it. When discussing within family never load them with facts and figures. Just explain them broad principles and major matters

2. Secondly, you must talk few of your relations over. You can choose to speak to one who has succeeded in business or career. Additionally, you must also have a rendezvous with a relation who is more of academic bent. This way you can mesh academia with practical life; a method often brings you a via-media approach. During this discussion you should wait till they finish and pose them questions, taking the stand that your business has definite fault lines. Why do I say this; if you profess loyalty and possessiveness towards the idea, your relations would often be silent and would not venture making any adverse comments

3. Next in your appointment schedule are close friends who could come from different backgrounds: in business, career, academia, government service, military, social service and so on. When you meet them you explain your business idea and give the pros and cons and await their own appraisal and analysis. You should ask searching questions that include benefit and cost; risk and reward, limitations and growth etc. As you proceed ask them to look at your idea from neutral ground and prod them to give you more qualitative comments

4. Then comes the professionals; you must approach accountant, company secretary, lawyer to give their feedback on your business idea. Once again you must adopt the approach I gave you in dealing with your family members. Give them facts and figures as well as broad principles and major matters surrounding the business idea

5. In the next segment you elect to choose either your banker or venture capitalist for an informal chat. These guys are well versed in seeing, reading and evaluating great number of business proposals and would be a big source not only in critically examining the idea but proffering advice and assistance in translating it into commercial success

6. Finally, you must get someone who can understand you, your business idea and your cosmics. However much bright and usefulness your business idea is, its successful transformation depends on how you understand and evaluate your cosmics. Cosmics are aspects residing within you shaping and influencing your business though these are un-seen and un-noticed by you. If you know cosmics well, you can employ these to your own advantages. For example, let us assume that your cosmics support you in food processing industry and your business idea is on data processing industry. So your success in transforming your business idea stands alone without any support from cosmics within you. No wonder why so many bright business ideas falter in the market.

 

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

How Your Bank Responds to Your Proposal ?

 

So you have an appointment to meet up with your banker tomorrow regarding a proposal you have sent him lately. You are wondering what kind of response the banker would give. There are for ways in which your bank responds to your proposal. Here are the responses:

1. YES: This is the one you are dreaming about, a big positive nod from the bank manager with a thundering yes. If you are one of the lucky guys whose dreams come true very often you can bank on this response as the most feasible one. Then there are businessmen, quite a number of them running small businesses that have the kind of cosmics supporting them tend to get a yes answer. Whatever the manner in which a proposal is made, you should have necessary requirements to get a yes from a banker. Some are related to your finance, some are personal some are aspects no one can explain about. The last one intrigues you always. You would have had this experience when you saw the most qualified is not the one who gets the job. This is what we call cosmics, aspects that are residing within you shaping and influencing your business throughout

2. Yes, But: Unlike the previous response, “Yes but “, is not very stronger. Nevertheless, still it is the green light. Bankers tend to give this answer where they feel a bit of itch or snag. They have some concerns and they will drop these one by one like bombs falling during war time. During the discussion banker would dwell upon the easiest thing they can corral; that is collateral. Once you elaborate the type of collateral you are furnishing him then he would jump to the next C factor: cash-flow. Once again you will be at pains to explain him how you can tweak cash-flow to suit to his requirements in terms of debt- servicing. From here onwards the trajectory to get a yes is not so steep. You can get around his “But” to be dropped, provided you handle the situation well with facts and figures. Of course, your C-factors, that is, capital, cash-flow and cosmics all should work harmoniously

3. No, Yet: On the face of it, “No, yet” response appears to be a negative one. It is not so. A banker tends to give this response where he cannot say an outright no. There are reasons for this not so negative response. He fears that you might leave him or he knows that he financed similar proposal that is not doing well or he feels that if you are genuine about what you are asking for you can modify your proposal. When this response is made do not despair but use the window of opportunity to explain about your commitment to stick with the proposal as amended mutually between you and the banker. You must assure him that if there is a case of any previous failure the bank should not apply blanket treatment to your proposal. You have to convince him that you are able to address all his concerns. From this “No yet“, answer you must get double promotion to a strong yes. If this is not happening then you are to be blamed because you have failed to understand how your cosmics work to your advancement. A simple example is that you went to the bank in casual dress rather than in formal manner

4. No: This is the one you dreaded most and you have it now. Poor soul. What can you do? Fly in rage and blame the banker for economic recession; blame your accountant for preparing figures that could not withstand tests by the banker; or blame yourself. This is not a defeat though. You can re-make the proposal to this banker or another. You can improve your business. You can change your outlook. You can understand and evaluate your cosmics to succeed next time.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Should Partnership Profit be Divided Equally among Partners?

Business partnership makes profits and such profits must be divided among partners in an equitable manner. Despite this moral rule most partnerships divide profits equally. But does this equal division of profit is equitable or justifiable? My analysis and recommendation is given below:

1. In a partnership business partners contribute in two ways: one is giving part of their money as capital; other is demonstrating interest in the business. However, there is no reason to expect that every partner will have the same level of interest. Some partners take active part while there are instances where you see a non-active sleeping partner. Let us assume a case where you and your spouse are partners; your spouse does not actively engaged in the business but minds the hearth and bed at home. Can you divide the business profit equally? Even if your wife has contributed equal amount of capital it is not possible businesswise to divide profits equally

2. There are instances where partners contribute different amount of capital to begin with. In this case nobody can insist that partnership profits must be divided equally.

