Bye Bye VAT Welcome GST

Tonight will be a historical night. When the clock strikes twelve at midnight, a singular tax system will be implemented in India. This tax will supersede all the tax systems. How is this different from what we are already doing? This is best explained in the joke circulating around on whatsapp. When you were single, you had to report to your parents and siblings & explain one thing to each. After marriage, all these are replaced by single person - WIFE. 

Jokes apart, how is it going to change business. How will it affect common man? How will it affect business? Things will be clear only after implementation. Overall, there would be no great effect. But see closely and you will be able to see some differences. At present, there is tax system which differentiates between small businesses and traders with big businesses. Small businesses & traders normally register only for VAT which is a local state tax. The big businesses will normally have excise registration along with the VAT registration. For small businesses, they will levy only VAT on their final product price. So, a product priced Rs. 100 at factory will be levied by VAT (say 10 %) and the price out from factory is Rs. 110/-. Above that there is transportation and margins by the distributor and the retailer, depending on the product as well as the supply chain. For a bigger company, they have to first levy Central excise. So, if 12 % is the excise duty, the same component coming out of this big factory will be Rs. 100 plus 12 % excise and on the above total, 10 % vat. The final price becomes Rs. 123.20. There is a marked difference between Rs. 123 & Rs. 110. This is the reason why branded products cost is higher. 

After GST, the tax structure will be same for small business as well as big business. GST somehow levels the disadvantage faced by the big manufacturers, while the small manufacturer loses his advantage of lower tax. The flow of people therefore, would be towards branded products because simply other products will also tend to price in a similar way and the price difference between branded & unbranded, organized product to unorganized product will decrease. This will be big game changer in the near future. 

Secondly, earlier the material dispatched outside state was levied 2 % central sales tax provided that the C form is given. The person supplying outside state would have to follow continuously for C Form. Now, this state boundary will disappear. People can send beyond state boundaries and there will be no C forms. The extra 2 % tax won't be there thereby reducing the tax burden. This will probably increase the transportation between state to states. Material flow will be there from one state to other. This will also bring a boom for transportation business. 

This is bound to bring many changes for India. Hope for a better India.

How To Manage Your Time Efficienty?

Do you know 5S? In 5S, there is a Mantra - a line -  'A place for everything and everything in its place'. I will borrow slightly from here and extend it to - 'Time for everything and everything on its time'. This in essence should be your best shot for Time management. When you say 'Time For Everything', the thing that comes to mind is planning. You have to plan your time for everything. This can best be done while sleeping on the earlier day. If you are not able to plan your tomorrow at night, then plan your today this morning. 

'Don't Start Your Day Unless You Finish It'.

The above line says it all. Unless you have finished your day in your mind, don't start it. Because if you do not plan, others will plan your time. If you have nothing to do, you are not driving your boat. You are merely avoiding any accidents and keeping it on some track. You yourself might not be aware whether it is the right track. First thing achieved. 

Always try to complete all the difficult tasks in the morning. This will end all the dread and the day will be peaceful. You can also plan your activities such that 80 % of the problems are sorted out and taken care of. When you are not able to decide on something - like choosing a dress or vehicle or something, just go ahead when things seem okay. 

Now, without going in details we will come to the second part. 'Everything on its time'. This is all about discipline. And managing your time efficiently is also about discipline. No matter how much planning you do, you will achieve nothing if there is no action. To do all things on its time, you need to keep a list and just complete all the necessary tasks. 

Laying Down Of Rails

Recently, I met one entrepreneur. He was into one related product to what we manufacture. And he had given us one enquiry. In relation to that, we met. During talking I liked the one thing that he said. He had several salespersons moving around the country. There were expenses that he incurred on them. And he thought that his company has come to a saturated level in terms of the market. Meaning that as per him, the market was only as big and he did not see any scope of further improvement in his business. What he hoped for was that if he could secure some back end manufacturing, he could extend his sales and take some percentage on that. He said that during all these years, I have laid down the rails. Now, I hope to run as many trains on these as possible. What he meant was that he has his network of salesperson and now if he could increase the sales through each of them by increasing the product line (mainly trading), he could benefit through it. 

This is similar to the parable of the pipeline that we hear. To take you back to the pipeline story if you have not heard it, it is a story of a village where there is water problem. Outside village there is a river from where water has to be brought. The contract was given to two persons - A & B. A is traditional person who carries water on his shoulders. As long as he is healthy, he carries the water. The more water he carries, the more he earns. But his earning had limitations as he could work only so much as his body allowed. Mr. B was long term in his thinking. He installed a pipeline and connected the village to the river. Then, without moving from his home, he could bring in water without sweating. He could bring as much water as was required and was able to earn more and longer than A. 

This is what entrepreneurship is all about. It is about building a system, so that it could be milked later without much fuss. 

Joint Advertisement

This topic might be of interest to ultra small business owners. There are many shops in our neighborhood. Some of the shops might be very common like a grocery store, saloon, ice cream shop, dairy, variety shop, etc. But there are also some shops which offer printing services, they offer flex service, repairing computers and offering old & new computers, and other such shops which will offer uncommon / special services. These services are not in demand much and are required by fewer clients. This is the reason why when people require such services, they do not know the place to go. You are not so known and the users of your services are also limited. This limits the reference through which many people come. This situation might be tackled with some advertisement. 

