Five Objectives of Business Survivial

The five objectives of business – Survival, Stability, Growth, Efficiency and Profitability -- run in a continuum. Normally, one objective precedes the other.1. SurvivalIn the initial phase of a company the objective is to “survive”. Survival means, “Not getting killed by the competition”. Business follows the law of the jungle; namely survival of the fittest. Survival is important for success. In a marathon race, the athlete begins at a slow pace, conserving his energy, for the final burst. For a company to survive it has to first break even; then comes making profits.2. StabilityPost survival a firm looks for stability. Stability can be in terms of sales or profits. A company following such an objective is seeking to maintain the status quo, of not rocking the boat. Some element of stability is necessary before launching on to growth. In the middle phase of the marathon the athlete maintains a steady pace before he sprints in the final leg. In a sense it is the least expensive in terms of time, talent and resources.3. GrowthEvery business wants to “Grow.” With expansion come more profits. Growth brings in its wake self-esteem. Growth could be in terms ofa. Volume of business, (Increasing turnover from 10,000 tons to 15,000 tons)b. Value of sales, (Increasing turnover from Rs 50 million to Rs 100 million)c. Number of customers, (Rising the number of clients from 1200 to 1500)d. Moving up the value chain, (From being a provider of raw-material to becoming the provider of the product which is uses this raw-material)e. Progressing from doing low skilled work to highly skilled work. (A company engaged in BPO operations would like to move to becoming a KPO4. EfficiencyBusiness is an economic activity. It seeks to add value to the customer and profit to the firm. Profit is the difference between the revenue earned and the costs incurred. Profit can be increased in 2 ways. Either increase the revenue or reduce the cost. While the first is dependent on external forces, the second is dependent on internal factors. Efficiency is a tool to reduce costs. If the work processes are conducted in the most efficient ways, it would lead to fall in costs and increase in profits. Efficiency mainly relates to the activities involved in the day-to-day running of the business.5. ProfitabilityProfitability means the ability to make profits. All businesses want to make profits. Peter Drucker once said, “There is no such thing as a non-profit organization. There are only organizations that do not make profits.” If a business ceases to make profits, it will have to be closed down. So survival, stability and growth exist only with profits. Efficiency will enhance profits. Hence ultimately, a business is of significance to a businessman only if it is making profits.

Nail on the Fence

There once was a little boy who had a bad temper. His Father gave him a bag of nails and told him that every time he lost his temper, he must hammer a nail into the back of the fence.The first day the boy drove 37 nails into the fence. Over the next few weeks, as he learned to control his anger, the number of nails hammered daily gradually dwindled down. He discovered it was easier to hold his temper than to drive those nails into the fence. Finally the day came when the boy didn't lose his temper at all.He told his father about it and the father suggested that the boy now pull out one nail for each day that he was able to hold his temper. The days passed and the young boy was finally able to tell his father that all the nails were gone.The father took his son by the hand and led him to the fence. He said, 'You have done well, my son, but look at the holes in the fence. The fence will never be the same. When you say things in anger, they leave a scar just like this one. You can put a knife in a man and draw it out. But it won't matter how many times you say “I'm sorry”, the wound will still be there. A verbal wound is as bad as a physical one. Remember that friends are very rare jewels, indeed. They make you smile and encourage you to succeed. They lend an ear, they share words of praise and they always want to open their hearts to us.'

About Money

Savings need to be invested appropriately. A look at the various avenues available to put your hard-earned money in Everyone wishes to provide well for themselves and their family. People work hard not only to earn a living but also to save something for that rainy day that lies ahead, to provide the best education for their kids and to lead that retired life in the future—to be spent in contentment without financial worries. However, how many of us actually take the necessary steps to achieve these objectives?
My observation is that for most people, providing for the future is achieved simply by investing their savings in certain instruments so that the money grows. Yes, savings need to be invested appropriately. However, while investing is important, it is only a small part of building a sound financial profile. There are other important elements associated with this process. This week, we shall see what these other essentials are and how they come together in building a strong financial edifice for you and your family.
Medical insuranceFirst comes medical insurance. This is a unavoidable expense, especially in a country like ours, where the state does not cover medical costs. Everyone should get a medical cover for themselves. Else, when an emergency strikes, apart from health consequences, repercussions on your finances could be disastrous. Of course, if you are salaried, more often than not, the employer arranges for medical insurance. Here too, most aren't aware of the exact amount of coverage. Ideally, have a family floater policy for a minimum of Rs 5 lakh. The premium for a family of fourwould be in the region of Rs 8,000-8,500 per annum.
Life insuranceThe basic financial tenet regarding insurance is that it is an expense and not an investment. Combining insurance with investment almost always leads to sub-optimal returns. Firstly, buy insurance only if your family needs it. Secondly, always, always, opt for a term insurance policy, which is the cheapest and purest form of insurance. A 30-year old can purchase a Rs 10 lakh cover for a premium in the range of Rs 3,500-Rs 4,000 per annum. If you find you have bought expensive insurance, consider surrendering the policy.
Public Provident Fund (PPF)PPF is the best fixed-income investment that you can make. An annual contribution of Rs 70,000 will get you Rs 32 lakh in 20 years. Look at it as a fund for the education needs of your children. If you are married, get your spouse to invest too and you would have a retirement fund ready.
Buying a houseThere is never a good time to buy a house. The sooner you do it, the better. With supply being limited and a billion people and counting, housing in India is never going to be cheap. Opt for housing finance, even if you have your own funds. Home loans are the cheapest option. The opportunity cost of the funds, if invested wisely, will almost always be higher than the interest rate on a home loan.
Avoid credit cardsA credit card is the most dangerous enemy of a good savings habit. The reason is to do with human psychology. Whenever you spend money, there is a trade-off. Buying something gives you pleasure, whereas putting up cash for it is unpleasant. However, what if you could only retain the positive payoff without experiencing the negative emotion? Using a credit card allows you to do precisely this. However, if you have to do something wrong, at least do it right. So use a credit card if you must, but don't revolve the credit. India perhaps has the most expensive credit card rates in the world. A good habit is to pay off the amount spent on the card the next day without waiting for the due date. Better still, use a debit card or cash.
Equity Making money in the equity market is easy, losing it is still easier. Don't invest on tips and recommendations. Do your homework before buying a stock directly. A better option would be to use mutual funds. Choose a fund with a minimum track record of over three years. Don't time the market. Invest for the long-term.
Emergency fundMoney lying idle in the bank is all too common. At the same time, investing the last penny that you have is also not desirable. Don't have more than three-month expense requirement at any time. Out of this, cash equivalent to a month's expense could be kept in the savings account and the rest could be invested in a liquid fund.
Last but not the least, be persistent. The secret of success is constancy. It's really not that difficult to achieve financial freedom. The only tough part is to keep doing the right things day in day out. If you do follow the above-mentioned principles diligently, you cannot lose. It's really that simple. Source: DNA money - Sandeep Shanbhag