3. Partners open two accounts in the books; one relates to the capital and other one is an operating/current account. Normally capital account is fixed. At the time of appropriation salaries or commission payable to partners are credited to the operating/current account. Even though partners contributed, let us say, equal amount of capital the current account balance may vary from partner to partner. Some partners withdraw money and others leave it intact. A partner who has left more money in this current account, contributes indirectly to the capital funds of the partnership. Therefore, it is not morally right to divide profits equally. My argument is that both capital and current account must be augmented to arrive at a consolidated amount and profits should be shared in the proportion of the present capital funds available rather than on the original capital contributed. Alternatively, the capital account must be made fluctuating and the partners must be given a right to transfer any surplus available in the current account to this fluctuating capital account. Thereafter, profits must be shared in the proportion of the fluctuating capital account balances

4. Yet another issue is about compensation payable to partners. In many partnerships, this factor is never taken into account in dividing profits. For example, a business must employ someone to do the sales. If you have a partner doing sales then he must be paid allowance/commission. Assume there is no such compensation is paid; in that case it is against all the principles of business to divide profits equally

5. You can have several partners; but the real operation is minded by one or two partners. In case there is a managing partner, he must be paid emoluments in correspondence to what the market pays. Assume that he is paid a meagre allowance, can the partners decide to allocate profits equally. It is a cardinal duty to pay man’s wages in a proper manner

6. Not every partner can bring business or nurture customers and clients. Among partners there could be one person who holds a magical wand. He has the charisma and personality to get going with people and situations; a kind of a doer. He possesses cosmics that attracts the customers and turn sales opportunities into fruition. Such partner has cosmics that shape and influence partnership business positively. If he goes away the partnership would also wither away. If you are a partner in this business would you insist that profits must be divided equally?

The conclusion is simple. No partnership should divide profits equally but equitably. In the latter case you have to examine the contribution by each partner in terms of capital funds, level of interest and the aspect of cosmics and arrive at an equitable manner in dividing profit among partners.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Three Ways of Buying into a Business

 

The difference between buying a business and buying into a business is very simple. When you take 100% stake you buy it. When you take less than full ownership you are buying into it. This rule does not apply to large companies or listed ones. Let me elaborate three ways of buying into a business:

1. Making a Strategic Partnership: This is the time tested method of buying into a business. Instead of taking large portion of the shares or equity you lock in for a 25 to 30
% stake. Before getting into negotiation with the prospective business owners you should evaluate what kind of synergy you will have in partnering with them. You must concentrate upon several aspects chiefly, marketing, operations, human resource, systems and finance. Strategic partnership is only possible where the interest of you and the present owners can tally together. By any chance there is no interest tangent possible between you and the owners then you should not proceed further

2. Floating a Joint Venture: In this case you buy out 50% of the stake of the current owners and morph the business into a joint venture. Joint Ventures often called as JVs, though not very common are very effective means of combining strengths of two parties. Similarly unlike in the case of strategic partnership you would not be wholly concerned with the past performance of the business. It is the future that matters. How the business under a JV would turn out to be is a cardinal question. Such JVs must eliminate if not neutralize any current weaknesses of the business and maximize the future strengths of the business. For example, let us assume that the business order book is fairly seasonal; this is a nagging weakness now. After the JV is floated you must be able to alter that seasonal nature of sales and generate regular orders throughout the year

3. Taking Majority Control: A popular method often sought after by prospective buyers is taking majority stake in a business. Such a majority can come about if you take 51% or more of the equity. To be on the safe side it is always better to take between 60 to 70 % of the equity control of a target business. In this case you have to handle two issues: one relates to what to do with the minority shareholders or owners, the other is to see how you can handle transition of control from the selling party. It is common knowledge that once controls changes hands there would be quite rumbling from the minority. They generally resist changes and fear that the new management might neglect their interest. You have to be ready to face this situation and must make every effort to take them into confidence. You have to treat them equitably as well. The second issue of transition tends to be much tougher. You have got too many irons in the fire. There are parties like customers, creditors, staff, lenders, bankers and host of others who like to be assured that the new management would not act counter to their interest and purposes. Moreover, seamless integration of the business systems prevailing in the target business including finance, operations and marketing into your own systems could be a nightmare.

4. Choice: What is the best way of buying into a business depends on the amount of money you have and the level of contribution the target business could make towards your own objectives. More than anything else, you should evaluate a key driving force. That is your cosmics. It is better for you to choose the appropriate method by evaluating your cosmics. You know, that, cosmics are aspects residing within you shaping and influencing your business throughout. If your cosmics support a simple ownership with benefits you settle for a strategic partnership. On the contrary, if your cosmics dictate that you should go for high risk taking then choose either JV or majority control whichever that suits you fine.

