Tuesday, 20 August 2013

Bigger is not always better in your business garden

Size is not everything.

Over my time in owning and managing business across a large number of sectors - big and small, I have fallen into a trap of many business owners that size is everything.

True, a larger business should be in a better position to with stand the ebb and flow of business success, especially in small markets like Tasmania and even Australia, however it does depend on the type of your cost base.

If you have too large a fixed cost base, you are exposing yourself to changes in the business environment that you have no control over.

It is easy to get excited in the good times, see that that extra piece of plant or building will be able to allow an increase in production or output - the good times however do come to an end.

This also includes the manner in which you employ people.

The natural thing is to try to employ people in real jobs, full time with all the benefits, however this is an asset that is also fixed as compared to a variable asset as a part time or casual worker.

The huge increase in casual and part time workers across Australia I feel is due to the wider cyclical nature of the business environment and businesses have to manage this, rather than employers trying to rip off workers.

As an employee who at times had over 120 workers as team members - and truly good employers do see people working with them as team members, you want the best for them, so they will look after the business.

So in the excitement of building a BIG business, many business owners see expansion to be BIG becomes important, rather than the business and personal goals that you had set your self when you started the business.

Back to the garden it is like having a small garden patch to feed your self or a couple of chooks for a few eggs and then planting a couple of acres of peas or carrots because they grew so well in your small patch or suddenly having a couple batches of chickens and you have heaps of eggs to get rid off.

Today, August 21, 2013 there is a report on a Tasmanian company TASSAL who has a huge increase in profit by changing its business from a fish farming business to supply predominately International Market, to ONLY supplying the domestic market.

The company has failed twice before pushing growth and seeing that it could only happen into the International Market - mainly Japan, but only 12 months ago with the huge increase again of the Australian dollar, took the decision to only supply the domestic market.

Changing back to its core of making money for the investors and shareholders, rather than looking to be the worlds largest fish producer has seen this business be successful once again, while other similar business in this sector are struggling on that International stage.

What is success in your garden.

Tony Park
Head Gardener
Business Gardener

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