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KNOW THE MACROS .. don't miss the wood for the trees

All businesses are a story of hope and ambition. No one can be accused of cynicism in setting up a business, except perhaps illegitimate ventures.

But the working of business laws are in itself quite relentless and every economic business cycle, has four stages: expansion, peak, contraction, and trough.

Steps to face situations triggered by these stages are often not part of any curriculum and it is no surprise that most businesses are unprepared.

Which is why, the success in the long run will depend upon how sound are business plans & actions when face-to-face with each stage of the business cycle.

In the expansion stage, the need is to ensure adequate investment to achieve critical mass but also to ensure that tier-2 capital is available for the next stage.

The peak stage is also the time for market consolidation but pouring investment in building capacity can easily cause a problem of idle capacity in the next stage.

Contraction leads to fire fighting whereas this is the best time to revisit markets, products, financial plans and most importantly human resources.

Businesses not geared for the 'trough' may lack plans to sustain losses & lower their borrowing costs & learn to spread costs evenly across supply chains.

THE SECOND OPINION helps businesses map their position in various stages of a business cycle & helps in strategic decisions to make business live another day.

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