We are noticing a spurt in the rise of entrepreneurs in our country. It is a healthy and a welcome trend. Entrepreneurs generate opportunities for employment, produce goods and services for the economy ,promote new business ideas and take responsibilities to be the torch bearers for next generation of budding Business Men.
Initial years of an Entrepreneur is dotted with Investments, use of new technologies to support his/her business ideas and promoting their brands. However, during their journey of new enterprise , they most often experience hurdles which causes stress on the cash flows and begging for increased borrowings. Most often such hurdles are a product of negative incomes ,improper production planning and product pricing.
I take this opportunity to share my experiences of providing total solutions through Business re-engineering of various activities that Influence a business. Many a times we hear that there is a serious financial problem in an enterprise and additional dose of capital, mostly in the form of debt, was induced to solve the problems. Finance can never and will ever be a panacea for Business problems. Indeed, inducing debt can further aggravate cash flow problems ,. Let me explain with an example. ABC Pvt ltd is a manufacturing company engaged in manufacturing of automobile components to Large OEM’s. ABC pvt ltd has obtained adequate working capital and term loan for machineries from financial institutions. After a year or two they start to experience negative incomes, (loss).Can this problem be solved by fresh capital ? Definitely not. Until health of the business unit is not restored.
Health of an individual is a direct functions of all organs in his body working together and in a best condition. Likewise, health of an enterprise is a function of various activities of business to work in tandem to their best abilities for a given objective . Hence a function of the business or few functions of the business cannot be responsible for proper health of an enterprise. Every enterprise or business unit must understand all the activities which are needed to a run a business. In my opinion all activities such as purchase, Inventory , production, HR, finance, marketing, pricing and statutory compliance are important activities that govern the business, Each of these activities bear a cost and only when we understand in totality the cost structures , we can then appreciate Business. I term this process as Understanding Economics of Business.
Economics of business deals with decisions involving economic parameters which influence your business . My next blog will explain the Economic Concepts of Business with Examples and Case Studies .