5 Business lessons I learnt from my family shop :
When I was growing up in my hometown, at the age of 11 I started going to my family shop, the shop which my grandfather so passionately started. I was intrigued to see the trust of the customers coming from interior villages. We had repeat customers and to this day their descendants come to our shop. Today, as I look back having lived in Mumbai for over 12 years, and having relationship with the most famous CEOs, I come to the real conclusion that I learnt my first important lessons in business from this family shop. Those lessons are permanently edged in my DNA.
Here are the five building blocks I learnt from my family shop :
Cash: I learnt how important the simple concept of cash flow is. Without money coming in to our door, we knew our business would fail. If you don’t have more cash coming in than cash going out, your business will collapse. Look at Amazon, one of the pioneers in internet based retailing or Ecommerce. When they started, they didn’t carry an inventory which gave them a huge cash advantage. Amazon generated cash which they used for marketing and generating more cash.
Margin: I discovered how keeping the cost of selling clothes low would yield higher profit margins. Companies that do well pay a lot of attention to margins. They see whatever action they take, how it impacts their profitability.
Velocity: I saw that by moving the shirts out of the shop faster with better velocity more money could be made. I realised that if there is anything that can kill us, it would be slow moving, ineffective stocks.So we tried to maintain the average shelf life of the stocks as low as possible.
Growth: I understood that by growing responsibly both in size and market share, my family shop could serve more customers with better care. Growth without increase in money making is no growth. You can grow revenue without growing profit but it drains the life blood out of business. Don’t get obsessed with growth compromising profits. Growth is good only when it is done profitably.
Customers: Finally you have to know the customers, not just the numbers. It is the customers who provide, cash, margins, revenue and growth. You need to observe with a keen eye, what kind of products they liked, where were they coming from, when they bought them, why they came to us and not others, is critical for any business owner. You need to take a street vendor approach. A street vendor is extremely well tuned to his customers for sheer survival.
Master these 5 building blocks. Always, always have the shopkeepers mentality, no matter where you reach. Always be a dukaandar.