IS IT EMBARRASSING TO ASK FOR HELP WHEN SALVAGING YOUR BUSINESS: A CASE STUDY...

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I came across a very interesting incident sometime in September of last year. I have been meaning to pen this for some time, but never got around to doing it till now.

During and after the Pandemic, business owners are going out on a limb trying to salvage their companies. While this is indeed commendable, however, sometimes, they are putting good money into business that has gone beyond the scope of being salvaged. Most of the time, it is because, these businessmen having built these companies from scratch and feel the pride, and the sentiment towards the said business. No matter how dire the situation, they feel, that by asking for help, they are admitting defeat.

But it’s not so, in any way. As the saying goes, “The one who asks, receives and prospers. The one who doesn’t, stays in the dark”.

THE CASE STUDY

This particular case study involves two of our rather old clients. For the purpose of this Case Study we We will name The clients A and B. A has been a client of SKB from 2009 and has a very successful food based manufacturing company.

B has been our client from 2012 and is one of the foremost Distributors within the Food industry locally and internationally. B was actually introduced to us by A as they have been good friends for a very long time.

THE PLAYERS OF THE CASE

COMPANY A

As we all know, from April 2020 all companies took various dives in business volume that led to immense losses coping with the Pandemic. A had several major problems as starting with their production volume. Due to the various restrictions, delay in importation of raw materials and the unstable labor issues that went with the pandemic restrictions their production suffered quite severely.

Business became unpredictable as they did not know how to stabilize their production schedule. Another problem that arose was the shipping of products and International buyers. Demand of products had reduced by 47% as most International buyers had to hold, postpone or even cancel their orders, being simultaneously affected by the pandemic.

Overhead expenditure too became harder to maintain as revenue had dropped drastically. The client did not want to reduce his workforce as they have been loyal to him and have been with him for a lot of years.

The problem was that the produced goods were moving out of the gate 50% slower than it should have been moving. By the end ?of 2020, the situation reached a stage where he had to trim 30% of the workforce. We suggested instead of that why don’t we take a 20% salary cut across the board. That would serve as the required savings and yet not let go any staff at this crucial point.

Expecting the rate of dismissal, the staff were very relieved with this option and happily agreed to it. This was a temporary measure, as our main problem was to get the produced goods out the gates of the Factory the soonest possible.

COMPANY B

?B on the other hand is an International ?and National Distributor of various products and consumer goods. They have been in Business since 1989. Similar to company A they too had a severe drop in Revenue since April 2020 due due to the closed borders, international distribution was halted for some time.

The problem become worse when some of their major clients started closing down. Without a steady stream of products they could not handle their distribution responsibilities and as a result their business too dropped by over 45%.

THE CASE STUDY

Now the thing is Company B had a huge requirement for products being manufactured by Company A and Company A needed their products to move off the production floor or they lost money. However, due to their hard hardheadedness neither admitted to the other that their businesses really required help.

As they have been good friends for that many years, it was a matter of pride and ego to assure the other that their businesses were doing Great despite the Pandemic. As a result neither brought up the subject that they needed each other’s help.

THE ANALYSIS

When we were brainstorming with Company B, we were shown the request for their current ?distribution requirements. We at SKB were ecstatic, as we knew that Company A would be perfect for the supply that was required.

However when we discussed the matter, The Chairman of B was reluctant as he was embarrassed to ask his old friend for what he had termed “Help”. Though we assured him that it would not be the case, he was still very reluctant to do so.

We suggested if we came up with something for both of them, would he be willing to consider the “Business Options”. He agreed as long as it was from us “The Consultants” and not in anyway to bring his request up in anyway.

THE PROPOSED SOLUTION

We got both the key people into a meeting and suggested a Joint Venture Company to handle the manufacturing and distribution of the said products. We included the proposed management structure, the responsibilities of each entity, Sharing of profits and an entire system.

We had to go through a lot of work to convince both parties for something they already knew and needed and could make it work on their own, if they only were straight forward with each other and just asked the other for some help to grow both the businesses.

IS THIS SENSIBLE?

DEFINITELY NOT! The business environment at the moment the world over is beyond what anyone could anticipate. The last thing that “WE” Business people need is PRIDE. Be proud in what you do, have principles that I would NOT borrow money from my friends…That is commendable.

But when you need HELP…Please ASK for it! This is No time for Pride and embarrassment as we don’t have the luxury of that with the current economic conditions. Of course I am not complaining as we were paid our fees for the tasks above. But seriously, these companies could have saved that money paid in fees only if they had just spoken frankly with each other.

My point is,there’s no shame in looking at what you require and asking for business help at this juncture. Be SMARTER, don’t just keep paying us Consultants, Lawyers and Accountants for things that could be sorted out by just taking Pride out of the equation.

Please feel free to give us a call should you have any further queries … Always remember….“THE SURVIVAL OF YOUR COMPANY, IS THE SURVIVAL OF OUR ECONOMY.”

Please feel free to Email me personally during this troubled times at: [email protected]

Visit us at : www.skbassociate.com ?Or ?WhatsApp your BUSINESS QUERIES to: ?Tel ???: 016 – 946 0208

Till then please Stay Safe!!!

S. KHUGAN

GROUP MANAGING DIRECTOR