Realising our potential in a family business

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A young man belonged to a business family that dealt in jute bags, but his ambitions lay in another direction altogether. He wanted to make it big in the hotel industry, and not just that, he wanted his own chain of hotels. His father tried to dissuade him, saying the hotel industry was a very capital-intensive business, and there was no way he could advance him that kind of money. The son told his father he could raise money on his own. The father was a little taken aback at his confidence, and out of curiosity asked him – just how many hotels do you intend to set up in this chain of yours? The son confidently told him that he would set up a chain of hotels that would number a100 strong within the next three years. The father seriously began thinking of taking him to a psychiatrist.

Then I lost touch with them for three years, and when I happened to meet the son again, my first thought was, he would probably have comeback down to earth by now. So I asked him in a roundabout way, so as not to hurt his feelings, how his business was going. He said business was going very well, but his plan had got a little delayed. I naturally assumed that he was still nursing what was a pipe dream, so I said, so the hotel chain hasn’t started yet? He said oh it had started, but that instead of a 100 hotels in three years, he had so far managed to set up only 25. But by the end of the year, he would have 30 more, and would complete a 100 next year, a year behind target. I was stunned. He had actually managed to do it! I asked him how it had been possible. After all, building just one hotel from scratch would ordinarily take more than three years. He said he had not actually put up any building from the ground up. He had just repurposed existing structures. I asked him to explain.

Seeing the Opportunity that Others Cannot

Then he told me that on his travels around the country, he had noticed that many builders and real estate developers had set up large commercial complexes during the years of the property boom. But the property bubble had burst, and now there were commercial complexes with no offices and shops operating in them. Or if there were, they were few in number, with most of the space lying unutilized. This was the case in every big and small town and city all over India. So his plan was, to go up to all the owners of these loss-making commercial properties, and propose a business plan. They would lease out whole or part of their properties to him, and he would set up a hotel there.

The hotel would be designed and furnished according to his format, and he would pay them a guaranteed percentage on the additional investment. The responsibility of running and maintaining the hotel would be his, but they would get 30 per cent of the revenues. Most of the owners, seeing a chance of turning losses into profits, readily agreed.

Then he approached corporates, and made a proposal: they would agree to put up all their employees at his chain, whenever they travelled to a city or town that had his property operational there. Since he offered very good facilities at extremely competitive rates, the corporates were soon on board. Within months, he had both a chain of hotels and customers to stay in them.

Today, the whole country knows and has probably come across at least one of the Mango Suits chain of hotels.

This is the power of realizing your potential. You sense an opportunity, and then make a plan to exploit the opportunity, however unfeasible and far-fetched it may seem to others. Don’t listen to the naysayers – they never even saw the opportunity in the first place.

 Don’t be Blind to Opportunity

There was a time, almost 200 years ago, when our villages were completely out of touch with the outside world. A group of Englishmen landed up in one of these villages, and were quite astounded at the lifestyle of the villagers. The villagers, of course, had never even seen Englishmen before, and so looked back at them with equal curiosity. The foreigners began asking them questions – why are there no shops? Where do you buy food? The reply was, we go into the jungle, and eat what we find.

What about a school? The villagers had not heard of the concept.

And a hospital? What do you do when you fall sick? ‘What do you mean,’ said the villagers. The Englishmen repeated the question – what happens when you fall sick? ‘What do you think happens,’ was the reply. ‘Only two things can happen – either you get well, or you die!’The Englishmen shook their heads, and headed out of the village. There they saw some of the village children playing. Now here was something that truly shocked them. They just stood there and stared. The children, noticing the strangers staring at them, got scared and ranto the village.  Soon enough, they came back with the angry villagers.

Why were you staring at our kids? The Englishmen said, but don’t you see what they were playing with? The villagers said yes, of course we know they play with stones. This is what we played with when we were young, and this is what our forefathers have played with for centuries! But… but… the Englishman screeched… these are precious stones!! They are diamonds!!!

The villagers did not know what diamonds were, of course. That night, as they sat around the fire, they discussed what the Englishmen had told them. The stones are precious? They are worth a lot? Then they dismissed it. What do the goras know? If there really was some value to the stones, wouldn’t our forefathers have done something about it?

And they promptly forgot about the whole thing!

Now, you may laugh at the idiocy of the villagers, but this is something we all do. We have an opportunity sitting right in front of us, and we fail to see it. Even if we do see it, we fail to exploit the opportunity to its full potential.

The Potential is Everywhere

I meet businessmen every day who tell me that the reason their business does not grow is that there is no scope for it to grow. They dismiss me as, ‘oh he’s just a professor, what does he know about the real world?’ Every businessman thinks, I know my business, and I know its limitations. The truth is that the limitations are there only in our minds. Who knew about the potential of unused commercial space before someone saw an opportunity and exploited it? There is opportunity everywhere, and potential in everyone and everything. All that is needed is for us to spot it. We need every businessman to start thinking in terms of global operations, of offices in Brazil and China.

In one of my programmes, I had just finished talking when Mr. Lohia, from the famous industrialist family, came up and said he wanted to say a few words, inspired by what I had been saying about potential and opportunity. He said that he had a turnover of 2000 crores in the companies under him, and he wanted to increase that to 10,000 crores by the next year. This was the potential of a 78 year old man!

Even a Setback can be an Opportunity

One businessman was in specialty yarn business and was enjoying good margins as there was little competition. Suddenly one large company started manufacturing the same yarn and they started pricing it quite low leaving little margin for our friend. A nice business had turned into an issue of survival. Facing the fact that he can’t compete with the large company having deep pockets he was forced to think about alternatives. He came out with a model of converting his business from pure products to services. To consumers located in 50 kms radius of his factory, he offered a unique service. Inform us today evening what kind of yarn and in what quantity you will need tomorrow and the exact quantity will be delivered before you start the work. With such service the customers need not keep any inventory and they were also saved from the possibilities of dead stock. He could charge a premium for this service and soon captured the entire market.

The Difference is Where We Look

In life and in business, we have two choices –

Look down from where we started and be happy that we have reached such heights that so many people are below us; or

Look up, where we can see how many people who started out at the same time as us and have reached much higher than we have, and how far we can still go.

Our motto in life should be – keep looking up.

Parimal Merchant

 

 

Parimal Merchant is the Global head of the FMB programme at the SP Jain School of Global Management.