Nepali Times
Strictly Business
How to ascend in recession


At an Entrepreneurs for Nepal talk in February, Min Bdr. Gurung, the owner of Bhatbhateni Supermarkets, assured the audience that bad economic times are good for starting a business in Nepal.

Gurung argued that since bad times make competitors scale down operations, entrepreneurs must take the opportunity to offer new goods and services that are likely to be valued by the market. He cited examples from the US and the UK, where bad times gave rise to the birth of companies that eventually became global powerhouses.

To be sure, well-educated Nepali entrepreneurs are good at figuring out the 'what' of an opportunity. They understand the gaps that lie between what is demanded and what is supplied. But in the absence of mentoring, and of regular public sharing of business know-how, what they often lack is a sense of the 'how' - that is, how to master a set of street-smart tactics that help them execute actions to profitably grow their ventures.

For help, they may flip the pages of The Knack, which, with its focus on business fundamentals, gives a set of coping mechanisms for entrepreneurs to deal with "whatever comes up".

The book, written by Norm Brodsky and Bo Burlingham, two small-business owners and long-time columnists at INC magazine, cautions entrepreneurs to not confuse making more sales with growing their businesses. What matters is making higher margins per sale. Higher margins make it possible for a business to cover its overhead expenses.

The authors' advice to entrepreneurs is unconventional: they advise sticking to a niche within a well-established industry where there are many competitors rather than doing something entirely new. They point out that educating the market about new services and products requires lots of money, and that people who try to implement new ideas first often end up watching those who entered the market second raking in the most profits.

Caught up in the hype about sales, small businesses can be lax about collecting what's owed to them. This leads to their not having enough cash to pay the bills. The authors give tips on how entrepreneurs must play the role of internal bankers, learn to view receivables as "loans made to customers", and set out a strategy to collect money by not doing more than 10 per cent of the business with any single customer.

Being in business is about engaging in negotiations most of the time. The book's chapter on negotiation suggests making concession on a secondary matter first. That gives an entrepreneur a higher leverage when negotiating the primary deal. Besides, since reputation is everything in a competitive business, the authors advise entrepreneurs never to bad-mouth competitors, and not be a sore loser when customers decamp to other suppliers. When customers leave, it's usually because they are tired of being taken for granted.

With regard to pricing, the authors advise raising them from time to time. This helps the entrepreneur to keep up with rising costs. As for dealing with employees, it's best not to think of them as one's social friends. A certain distance helps keep emotions out when dealing with personnel problems that affect businesses.

Successful entrepreneurs such as Gurung know the contents of the book instinctively because they've had countless opportunities to learn from their mistakes and to continue to sharpen their business acumen. But for others, who have already started their businesses in these difficult times, keeping a copy of the book on the desk, will be a reminder that underneath all the hype and bluster, running a business is all about quietly paying attention to the fundamentals.

(11 JAN 2013 - 17 JAN 2013)