How can small businesses be a win-win situation for all stake holders

In my post yesterday, I said that small businesses become a zero sum game and if the owner wants to make a tidy profit he has to exploit and out smart his smartest employees. This is a cat and mouse game. The Cat (owner) may eat many mouses but eventually he will run out of steam i.e the younger employees will have a new skill-sets which the older owner is not able to keep up with.

So how do small businesses over come this structural issue

I think small business have this basic structural issue, where either the owner wins or the employer wins. If the owner wins, the business stays afloat for a longer time, but eventually this structural issue with eat up the small business like termites dig into walls.

Naval Ravikant I think says that in future, every person would be a one man business.

With the advent of AI, most of the corporation who can use this expensive tech, will start reducing their manpower. This means the current peak levels of employment will not be sustainable. Corporations are built to maximise profit, if a AI can do the job, corporation will cut the work force.

But governments are supposed to manage the people. If unemployment reaches beyond a certain point and if there is wide spread discontent, the stability of the country is at stake.

New phrases like “ Gig economy and Co-working space” are the already an industry on its own. This is an indicator that people will be doing a lot of stuff like a small business or perhaps a one man small business.

Small Business should turn all its employees into a one man small business to make it a win-win situation

People are driven by incentives. The more skin in the game one has the more he is in the game. In the traditional small business set up, the employee is treated like a disposable commodity. If he works his arse off, he is building the owner of the small business brands. So he doesn’t have any skin in the game.

Now, If a small business can subcontract all its operation/marketing/sales/service to other one man or smaller units of small business this could mean all stake holder have skin in the game. The subcontractors are owners of their businesses, and whatever they learn servicing their existing clientele can be transferred to a new client.

Conclusion

If you are small business and feel you have grown to a point where it is getting extremely tiring for you to carry on. Do try this system and let me know 🙂

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Small Businesses are a zero sum game

I am a huge small business advocate, but lately I have been disillusioned with small businesses. The problem with small businesses is it is a zero sum game situation between the owner and the employees.

Either the owner makes money or the employees cheat the owner to bankruptcy. Let me explain. A small business is basically where the owner is the complete master of the trade. The owner should know his business in and out. He should know everything about the business. Thats an essential pre-requisite to being a small business owner. But small business owners in this rapid technological developments might see them becoming increasing dependent more and more on other specialised skills.

In a small business scenario, the owner is making enough money that he can live a rich persons life but this means he has to always keep on finding employees who he can exploit. The margins and the volumes of business is such that, there can be only one master. (The man)

Employees Cheat

Some employees, see this zero sum game situation. So they develop strategies to hack the game. They try to make sure, that the owner will lose and they will win. Here comes corruption and loss of integrity. The employee doesn’t wan to a the losing end of this game.

He starts finding ways to cheat, wherever there is cash sales, he might rob the owner. If the owner is not well or on vacation, the employee will steal stuff from the office or business. The employee will try to find likeminded people in the staff and make a Kabal and sustain this systematic looting of the small business owner.

You would say Big corporations employees are also corrupted.

Yes, but the leverage the big business owner has against corrupted employees is huge. A big business has something called HR. The big corporate CEO or management are ten of thousands of times powerful than some employees stealing.

But for small business owner it is a daily trauma and fear, if he is no longer handson he ceases to be the winning part of the zero sum game.

What is a zero sum game

In case you wondering what is zero sum game? It is where in a given transaction or trade or agreement there is one winner and the other person is loser as against a win-win game. A win-win game is where both parties benefit and there is no exploitation.

You can become a Chartered Accountant in only Rupees Ten Thousand only

I was under the impression that education has become extremely unaffordable in India. I have been hearing stories about astronomical fees for professional degrees. So I was in for surprise yesterday.

I was on a client visit and while returning the chartered account of the client also joined me. He hails from a small town near Hyderabad. It was a long journey back home and the CA got talking to me. He said his CA education cost him Rs Ten thousand only. He said there are 10 papers for CA and each cost about Rs 1000 to appear. Please note – In mumbai the price is Rs Ten thousand per paper, but to save money he appeared for his papers from small towns like Chennai and Hyderabad where the paper costs only Rupees One thousand.

He said his monthly pocket money was Rs 100 and he couldn’t afford to live and give exam in Mumbai city so he travelled to Chennai lived with his relatives and gave his paper. He is about 30/35 year old. So circumstances might be a bit different today. But again Education policies don’t change all of a sudden.

## His Education catapults him to the upward moving Salaried Class

He said, immediately after graduation he got a job in an investment banking firm where he has privileges like air travel, which was a dream come true. He was then at Infosys where the living arrangement was like a 5 star place. He then moved to Dubai for 6 years and even got a US degree in CFA while working.

This is a story of India from 2002 to 2018. His story is the story of India. I will be following his career story from 2019 onwards.

Beware of Fake It till you make it Influencers

Do you know that you can purchase thousands of followers on Instagram?

Do you know you can also purchase like and comments too?

Do you know of existence of Whatsapp groups, which encourages its members to like and comment or face expulsion from the group?

Yes, these are the facts of “Fake it, Till you make it” which basically means fool the client till the money is in the bank. Brands work on numbers, numbers look good on Graphs and charts. Also a marketing manager job is easy if he has corresponding data to show his VP to justify the campaign costs.

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BUT THE BIG QUESTION IS, DOES IT SELL?

The influencer eco-system is corrupted and in 2018/2019, all social media networks did a purge. But guess what, social media companies also need to show numbers to their stock holders.

Fake it you make it a universal law. But choose your influencer with caution. Do some background checks, for eg

1. Does the influencer you are hiring have real followers or are they all BOTS?
2. See the historical growth of the followers of the influencers you are trying to hire. Use tools like socialblade.com for the same. If you see sudden spike in the number of followers, it is a “fake it till you make it” account.
3. Reward genuine handwork. Many influencers like us are working hard to nurture our community. These fake influencers are jumping the Q. They have to fool the brand till the money is in the bank. They are what we call ‘Fly by night ” businesses.

Modi won because Indian’s would rather stay poor than let other’s prosper

So everyone and their uncle is analysing why BJP won. I thought Rahul had picked himself well and certainly didn’t think he would be falling so short. So did many of you including Ruchir Sharma (Morgan Stanley, i think) who just wrote a book on the Indian Democracy. He has been covering elections on the road for last 30 years. I also recently attended a talk by him at NCPA where he said, NDA will get either less than 200 votes or around 236 votes. He missed the mark inspite of having his ears to the ground.

Populism or Majoritarianism

Populism ( it would be called Majoritarianism in India) is basically a strategy used by the politicians by instilling the fear of scarcity. It is a race to the bottom. The narrative is – We will snatch it from the minorities and will give it to you, or the minorities have been appeased and now we will undo it.

Ruchir Sharma mentioned in his talk with Shobha De that, Indians who were harmed due to demonetisation were still happy that the other people who hoarded cash were more harmed. This help them sustain their love for Modi. Instead of accusing Modi for the harm, they justified it by saying a little pain for the good of the country can be borne.

Again, this time. Modi seems like the only capable politician who can give moo-thod (fitting reply) to the enemy i.e Pakistan, terrorism. Jobs be damned, economy can go to bollocks.

What is the alternative ?

Grass root level work as mentioned in this wonderful twitter thread by Ananya Chakravati.

Moving towards a philosophy of abundance instead of fear of scarcity

This would be most difficult thing. But some how we need to convince people that there is enough for all of us. This could counteract the strategy of fear scarcity among the minds of Indians.