Advertisement for shops like this can be ultra local. These cannot appear in newspaper because it is given in many places. You can try giving advertise in classifieds of the most read newspaper. It may not cost you more than 700-1500 bucks depending on the newspaper and its circulation. Here, the advertise is only 6-7 lines so you have to solo. This is more suitable for a shop where people from other areas can also come. Another option is to give pamphlets / leaflets in your area. Depending on how big your area is, you will have to print the quantity. This ensures that your target which is nearby market gets the leaflet. If you want to give a discount, you can ask people to bring the leaflet to get the discount. Discount ensures that people who want the service / product anyways will definitely come to you because you are offering a discount. 

Another way in which you can advertise is collaboration. Meet your fellow shopkeepers. Ask them if they are interested to distribute leaflets. If they are ready, you can divide the leaflet area and print both business information on one paper. The cost will be for one but the result will be for both. Similarly, if you can have 3-4 businesses, it would be great because this way you can get a big deal with your printing guy. You can have both side print and print in large quantities. Large enough for distributing each month or at least once in a couple of months. This will ensure people remember your name. More the visibility, better are the chances that people come to you.

Idea University

Do you remember the advertise Idea University / Institute? The premise for the advertise was simple. It told the story of Eklavya. Confused? Let me take you back to the story of Mahabharata, where Rajguru Vyas taught the princes of Hastinapur. There was another poor child who wanted the services of Rajguru Vyas. But since he was not a prince, Vyas did not teach him. Then one day, when Vyas was going through jungle with his dog, he found that someone had aimed 6 arrows exactly in the dog's mouth. Nothing happened to dog; the only thing happened was that he could not bark. Vyas found out that it was Eklavya who had shoot the arrows. Eklavya tells him that he had kept Vyas portrait and practiced bow & arrow under his guidance. He offers Gurudakshina to Vyas considering Vyas as real guru. 

Idea brought a similar concept. Idea telecom wanted to spread the usage of 3G phone and the internet usage. So, they advertised underprevileged people to be studying what they want on internet instead of going to a college (because they cannot afford). Similar advertisement was taken out by Jio where a Hotel boy is trying to learn English through internet. THE POINT I AM MAKING IS THAT INTERNET IS A STRONG MEDIUM. Many people use it only for entertainment purpose. But another E (Education) is also a possibility. Indeed, a greater one. People can virtually learn anything on internet. As if the writing and the pictures were not enough, that youtube brought a revolution. People are uploading all kinds of videos on youtube. It is you who have to choose between wrong and wright. Some entertainment is okay, but only entertainment is a problem. 

You can learn something about new subjects, music, talking english, different skills to take your business to the next level, making videos, making presentations, installing printers, etc. The world is not enough. You can learn yoga, you can learn Zumba, you can learn dance, you can learn technicalities of sports, etc. Jio has really changed the way India uses internet. Now, we just need to channel the energy. Welcome to Jio/Airtel/Tikona/Idea, etc. university.

Cost Of (Bad) Quality

Why are brands preferable? Why do people prefer to buy branded material even though it may cost 1.5 times more than other items? The answer is trust. Trust of what? Trust of quality. Common people don't know much about quality. They only know that when it is of a big company or a big brand name, it is of good quality. It is better to pay more that product because there will be no headache in future. Even though the product offered is same. The unbranded product comes from the supplier to the brand, while the competing product is of the brand itself. Both the products are same, but the branded product is costlier and bears the brand name. The basic point is, that the branded product will give 'PEACE OF MIND' because of it's QUALITY. 

Commoners agree that though we are paying more price, this product life is longer than the other one. Ultimately, the lifetime costs are less. This means that the effective price of a quality product is less. Quality manufacturers are preferred because there is no headache in their supplies. So, where does bad quality or no quality consciousness take us. If there is no quality consciousness, then the rejection ratio will be high. There will be internal rejection. This rejection will come when your product quality inspection is good, but you lack process quality inspection / control. This will ultimately give a loss of the raw material and the process cost. The higher losses are in the next stage. What if your product quality inspection is also absent. When product quality inspection is not there, then and will have headache. No one likes headache. He will transfer that headache to you. You will be asked to replace that material. If this is repeated, it is quite possible that the customer will break. You will not get orders from him. 

This will have the most detrimental effect. When it is internal rejection, only your raw material and process cost is wasted. When it goes to customer and it has to be replaced, the replacement is the additional wastage. We are not adding any in-tangential losses here like time, loss of faith & goodwill, etc. If the customer gets dissatisfied and is disconnected, then it is the biggest loss. No customer is wholly dependent on you. It will be only for one time that he will be affected. Next time he will have cover and you will be the sufferer. The best way to avoid this is to have quality products & systems.

How To Break A Wall?

How strong is any chain? Well, the chain is as strong as its weakest link. As soon as the weakest link fails, the chain will fail. It is true for remaining part of the chain too. The strength of the remaining chain is next weaker link. How does the wood cutter cuts the 🌲 tree? Does he hammer his axe at all over the tree. If he does so, he will be wasting his energy. Instead, he needs to aim all his shots at one place. The tree will be cut in few shots. Similarly​, you need to focus on breaking a brick by repeated attacks on the brick. Once one brick is broken, the wall will be weak. Don't spread the energy of the attack all over the wall.

In our life, we have​ similar walls. On the other side of the wall lies our dream. We should not spread all our energies by attacking all​ over the wall. Focus is a great thing. In any problematic situation, 80% of the problems​ results in major problem. Attack on that problem may take only 20-30% of your time, but the results will be great. You can turn any simple thing into a weapon by tweaking it. There is one scene in Jackie Chan movie, where he gets out of jail using a cloth. He just pees on the cloth to make it wet and then puts it across two bars and twists the cloth over & over. The cloth gets enough strength to bend the bars. If we focus on solution, we will find one.