Sunday, December 13, 2009

Something for deliberation (16)

There have been cases of business, companies big and small, closing down or winding up because they couldn't get paid for the goods or jobs delivered. When competition is high, you will find profit margin low. The squeeze does not only come from lower margin but also from longer term of payment.

The smaller you are, the harder you will be hit insofar as operating business in a tough environment is concerned. When the time comes to pay supplier and subcontractor, smaller sized businesses will have more problems if they cannot pay. More often than not, the bosses will have direct dealing or negotiation in the transaction and there is practically no" buffer layer" in avoiding commitment that is due.

Big company, organisation will have their managers to deal with smaller sized businessmen and it is easier if these gentlemen say " account has not prepared, processed the payment ; account has overlooked your case ", " the company is holding on your payment". When this happens, the latter have to start "rummaging the bush in the forest to hunt for the rabbit", to meet his commitment.

The headache faced is one thing. Many can accept it as part of the job hazards. But there are some who have to close shop because their customers cannot pay them.

This brings me to the points I want to highlight in this posting :

1) How much does the knowhow and skill that are involved in the business that have been closed down really worth? And I say, if any business had to close shop under such circumstances, then their knowhow and skill did not worth much, if there were indeed knowhow and skill involved!!

2) Knowhow / skill alone is not enough to run a business. It can be an integral part but it is not the whole thing. It can be one important thing but it is not everything. There are other important parts that complement to make the business run competitively......

About the other parts, " I shall return ".

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