 

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog

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Seven Steps in Preparing a Business Plan

Business plan is a vital document for any type of enterprise. It serves two purposes: one as an internal guidepost and the other as an external statement of purpose. You can easily prepare a business plan if you follow the seven steps listed below:

1. Look Out: The first step in preparing your business plan is to just look out at the environment. You see what is happening in political, economic and social spheres. You find out what your competitors are doing; anyone is closing shop and any new entry into your field. You watch how products similar to yours are performing in the market. All these can be summarised in two words: Opportunities & Threats. Management analysts place a major emphasis on understanding and evaluating opportunities and threats facing a business. Once you get a hang on this subject you can move on to the next step

2. Look In: This step is all about self-examination; the reverse of what you have been doing in the first one. Here you are assessing how you can respond to the status of affairs prevailing in the external environment. How are you positioned; what do you have; what you should get rid of; how do you optimize pluses and minuses. This stream of activities can be summarised in two words: Strengths & Weaknesses. These two are pitted against the opportunities and threats explained earlier. Once you identify and evaluate your strengths and weaknesses you can find a via-media to maximize your strengths and minimize your weaknesses

3. Set Objectives & Goals: You have already learnt much about external and internal aspects. Now it is time to find out what kind of tools you have to make external opportunities work in your favour while at the same time ensuring that you are not unduly threatened by external forces. Moreover, the tool must ensure that you can maximise strengths and minimize weaknesses. This tool is known as ”optimization of business”. In optimization you begin to set objectives and goals. Objectives are set in broader qualitative terms, for example: business must achieve higher market share. Goals on the other hand zoom in the objective into a specific quantitative measurement. For Example: business, must achieve 25% market share. Objectives and goals vary from business to business. Broadly these cover : Quantum of sale; market share, product quality, product differentiation , customer service, diversification, best practises in managing resources within business including human resource, physical assets and financial assets

4. Craft Strategies and Tactics: Once you have set objectives and goals for your business, you must proceed to formulate strategies and tactics. Strategy is a broad area of approaching the objectives whereas tactics are narrowed down field for you to achieve the goals. As an illustration look at your objective of achieving higher market share; here you prefer to use a strategy of advertisement & promotion. Conversely, your goal of achieving 25% market share is best attempted via a campaign tactic focussing on aggressive marketing. By the time you are in the middle of the campaign surely your competitors follow suit. Hence, the usefulness of this measure is just tactical for the moment

5. Put it in Writing: As you get thorough knowledge and understanding you can put your thoughts in writing a business plan for you. This plan highlights all the aspects covered so far and includes all key facts. Additionally, you include mission and vision, monitoring and evaluation of the business plan, sub-plans for critical sectors such as marketing, operations, human resource, information systems etc..

6. Dress it with Figures: The most difficult step in the process of making a business plan is to reduce everything into figures. You are comfortable with facts, bur when it comes to figures you shiver. Not to worry, you can do as much by trying it alone, or following a standard business template or in extreme cases you can hire an accountant to cast figures for you. Remember figures are necessary as they stand as bench mark for you to do monitoring and evaluation later

7. Time it well: The final step is about time; everyone knows time is in essence; time gives you relief. We call this cosmics. There is time for everything. You have to push your button for business plan on the first day of January, barring any holidays. During January, you get a sense of new beginning and time to sit and think about your business plan. Cosmics of time in making business plan is like Christmas; it comes once a year.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Tips on Using Others Money in Business

Capitalism and Rome are not built in a day. It takes quite a while to build up your own business capital. Till such time, you have got to use others money. Here are some tips on using others money in your business. For easy reading, I have categorised using others money in three major phases: Initial Capital, Operational Phase and Growth Stage:

Initial Capital

At the time you start a business you need what we call as seed capital. When you are short of this money you must find alternative sources to supplement this shortfall. Here is a list of such sources:

1. Small Business Corporation. Most countries run a Small Business Corporation that lends portion of your capital in easy terms

2. Venture capital Companies: If you have an excellent business idea that can be turned into a successful venture you must consult with venture capitalists and obtain finance

3. Government Grants: In addition to provide loan capital there are grants made available by the Government Institutions for businesses

4. Informal sources: You can also get initial capital from family & friends on no-cost basis or in concessionary terms

Operational Phase

When you move into operational phase you get receivables and creditors. You will also require a whale of a lot of money for operational expenses such as salary & wages, utility and statutory payments. Here are effective tips:

1. Negotiate very favourable terms from your creditors. These terms should cover bulk discounts, extended period of credit, timely delivery schedule and stand-by measures

2. You should, as matter of fact, encourage cash sales and when you are faced with a credit sale you must ask for an advance; where you are getting bulk buyers on credit terms get some short of deposit from the debtors

3. Obtain a Working Overdraft / Operational Line: Banks generally extend working overdraft/operational line of credit for financing working capital. Your seasonal ups and down in money needed to finance working capital can be smoothened by this arrangement. Furthermore, these credit lines also offer safety valve in paying your operational expenses including salaries, wages and utility payables

Growth Stage

As your business notches up on to the growth stage, your money requirements change in terms of quantum and period. Now you need more money and for a longer duration in order to expand as well as to finance the growth of business. Here are good tips:

1. Go for a Fixed Loan/Term Loan: Generally banks and finance institutions offer term loans for long term capital requirements such as buying into fixed assets or improving existing fixed assets. In some cases you can also acquire new assets as well. In the latter case, there is an alternative in the form of equipment leasing

2. Issue Preferential Shares: These shares may be issued with a stated interest rate and made redeemable on a future date. I recommend the issue of preferential shares over equity shares because preferential shareholders are not entitled to take part in running of a business whereas equity shareholders can control the management of a business

But wait a minute. Do you possess the required cosmics for using others money in your business. If you have the right cosmics you can prosper on others money. What are cosmics? Cosmics are aspects residing within you shaping and influencing your business though these are un-seen and un-noticed by you. So first and foremost check whether you have supporting cosmics that enable you to use others money successfully.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Why Small Business Needs a Logo?

