Gold Dust
This story was narrated by Mukul Deoras then Marketing Manager at HLL & sourced from Indranil Chakraborty’s book Stories at Work
IT WAS HOT and dusty, a typical summer’s day in a small town in Uttar Pradesh. As a young sales manager at Hindustan Unilever, I was on my mandatory market visit.
Today was the wholesale beat. Most of the wholesalers were working on a wafer-thin margin. Their way of working seemed to defy everything I had learnt at IIM (Indian Institute of Management)Ahmedabad. I sat on an empty oil tin, sipping a cup of tea made mostly of milk and sugar.
I noticed a fifteen-year-old boy manning the store in his father’s absence. I was in a good mood, so I decided to give him some commercial advice.
You shouldn’t be selling our products cheap. By only keeping 0.5 per cent margin you will soon go out of business, I said.
The young boy smiled. Sir, I don’t think you understand. I make a lot of money from your products. Let me explain.
I sell on cash. I have about two weeks of stock, but I also get a weeks credit from your distributor. This means that I essentially have a net investment of one week. My investment rotates fifty-two times in a year and with 0.5 per cent margin in each rotation, that is a return on investment (ROI) of 26 per cent. What’s wrong with a 26 per cent ROI?
He spoke with the kind of panache usually expected from a VC-funded entrepreneur.
Learning from the story
1. We can learn in any situation & from any one, provided we are open & conscious of learning.
2. Money is made by rotating money and not by the absolute amount of money earned in each transaction. It’s like a wheel that turns very fast. And every time it turns, it picks up a little bit of gold dust, and that way the gold dust keeps accumulating.
3. Idea here is not reducing margins, but finding ways to make the Money Wheel Rotate FASTER. Once you find ways to rotate it faster, our job is to Re-Invest into business to Multiply profits.
Questions to ask ourselves⁉
*What is my investment in business under rotation?
*What is the existing frequency of rotation?
*What are the ways to increase the frequency of rotation?
If you really want to learn how to first FREE the cashflow from Business & how to Re-Invest to Multiply your Profits; here’s my personal invitation to our FREE seminar Business On Autopilot
Read what Gautam Gajra co-founder @ Lucre International an export house exporting Onions across the globe has to say about this seminar.
“I attended Sachin Mahajan’s seminar and it was awesome. I thank Raghu, who referred me this seminar. I am convinced that there is lot of learning to be had, get clarity of thoughts and guidance in my future decisions as an entrepreneur. Thank you.”
Facebook Comments
TAGS
