How to grow business in 2009 ?

Business Growth in 2009 ?

Yesterday , I had a chat with one of my old business friend . He made a interesting comment , which to be honest scared me a lot .

Here is his comment about Business Growth from 2009-2011

If you can survive next 3 years , you can survive next 300 years

I was little taken aback with the statement . Honestly ,upto yesterday , I have never thought of my survival strategies beyond 3 months . These days the environment changes so fast, that planning beyond 3 months is something which is obsolete . There is need to redesign the plan .

Infact , I called him up to fill a survey which we are conducting in North and Eastern India for United Nations Conference for Trade and Development (UNCTAD) and and getting somewhat very frustrating responses.

And over to it this statement . The market sentiments are very low these days and often you have scores of rejection of anything as simple as filling up a survey response .

I pondered and found, that there is general negative statement, which is ruling the market these days.

We need understand that the market is symbol of our collective requirement . The collective requirement of the human society has not changed, only the interfacing structures, between the requirement generator and the provider has changed .

The new structures are replacing the old interfacing structure . The new structure has already evolved . And the process of transition is on .

The business all over the world needs to adjust to these new realities in order to succeed .There has to be comprehensive understanding created about how the global market will operate now onwards.

We will discuss about these new financial paradigm on which the business can also grow in the upcoming post.

Risk Management and Merchandise Export Finance

Market liberalization has brought profound changes in the way price risks are allocated and managed in merchandise export sectors. Price risks increasingly are allocated to third party organization like factoring companies rather than absorbed by the merchant. The success of market reforms crucially depends on the ability of the emerging small and medium size export sector to make full use of the range of modern marketing, financing, and price risk management instruments.

The merchandising export sector have two process to address while risk management in export .

A) Avoiding Risk by making proper Buyer assessment
B) Recovering money through recovery agency.

On this avoiding risk is a more cheaper solution as presently the recovery agents all over the world is charging 25% of the money looking at the griming market situation .

Obviously there are political and war risk and at the same time there is risk of the buyers bank becoming insolvent . At certain cases however it is seen that there is a deliberate attempt of the buyer not to pay looking at the tough market condition now.

Still small exporter could implement better risk management practices to solve this problem. They can start with correspondence and then put up the case with the relevant authorities and after that they could even file a legal suit under Export Insurance cover and at the end hire a debt collection agency.

Export Risk Management for Small exporters

For small exporters failure to get payment for one consignment is a big deal . It can lead even to the bankruptcy of the organization . Looking at that, there is a burning to need to put right kind of 'Export Risk Management' program in practice. Specially chances of bad debts has to properly analyzed . Most of the small exporters doesn't have proper risk management practices . Following key areas has to be looked after in order to implement proper risk management practices in export.

1. Understanding the Pre-shipment and Post-shipment framework from Bank /Institution.
2. Defining the mode of payment in export which would be benefiting-

a) Direct to customer
b) Through Merchant Exporters
c) Overseas Agent

3. Understanding the barriers which could lead to major problem areas for bad debt

a) Identifying new markets for your product
b) Identifying genuine buyers in new market
c) Understanding the quality norms
d) Financing pre-shipment post shipment activity
e) Cost of Export insurance program
f) Bureaucracy in export process
g) Payment risk in foreign markets
h) Volatile foreign exchange

4. Other items of risk

a) Insolvency of buyer
b) Insolvency of buyers bank
c) Deliberate attempt of buyer not to make payment
d) Foriegn currency risk
e) Political and war risk
f) Rejection due to various other reason ( quality issues,
documentation,perishibality of goods)

5. Possible ways of managing risk

a)Correspondence only
b)Complaint to Indian Embassy
c)Complaint to Export Promotional Council
d)Complaint of authorities in buyer's country
e)Filed case under under ECGC/insurance cover.
f)Intiate legal action against the company.
g)Hire debt collection agency

6. Work on the reason like quality , delay in supply and commercial dispute

7. Using following services from other agencies

1. Market Research report from export promtion council
2. Service of overseas buyer assessment agency
3. Export insurance cover.
4. Forward cover for foriegn agencies
5. Factoring companies
6. Service to debt collecting agencies

Allindialive reviewed in Education Times of Times of India

Allindialive.org is reviewed in 'Education Times' of Times of India .

Allindiaive Review Link

The site address mentioned as www.allindialive.com is a printing mistake and the real site is www.allindialive.org.