Most small business enterprises are run without a fitting business logo. When you ask a small business entrepreneur why he does not have a logo he would have a stock reply: I have no time to bother about petty affairs. More than a big business, it is the small business that requires a logo badly. Let me enumerate chief reasons why small business needs a logo.

1. Representation: A logo is similar to an owner or an employee. It represents small business to the people in the outside world. A business logo is ascribed living qualities. In commercial activities a business logo is just a party as the owner and his staff

2. Recognition: For a small business, logo functions as a brand. Commercial enterprises immediately recognise a brand; so do the customers, creditors, lenders, bankers and other business actors. A successful small business needs an appropriate business logo; vice versa, to succeed, a small business needs recognition and a business logo

3. Identity: A logo for a small businessperson is basically an identity card or a passport. He can just show the logo and gain entry into many places. Besides, a logo is unbreakably connected with the name of the business and the staff employed therein

4. Image Projection: Undoubtedly, a business logo projects the image of a small business to the outside world much more effectively than promotions and advertisements. It is true that you need both for initially getting into the attention of customers and clients. But once you achieve your goal in getting attention sustaining it requires a well-designed logo

5. Communication: Logo is not just a symbol, form, or lines and letters; it is more than that. A business logo essentially is part of business policy. It communicates the mission and vision of the business; its policies and practices; its commitment to uphold ethical principles of trade. Moreover, business logo conveys company strategy and directions to parties dealing with that business

6. Uniqueness: Every logo is unique, true enough. Yet there is something else in uniqueness for a small business. One with a well-crafted logo stands out among large numbers of small business enterprises; besides it automatically gets up-graded into the class of big business

7. Generates Responses: What kind of a response a logo elicits from those who look at it. Every day you see thousands of business logos. So what is the fuss about a logo doing something for a small business? The answer is very simple. For a small business a logo gets feelings of attachment, sense of appreciation, positive emotions, and rational calculations and finally “let’s try out this company” attitude in the onlookers

8. Transcends Time: Most business logos can outlive its creators and / or users. In the case of a small business it is doubly important because in small businesses there are more chances of changing hands or rapidly being wound up. Whatever happens, a logo transcends time and is passed into new owners and successors like a baton in a relay race

9. Fountain of Cosmics: Logos have inherent cosmic power; you can feel this cosmic power when you look at famous business logos; Apple, Coca-Cola, Google, IBM, Lego, Microsoft; all these are fountains of cosmic energy. These logos not only generate cosmic energy but translate it into cosmic power in the form of sales, profit, goodwill and a groundswell of positive feelings and emotional attachment to the underlying products. Conversely a business logo that is designed without taking into considerations of inherent cosmics could turn out to be very destructive to its owners and users. A good example is the Nazi Swastika that finally destroyed everyone connected with it.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

How to Improve Your Cash-Flow?

As a business person your main concentration is focused on improving your business and improving your cash-flow. There are so many blogs on the subject of cash-flow. Let me be different and give you a functional model on how to improve your cash-flow.

In a business there are three major functions: Sales, Operations and Purchases. Let us do reverse engineering and start with the sales function, meander our way through operations and arrive at the purchases.

Sales

1. Look at your sales model; you have cash sales which is now becoming something rare due to recession. In cash-sales you raise invoice, receive cash and deliver goods and that is all over. As a matter of prudence, you should give incentives to your customers who pay by cash. Customers would give currency, bank cheque or credit card. If the sales are on credit card it is the same process but the merchant who services your credit card takes out a portion of your sales income. You should negotiate with your merchant better terms for you. Whatever the form cash-sales help improving your cash-flow tremendously

2. A credit sale is a different ball game; you part with the goods but the payment is received after a lag of time. Here you have to control the following areas to improve your cash-flow:

2.1 Never overtrade with a single customer; broaden your customer base

2.2 Do not stick to uniform credit terms; be flexible in extending period of credit depending on the customers and situations

2.3 As you deliver goods see the bill/invoice is also delivered; for large amount insist on acknowledgement

2.4 Segment your customers into: fast payers, prompt payers, slow payers and non-payers. Always offer rewards to those who pay well before the due date or promptly on due date. As regards to the slow payers send them reminders at-least couple of weeks before due-date and keep on chasing after the due date. You should not deal with the non-payers except in getting your money back

Operations

Operational expenses can take two forms: internal and external; internal relates to payment of salaries, wages etc. while external covers areas such as utility and other bought-in services. Follow the guidelines to ensure healthy relationship with staff and expense creditors:

1. Pay employee salary and wages on the dot

2. Pay external bills only on the due date; never pay before it falls due

3. Get whatever discount you can have on prompt payment of the external expense bills

Purchases

Like in sales purchase is a critical area where your money is tied down. Ensure the following in improving your cash-flow:

