Will the Real Businesses, Please Stand up!

While the world continues to be at the edge, coming times shall be kinder to old fashioned, “middle-class” businesses. Good ol’ profit making companies would be back in favour, solid customer relationships would be indeed an asset and committed workforce as priceless as any other time. Adding workforce would be easier and significantly cheaper, real estate rates (rentals/leases/buys) would be moving towards realistic prices too, very soon if haven’t already. Terms such as Burn Rate are losing favour; profit and positive cash flows (no matter how small) seem reassuring and for many rediscovered!

These (old fashioned) businesses may have wondered for the past decade what they have been doing wrong, why they were doing what they were. They suffered – from abusive employees, financial institutions and alumni from school or college or the neighbourhood – the talk about valuations and spectacular growth plans, while they just grew by 25% or abouts.

To those old fashioned businesses: ladies and gentlemen, please rise and take the applause for being the Real Businesses. For sticking on your path, when you saw your peers earning multiples of what you do after spending years in your enterprise, for seeing “funded” ventures poach your employees, for losing the limelight with your customers who wanted to talk to the “better funded and more visible company” over you and so on. Thank you for being there!!

While at all times new business models are needed, challenging the incumbents, let us not forget that the ‘incumbent’ was a challenger, an innovator not so long ago.

Businesses’ raison d’être is very simple and very basic and yet so many of us forget it so many times – to be able to bring that something better (faster, or cheaper, or whatever the customer believes is value) to the market and taking a (large) part of the customer’s pain away. In fact the larger the pain mitigation, the larger the reward the business can expect over its competition. In the process businesses make money, create jobs, improve processes, and improve productivities, and profits are by definition a by-product of all these factors and external market factors. And yet this simple principle eludes us many times – especially in times of bubbles, speculations, times of “hurriedness”; and we know how it all feels, for we have been there too.

These real businesses have created real surpluses – over both inflation and that part of the profit which Peter Drucker would refer to as “the cost of doing business in the future”. They have invested these surpluses in real estate when it was a little less bubbly or even otherwise. They have borrowed money at expensive credit rates & terms and have yet grown their businesses and their employee base (Some, having “mastered” their sense of enterprise to an extent and given their motivations and aspirations, attempt playing at a different stage…and scale.)

Real businesses: thank you once again for persisting, for growing at double or more of the GDP growth rates, we bow to you. For you have lasted downturns and crises of the past and come out stronger and wiser and you shall, again…