SME Loan restructuring through Loan Repayment planning

The present situation of economy is increasing non-performing loans in the banking industry maybe directly or directly related to the downturn in the Global economy. Basically, these problem loans are the result of the borrower’s inability to generate enough income to repay the loans. This inability may be due to management weakness, over-gearing, poor marketing, low productivity or sheer unresponsive to changes in the business environment. Whatever the reasons, timely diagnosis and treatment of these problem loans is paramount to prevent a disastrous outcome. The extent of any cure will depend upon the size of the problem, how quickly it is brought to light and the responsiveness of the business owner to act concertedly.


Lon restructuring is an specialist Job

The task of reviewing a problem account and considering practical remedial solutions is not for new-entrant to banking. The job is enormous as it normally entails identifying the cause(s) of the problem, procuring an accurate financial picture of the business and developing financial and strategic restructuring plans. Upon conceiving the “actual” situation in hand, the person in charge not only has to convince the bank to accept the plan but also need to convince the owners / management to act on the plan drawn

To be effective the person in charge, needs to recognize the importance of economic, market and other external factors. They also need to be a Financial Analysis, Consultant, Economist, Lawyer, Salesman, Beggar and Butcher!

Can All the Accounts Be Restructured / Rehabilitated?

To the hard pressed collection / recovery officer, restructuring is an exercise to defer classifying the delinquent accounts as non-performing and hopefully, the problem would resolve by itself. Unfortunately, this is not the case. As the saying goes, “what will happen, will happen”. Certainly, not all accounts can be rehabilitated. It is only borrower’s having the right “ingredient” and business that can be considered.

The Highlights of the repayment plan

At the end of the entrepreneur should able to supervise and follow up his distressed SME accounts more effectively by working closely with the bank.


It is important to learn

• Determine whether an account can be rehabilitate
• Determine the types of borrowers involved
• Understand and appreciating the financial predicament of distressed borrowers
• Determine the options available to the borrower in resolving the problem.

Following issues are extremely important to understand

• Loan structuring

- why is it so important
- how it can cause problems for the borrower
- what does it involve

• The role of a workout specialist

• Understanding and appreciating why good companies can turn bad
• Businesses do not fail overnight – spotting the tell-tale signs of trouble
• Determine the cause(s) of the problems(s)
• Options for businesses in difficulties
• Assessing the situation

o Conducting a situational audit of the business
o Is the business still viable?
o Is it worth saving?
o What is involved / required to make it work? What additional resources are required?
o Can the borrower do it?
o Should the bank do it?

• Structuring term lending
• Studying cash-flows to determine capacity to service interest / repay the loan
• Studying cash-flows to structure the repayment schedule
• Loan covenants and support - importance of - some types – structuring
• Drawing up action plan – monitoring progress – taking remedial actions
• Knowing when it doesn’t work!

Regularity on Business Planning

Some entrepreneurs, do modify there business plans on regular intervals . Some do not . There is an essential disadvantage of not modifying the business plan on regular intervals . One of them, is related to the validity of assumptions made in the plan . The Business plan need to be updated with the changing market scenario . Otherwise , it becomes a part of history .

Infact,I feel Business planning is a process . Once a person starts religiously following the process , he creates clarity in lot of avenues of Business . That clarity helps him to structure the plan in a better fashion , which could lead to better revenue outcome.

Business Plan written by Professionals for aspiring entreprenuers

There is a big doubt on the minds of aspiring entrepreneur, on the practice of recruiting a professional/consulting firm on writing their Business Plans. Most of the aspiring entrepreneur remains in a very excited stage, on the early days of business . This makes them think less of the requirements of the audience, of the business plan. In addition, they are more aligned to their emotional satisfaction and sometimes completely lost in their ego trip.

Obviously , these was hard for them, for sometime, when a person from the opposite side comes and starts dissecting their idea . Suddenly they feel lost of the entire excitement with realizing , the ground realities that a investor looks for .

However ,to me it looks like a stage where the business has start maturing from a seed stage to a sapling stage . The growth of the business brings more objectivity and these is something, an aspiring entrepreneur has to realize, early and not guard his idea in feverish emotional excitement.

I realize the Business Planning Event season has come, as the organization all around India are coming to me for with request for different role play on their business plan event starting from becoming a Judge to Mentor Business Plans .

I have already got the invitation to Judge the Business Plan Event of Indian Institute of Management , kolkata , known as i2i2009. I have been associated with i2i for some and other role, since its inception . But these time , Indian Institute of Management , Indore and National Entrepreneurship Network has invited me to mentor some of the Business Plan which has been selected in the Preliminary round of there Business Plan Competetion Sanjeevini.

Looking for a exciting time ahead with a bunch of aspiring entrepreneur . I had always a great interaction with them and there energy level remains very high ,in these seed stages of business.