1. Plan your purchase function very well; time of purchase and level of purchase should correspond to smooth functioning of your production/process department. Over-stocking is as bad as non-availability of input goods as and when required. Institute good inventory management system and ensure that no waste, theft or leakages take place

2. Negotiate best terms of your purchases in price, delivery and related matters

3. Monitor payables so that you are never behind payment

4. And you must make payment only on the date due or just prior to the due date in case of holidays etc..

Cosmics

In addition to the above three major functions, cosmics should also be taken into considerations. The above three are mechanical and business like functions. Cosmics, on the other hand, work internally and outside the realm of mechanics. You must make your office bathing in cosmic energy. There are several measures that you can take to harness cosmic power; one easy way is that you can keep gems & crystals to get that extra zing. Some of the gems & crystal recommended include: Garnets in several hues: chiefly red, orange, yellow, pink and violet; green coloured Aventurine, Calcite and Tourmaline.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Why You Need a Business Partner?

 

Of late, partnership form of business has become vogue in several countries. Partnerships are being formed straddling into several economic sectors including trade, industry and agriculture. Let us find out why you need a business partner now whereas you have been going solo for all these years.

Firstly, let me define what partnership is: A partnership is basically an arrangement between two or more persons who will act together in furthering their mutual interest in any trade or venture or business with a view to share profit or loss. A cardinal principle in partnership is that every partner is bound by the mutual interest which is sacrosanct. We call this as common interest. Therefore, it behoves partners to show interest in a partnership and avoid any conflict of interest. However, there is no reason to expect that every partner will have the same level of interest. Some partners take active part while there are instances where you see a non-active sleeping partner.

You need a partner for your business due to the following reasons:

1. Capital: In majority cases partnership is formed because one person alone cannot contribute the entire capital requirements of a business. Lack of capital is a perennial problem impacting initiation and growth of businesses. Even though we see sole proprietors abound in many sectors their scale of operations is fairly limited. Their growth opportunities are stunted. Therefore, it is better to bring in partners who can contribute additional capital requirements

2. Fixed Assets: There are instances where you require a property in the form of land or building for the conduct of a business. Instead of blocking your money you can co-opt the owner of such land or building as a partner in the business. Sometimes you may require a particular plant & machinery. Here again without resorting to bank loan or leasing you can persuade the owner to be partner in your business

3. Knowledge: Another reason for formation of business partnership is specific knowledge required by a business that is lacking there. In this regard let me submit to you two issues: One is that we are today in what we call as knowledge based economy. The other is that entrepreneurship is not necessarily knowledge based. You are an entrepreneur. If a particular knowledge base is vital necessity in your business then either you can resort to hire it or bring in the guy who has such knowledge as your partner. In highly competitive areas such as technology it is better to form partnership rather than opt for hiring

4. Skills: Yet another reason for bringing a business partner is skillset. You are running a business on government tenders and you are often confronted with your inability to liaise with government officials. You are too pre-occupied with the nitty – gritty of the operations and have not developed the liaison angle. Sincerely, you do not like to hang around with scheming officials. In this case you are well advised to get a guy or gal, the latter the better, to liaise with those who work behind the panelled tables in government departments

5. Connections: This is one of the smart reasons to take in that new partner who has wide contacts in the sector where you do your business. Contacts not only give you real business they can also give you what we call as business leads, that is, hints of potential business elsewhere in the sector

6. Companionship: A behavioural reason forming partnership is the need for companionship with another person for the sake of having someone else in a business. In some cases companionship turns out to be too vital that, business collapses without one. Companionship canopies contribution in areas such as business advisory, lightening business load, helping out in legal and administrative matters or simply just to be around. Some businessmen prefer an elderly person while some like to have a fair lady around

7. Cosmics: As you know cosmics are aspects residing within you shaping and influencing your business though these are un-seen and un-noticed by you. If your business demands cosmics that you do not possess it is better for you to get someone else who has this cosmic energy. For example in service and entertainment industry, you need a partner who has the charisma and can captivate hearts and minds of your customers by his mere presence.

 

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

How to Allocate Your Business Profit?

 

You are delighted to see that your business has made substantial profit at the end of the financial year. At this moment you face a problem. How to allocate business profit into competing wants? I am listing below the theory of three parts allocation:

In history and human thought kings, philosophers, prophets and enlightened tradesmen were using the number 3 as the number for trade and wealth. Even Hindu cosmologists considered the planet Jupiter as wealth giver and assigned it with number 3. Following their steps I am sketching for your benefit a three part business profit allocation method:

Allocate one-third of Profit within a Business

Business must grow from year to year. As each year passes you see the level of operations is rising. This entails additional capital requirements from you. There are two types of capital requirements. One is for purchase of new fixed assets or re-furbishing of the existing ones. This is called as capital expenditure. The other is additional investments in inventory and receivables which is popularly known as working capital. Both capital expenditure and working capital are combined together to enhance the capacity of the business to produce goods and/or services in an effective way.

Allocate one-third of Profit outside the Business

An age old adage obliges you not to keep all your eggs in one basket. It is true that your business is growing and needs more cash to grow faster. But it does not mean that you should put all your money in a single enterprise. Any novice knows that, it is better to bet on more than one horse in a race. In modern day risk analysis the fundamental theory is to spread the risk. So be wise. Park your one – third of profit in a different area. Maybe you can place it in bank, share market, gold or other investments. In some cases you may open a subsidiary to your main business and invest it there.

