by C.V.Rajan

Created on: May 21, 2008   Last Updated: May 28, 2008

Risk taking is part of business. Proper decision making is a basic requisite at every simple and complex activity of business. These two aspects of business, when done in a lop-sided way without adequate basic inputs, thoughtfulness and well-nurtured business instincts, will pave the way for making big blunders in business.

Some blunders are made when a business is at start up stage and there is pressure to be up and running. Some blunders are made when the business is in dire-straits or there is desperation to make profits.

Here are some such common mistakes:

(1) PARTNERSHIP WITH INCOMPATIBLE PERSONS:

Unless a business partnership is made between persons bonded by strong friendship, having compatible business ethics and a long term vision, business can end up in problem sooner or later. A businessman once said: "Partnership fails when there are major losses or when there are excessive profits in business!"

(2) UNDER-STAFFING:

Stinginess, desire to cut corners in the salary bill and tendency to treat the staff as slaves these are the blunders that lead to under-staffing and the business suffers for want of adequate experienced hands to carry it through.

(3) PUTTING TOO MANY EGGS IN ONE BASKET:

Relying heavily on a single customer, insufficient product mix, investing heavily in one business segment at the detriment of another etc may prove to be business blunders in the long run.

(4) JUMPING INTO THE "LATEST AND HOT-BUSINESS":

One example: In Chennai, India, due to sudden spurt in IT, IT enabled services and Business Process Out-sourcing, there were plenty of businessmen jumping into these, as they are sensed to be "hot and the most profitable". Consequently, there was a huge demand in office space for accommodating these business houses.

Real estate developers jumped into the fray to build massive infrastructure needed for the same. Now there is an unprecedented glut in the market, triggered by the slowing down of US economy. As supply of office space has now out-stripped the demand, there are hundred-thousands of square-feet of built-up area remaining un-occupied and real-estate developers who wanted to make a kill are now in trouble.

(5) BUSINESS AT INCORRECT GEOGRAPHY:

To develop industrial infrastructure and employment potential in under-developed areas, some Governments may offer tax incentives and heavily subsidized land at certain locations. Some businessmen get lured by them and after investing in such places, suffer for want of proper transport facilities, infrastructural

• 1
• 2
• Next Page >>