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At last – a solution to all ills (not)

It was always going to come to this, of course, when you think about it. With our capacity for scientific and technological exploration and advancement limited only by the confines of the human ability to dream – one day someone was always going to be able to ‘square the circle’ between communism/socialism and capitalism.

In other words – on the one hand – reconcile the right of millions of ordinary people to share adequately in the profits of their employers – or alternatively, work less hours (e.g. only those of their own choosing and then only when they felt like) and yet at the same time receive enough money from either their employer and/or some organ of government to enable them to buy any food or luxuries they felt entitled to have – and – on the other hand – the rights of others imbued with a free enterprise spirit to invent stuff and/or business models; take the manifold risks associated with setting up their efficient manufacture and then the marketing and selling of them for what some might seem potentially obscene amounts of reward if things should happen to go particularly well.

I used the phrase “efficient manufacture” deliberately in the paragraph above.

The fact is that – next after having what some might regard as far more than your share entitlement of sheer luck – success in running any business depends as much upon its ability to organise itself to best advantage – e.g. by attracting the best people possible to work for it; devising an administrative system that ‘works’, not least in getting its good or services out to customers (and then securing the proceeds of sales as completely and swiftly as possible); investing wisely in ongoing research and development and marketing; and, of course, (in the 21st Century) creating a brand that has the wildest possible appeal – as it does upon coming up with a whizzo idea in the first place and working 24/7 against all the odds.

In short, in both planning and execution, keeping your costs down matters as much as if not more than the selling of your products or services. And maintaining your profit margins.

I once worked as CEO of a potentially successful company founded by a woman who had a fatal flaw – she didn’t understand the distinction between sales (turnover) and profit. She thought they were the same thing.

Two things resulted: firstly, she regarded winning business as the ultimate, only goal; and secondly, she assumed that, once new contracts had been won, thereafter success and profit would automatically follow.

Thus the business secured more and more sales (at decreasing profit margins because to win contracts there was no price below which she was unprepared to go in winning business) and progressively made less and less profit.

At one stage I called in a marketing consultant to advise upon how we could improve our performance. After a spell examining how the business operated, he came back and told me his first recommendation.

He said that – as with so many founder-run businesses – it was to that we should shoot the owner.

To use the analogy of a food supermarket, she was the type of person who, whilst possibly capable of running a high street corner shop, was totally unsuited to running a chain of them, let alone a monster like Sainsburys, Waitrose or Aldi.

My father was a senior partner with one of the Big Four UK accountancy firms. He gave me two pieces of business advice that have stayed with me these past forty years.

The first was that whenever a client or potential client brought him a business plan, in order to get anywhere near a realistic practical version, his first moves were always to halve the profit projections and double the cost ones.

The second was that the quality of employees is a vital component of any successful business.

The fewer and better they were – in intelligence, drive and efficiency – the greater the chances of success.

Why? Because people inevitably bring with them complications and problems.

The ideal business would have no people in it at all!

I was reminded of some of these things today when I came across the following piece by Kate Ferguson, senior political correspondent, upon the website of the – DAILY MAIL

 

About J S Bird

A retired academic, Jeremy will contribute article on subjects that attract his interest. More Posts

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