Allocate one-third of Business Profit to You

In the rush you have forgotten about you, your family and the society out there. As an owner of the business you need compensation. This we call as drawings in the case of sole proprietor and partnership and dividends in the case of limited liability companies. You have to live and run a household and attend to the upkeep of your family. More than that, you have to contribute some part of your income as charity to the society at large. Therefore, it is duty cast upon you to allocate one-third of business profit to you as owner.

Cosmic Balance

If you follow this scheme of allocation, you are in cosmic balance. There is a triangle formed: one is your business, other is your savings/investment and next is your own self. By following this three part allocation of business profit you will be able to get your cosmics working for you in perfect harmony. As you know cosmics are aspects residing in you and influence you and your business throughout.

 

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

How to Choose the Right Business?

 

Two third of the adult population of the world feel they should be in some sort of business. Undoubtedly, business seems to be the most alluring prospect for most if not all of them. The question facing them, however, is how to choose the right one. I am listing below in point form ten parameters on the subject of how to choose the right business:

1. Love: Unless you are really in love with a particular type of business never get into it. You must love it with so much passion such that, the business turns out to be an obsession for you. For example, if you really love gaming then casino is a better choice

2. Interest: There is a fundamental difference between love and interest; love may be blind but interest is always rational. An interest gets you rewards, financial or otherwise. For Example, you did geography in your college and very much interested in that subject. You can choose wide range of businesses from maps production to producing films on wild life. Just look at the National Geographic Magazine

3. Strengths: You have to choose a business that optimizes your strengths; assume you have a tendency to judge people and feel at home in talking to them and/or working with them. The business of head hunting would suit you fine

4. Skills: You know skills are manifest forms of strengths and could be applied in a situation. Let us assume that you have mathematical skills along with problem solving flare and being computer savvy you can easily start a software house

5. Personality: Personality is a great arbiter in choosing right business. You are an extrovert personal; never fails to wear that broad smile on your lips; always attentive on the whims and fancies of others. In your case running a stall in a supermarket is an excellent proposition

6. Lifestyle: This aspect varies a lot from person to person. Assume you are an outgoing person; has a flair for fashions; typically a ladies man. So for you anything between fashions to perfumery would work well

7. Family Background: Over generations families develop what we call as genetics. These include manners, behaviour, predilection and choice of vocations etc. If your family background is in growing vineyards and being conservative with a healthy respect for traditions then it is better for you to start a vintage liquor business

8. Networking: People who have countless contacts and have the ability to befriend many more are good in networking. If you fit this bill, then get a business in advertising or distributorship of consumer items

9. E-Factors:

Education:  A business that you choose should uplift your educational qualifications. Furthermore, you should do something commensurate your status. Never go infra-dig and start sundry businesses that spoil your name and status. Good example is an MBA should never choose a Xeroxing shop

Experience:  Always optimize your experience in case you have worked somewhere before you thought of going it alone. If you have worked as a journalist, it is easy for you to select magazine publishing

Exposure:      A combination of education and experience applied in a given situation is known as exposure. You can have exposure to people, matters, or specific agendas. If you are exposed to areas of high level negotiations in political or diplomatic field you should find a consultancy on crisis / conflict management

10. C-Factors:

Capital:       Business requires a whale of a lot of money. Always select business that can run at-least for the first year with low level of capital contributed by you alone

Cash-Flow:  Unless the expected cash-flow from business is sufficient to meet your personal expenses never get there

Cosmics:       Finally cosmics make you the successful businessman in a particular field or sector. Cosmics are aspects residing within you shaping and influencing your business though these are un-seen and un-noticed by you. If your cosmics dictate that you should open a jewellery business do not get into a business that sells shoes.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Ten Steps in Getting into a Business

 

Congratulations. So you want to get into a business to become a successful person. Right you are. And you said you want to know how to set about. Here are ten steps you can follow in getting into a business:

 

1. Understand the equation - Market & You: You cannot exist without a market; neither the market can survive without people like you. Both the market and businesspersons like you are entwined in making economic goods and services. You produce the goods or services the market wants and at the same time you consume raw materials and labour provided by the market in processing and finally sending the finished goods out of your factory gates. On one hand you are a producer and on the other hand you are a consumer or user. This relationship can be further analysed; next five steps relate to the market and the last four steps relate to you as a business person

2. Find the Market: Now that you understand the equation “Market & You”, find out what is the type of business you want to get in. In other words you must zoom in on a particular industry or sector. There are several sectors and even more sub-sectors. Let us assume you want to get into technology and narrow down to electronic chips and further narrow down to the production of a chipset for mobile phones. Now you can do the research to find out the annual demand of the product industry wide, country wide and state wide. You can also research the ways and means of providing a chip that is durable, affordable and of superior quality

3. Check Market need and how you can satisfy it: In your research you found that there is a huge need for a chip that has multi software functionality. You also feel that you can produce one that has this functionality

4. Look at the competition: You have got a product; it is time for you to look at your main competitors. Some of them may be multi-nationals or regional heavy weights. There may be still room for your product. Certain manufacturers would not like to tie up with big timers but with specific part suppliers whom they consider as captive groups. You can get few of them lined up as prospective buyers

5. Assess Market Potential: No point putting all your efforts in turning out a product if the market potential is doubtful; if the quantum demanded is below the break-even point; if the product demand is seasonal; if the product cannot be co-opted into wider use. Attractive market potential gives you a big fillip so that you can fashion your own product

6. Morph a Unique Product: Your product must have what they call in the industry a signature. A novel product that has unique features so that the buyers feel that they have got the best bargain in purchasing your products

7. Evaluate Your Capacity: Up to now it is all about the market; here comes you as a business person. First question you have to ask yourself is whether “Do I have the capacity”. Your capacity can be manifold: technical, managerial, operational, financial etc. You must not only produce the best quality product but be able to get the delivery going un-interrupted

8. Mark it as Your Obsession: Forgive me for using the word obsession. I could have used words such as inspiration, ambition etc. I am deliberately writing about your obsession because that is what you need. You must do your business as if you are possessed buy a spirit and go pell-mell in getting ahead in your product and business. For you nothing matters other than the product you are making and the business you are running

9. Write & Review Your Plan: Put your thoughts in writing; make a plan of the market, the need, your product, your operations, finance, marketing and host of other items. Write your business plan is well. Review it a number of times. Reflect. Discuss with your family and friends. Get advice. Do you feel something missing?

10. Know Your Cosmics: In most cases the missing link is your understanding of your cosmics. Everything looks good in black and white. But what is your gut feeling? Do you think you can make it? Perhaps the best way to check is to understand and evaluate your cosmics so that you can employ cosmics to your own advantages. You know, that, cosmics are aspects residing within you shaping and influencing your business throughout.

Wish you the best,

 

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

What is Your Business?

Very often you are serenaded with questions such as what do you do for a living? Are you working? What is your Job? Nobody asks you the question what is your Business even though you are engaged in some form of business already. It is because the society as a whole is so workaholic that it expects every other guy to work for somebody. It is time both you and society change track.

Basically, business relates to what you do as independent business, profession or vocation which you own fully or partly. An independent business is what you do on your own as sole proprietor or in partnership with others where you are the managing partner or by forming a limited liability company where you hold major/controlling shares and run the company as chief executive officer.

In corollary you can engage in an independent profession owning fully or partly. In accounting profession you see a solo practitioner as well as accounting partnership. Vocations such as carpentry can also be conducted by single person or in partnership or by way of a limited liability company. Whatever the form or structure a business demands a lot of discipline not seen in doing a job under someone. Some key characteristics of being in business are described below:

1. In business you are constantly on the move or busy in your office handling various issues, questions or problems or placed in un-comfortable situations

2. You are expected to make the right decision at the right time.

3. You have no peace of mind

4. Your work is often carried to your home in the evening after the doors of business are closed for the day

5. Your commitment to your business is total and over-rides your responsibility to your family

6. There is no specific working hours

7. You are a proud owner of an entity that provides distinct economic service to the society and country

8. You have a higher discretionary income compared to the guys who are working 8 hours a day

9. Successful business life does not depend on your just being lucky; but lot of hard and smart work and proper direction you take on your own wisdom or as counselled by a neutral adviser

10. Finally, your cosmics have given you an opportunity as a business person whereas many of your colleagues and fellow graduates are languishing somewhere working for others and eternally blaming everything except them. You know, that, cosmics are aspects residing within you shaping and influencing your business throughout.

Next time someone asks you questions other than what is your business take pride and tell them bluntly that you are “CEO of the Business you own”.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

In Business, Turnover is Vanity Profit is Sanity

 

Turnover relates to net sales of a business, whereas profit is the bottom line of a business. Many businesses go wrong when they over-drive on turnover at the expense of profit. So the maxim: Turnover is Vanity and Profit is Sanity. Let me explain how this situation comes about.

Firstly, let me define the terms turnover and profit:

Turnover: In any business sales less sales commission and trade discount is treated as turnover. This figure is generally shown for a complete financial year of 12 months. In mid-way of a financial year this figure is shown as turnover to date or turnover up to such a month. Turnover is the first and primary figure one should look at

Profit: In a business profit is shown in two different ways:

Gross Profit: Turnover less Cost of Sales equals Gross Profit sometimes referred to as Gross Margin. Gross profit is often shown as a percentage of the turnover

Net Profit: Gross Profit less Operating and Financial Cost equals Net Profit, sometimes referred to as Bottom Line or Net Margin. Net Profit is often shown as a percentage of the turnover. In this blog profit means Net Profit

Turnover is Vanity: A business must ensure that turnover grows from year to year. The basic parameter is that it should make sizable gross profit from its operations. It has to cover the cost of sales by a wide margin so that it can absorb operating cost as well as financial cost and return an attractive net profit. When a business goes on over-drive and increases the turnover but at the same time decreases the gross profit percentage, the situation is bad. To support the increase in turnover the business would offer extended credit terms. For example if normal credit terms offered are for 60 days, the business is inclined to double the offer to 120 days. Moreover, to support increase in turnover the business would hold more inventory than it used to be. Both developments mean more money is tied up resulting in increase of financial cost. But there are exceptions. In a business where the goods sold are of low value, it is necessary to have large turnover to ensure a safe bottom line. Caveat: Do not have vanity in jacking up turnover at un-manageable level.

Profit is Sanity: Whatever the level of turnover, it is the bottom line that matters. A business must manage its level of turnover keeping a sharp eye on the percentage of both gross profit and net profit. There are instances where you get high gross profit percentage but it does not lead to a high net profit percentage. In this case either operating cost or financial cost or both spiral up sponging all the profit of a business. From another point of view let us assume a business where the goods sold are of high value. Here, it is necessary to have reasonable turnover to ensure an attractive bottom line. Sanity prevails in a business that constantly monitors the turnover level as well as receivables & inventory level as against the cost of credit. Needless to say, healthy bottom line makes a business vibrant and indicates solvency in the short term. Furthermore, it impacts positively on the growth momentum of the business.

Choosing the Right Mix: How much shall be the turnover and how much profit could be made out of this turnover is purely a business budgeting exercise. But in most cases despite all these admonishing of “turnover is vanity and profit is sanity” businesses do get the mix wrong. Three reasons cause this problem:

1. The planning and budgeting department has not done its job well

2. Owners / directors are just crazy or egoistic or megalomaniacs

3. Cosmic balance is lackadaisical; cosmics are aspects that are beyond facts & figures but still influence the conduct of a business; cosmics reside in every individual and by extension in every business. A business that understands its cosmics can choose the right mix of turnover and profit to enhance its survival in both short and long terms.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Seven Reasons why Business Fails

 

Business fails due to several reasons. Many of you might have some experience, somewhere in your life, in going through the mill when faced with a business failure. Let me re-visit and re-hap seven reasons of business failure:

1. Not doing the maths right

Business is all about numbers; you buy or manufacture a good in monetary terms; you hold it in inventory in the interregnum which costs you monetary figures; then you sell the goods for cash or credit; if it is cash money flows in straight away; if it is credit the period of such credit costs you bank interest which you have to pay. Everywhere you turn you see numbers. Beginning from the planning stage to the final implementation of your business plan you are slapped with numbers. Errors could creep somewhere in the value line. Perhaps you got it wrong at the time of purchase or bungled with a customer who turned out to be a bad debtor. In summary if you do not concentrate on facts and figures your business is vulnerable to failure.

2. The Big Picture is lost

Business is worried about survival in the short term entailing in constant fire fighting in the marketing and production departments. Marketer wants to cut price in a short term deal with a new buyer; production department grumbles because lowering price means either lowering quality or reduction of manufacturing profit. Then the existing buyers come to know and they too demand price revision. In the long terms there is chaos and the business starts to flounder.

3. No reverse engineering in the Value Chain

If you see your income statements, prominent and first figure is Sales or Turnover. Fantastic. But when you start the internal value chain you start with the production. You manufacture or stock the goods first and then find out how to sell these. In this case the value chain goes from production to marketing. When the value chain begins from marketing and then comes to production it is known as reverse engineering. While doing your annual budget you must first ask the questions what the market demand is and how it will work out for you. From this point you must run on reverse gear and find out how you should make your production satisfies this particular market scenario.

4. Not focusing on Core Business

In every business there is an area known as core business. A tobacco company has core business in the form of cultivating, processing and making cigars or cigarettes or tobacco for pipes. When such a company sees there is opportunity for inter-cropping tobacco with other vegetation well and good, it must go ahead. What happens is after sometime the other vegetation demands more time, resources and management attention. It is a classic Pareto rule. Twenty per cent of the production takes eighty per cent of the management time. Finally the core tobacco cultivation suffers resulting in a business failure.

5. Relationship is in shambles

Most cases business fails because it did not handle the human relation within the business properly or customer relationship outside the business properly or both. Today there is immense value placed on the relationship angle. A good relationship model should cover the stakeholder concept. Business stakeholders include: owners/directors, staff, customers, creditors, government, and society at large. Owners/directors should conform to standards and ethics and give proper directions to staff and make human resource pool happy and contended. Satisfied staff performs duties well, resulting in: Retention of customer loyalty; Retention of human resource pool; Improvement in profitability & growth of companies; Contribution of taxes and revenue to government; Involvement of the society at large. When this does not happen the relationship is in shambles and a business fails.

6. Cash-flow is the king, but he is dethroned

There is no doubt cash-flow is the one that keeps everybody going: owners, staff, creditors and debtors, government and society. Constant monitoring and progress chasing keeps the cash-flow intact. It is like oiling a machine to be in good state of repair. If you do not oil the machine breaks down one day. Cash-flow must be a continuous entity. Productions can take a short-break in between shifts; sales can take a holiday. No interruption in Cash-flow, never. Business fails because it dethrones the cash-flow and allows it to trickle and dries out finally.

7. Cosmics are not helping

All the above reasons are mundane; there is something beyond the realm of this sphere. Even after doing everything right still a business fails; no mundane reasons can be ascribed. This is where cosmics enter the picture. Cosmics are aspects residing in every person and as an extension in every business. Some businesses are eternal, for example, Columbia Pictures even though it has changed hands. There is something in that; may be it is the picture of a woman in white and flowing dress holding torch in the right hand; or maybe the pyramidal six step platform on which she stands. Cosmics can arise in different ways. You have to understand cosmics and turn it to your advantages. If this does not happen then cosmics are not helping you. Then the business fails no matter what remedial steps you take to arrest the failure.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/