• sunilscga@gmail.com

Monthly Archives:October 2015

The new currency & the new gold reserve in the Sharing Economy

A new survey reveals:

Customer experience will overtake the product and pricing as a key brand differentiator. ( I am not saying so to promote my book on Customer Experience in times of social media “The Bread is moving”. Check the source of the survey here.)

Many enterprises are either not yet aware about the customer experience or they have other priorities than working on to create a customer experience focused organisation.

But a few statistics will awake the decision makers and people responsible for P & L A/C.

  1. Brands in the U.K. are currently losing nearly £15 billion annually due to poor customer service. ~Harris/ClickSoftware Survey
  1. U.S. brands are losing approximately $41 billion each year due to poor customer service. ~NewVoiceMedia Study
  1. 65% of 1,000 consumers surveyed said they’ve cut ties with a brand over a single poor customer service experience.~ 2014 Parature State of Multichannel Customer Service Survey
  1. Only 14% of respondents in a 2014 CMO survey rated the customer-centricity of their organization as high; and only 11% believe their customers would say the same. ~2014 CMO Council Mastering Adaptive Customer Engagements Report
  1. More than two-thirds of 2,000 consumers who encountered a customer service/customer experience issue on a brand’s website left the site or visited a competitor. ~ 2014 IBM Digital Customer Experience Report
  1. 71% of those who experience positivesocial careexperience are likely to recommend that brand to others, compared to just 19 percent of customers that do not receive a response ~ NM Incite Social Care Survey
  1. Companies delivering customer support through social media achieve superior gains – 7.5% vs. 2.9%.~Aberdeen Group Social Customer Care Report
  1. The revenue impact from a 10 percentage point improvement in a company’s customer experience score can translate into more than $1 billion.~ Forrester Business Impact of Customer Experience
  1. 58% of companies say they are just now developing a strategy for delivering an integrated customer experience; and only 8% of companies surveyed said they currently provide a ‘very integrated’ customer experience. ~Econsultancy/CACI Integrated Customer Experience Report.

 10. Customer Experience leaders outperformed the broader market, generating a total        return that was 35 points higher than the S&P 500 Index. Laggards trailed far                behind, posting a total return that was 45 points lower than that of the broader            market offering a better customer experience ~ Watermark Consulting

What is considered premium today will become a basic norm by 2020. Yes, smartphone-enabled social media will compel every enterprise to focus more on more on customer and experience the firm is creating for its customers.

Competition is just a click away. Good and bad review writing is just a click away. Why online reviews matter is made amply clear by the following survey.  

According to the survey conducted by Dimensional Research, an overwhelming 90 percent of respondents who recalled reading online reviews claimed that positive online reviews influenced buying decisions, while 86 percent said buying decisions were influenced by negative online reviews.   


Welcome to the new economy, The Sharing Economy in which Customer Reviews are the new currency. & When customer reviews are the new currency one can imagine the importance of better Customer Experience.  Yes, the new currency will be printed on the basis of customer experience. Customer Experience is the gold reserve based on which new currency will derive its strength.

Sunil Gandhi

Don’t read this but write a book

“Writing a book isn’t an easy process, nor is it always enjoyable, but it is one of life’s most satisfying achievements.”

― Guy Kawasaki, APE: Author, Publisher, Entrepreneur. How to Publish a Book


Writing or for that matter anything equals to  anything plus marketing. Whether a blog writer or a book writer, knowing marketing is very important, especially in a time of the self-publishing world. The more options we have now for self-publishing the more it is difficult to market.

There are plenty of blogs and even more self-published print as well as ebooks.

Blog platforms like WordPress or Bloggers or Instagram or even Linkedin are very popular. Linkedin comes with ready captive readers while for other blogging platforms getting readers is a challenge.

Amazon’s ebook publishing platform is a boon for new writers. Just write and e-publish. No need for intermediaries like publishing houses which takes months to decide and mostly their response is NO NO for new writers. Fortunately for self publishers, many a times they are not the best judge.

Nobody will want to read a book about a seagull.” Richard Bach‘s Jonathan Livingston Seagull goes on to sell 44 million copies

Having sold only 800 copies on its limited first release, the author finds a new publisher and The Alchemist by Paulo Coelho sells 75 million.   

It is so badly written. The author tries Doubleday instead and his little book makes an impression. The Da Vinci Code sells 80 million.

The above reality makes it clear that the rejection by a publishing house is just an individual judgment not the universal truth.

But at the same time when an author goes with self-publishing a major challenge which comes is about marketing. A very good product may die of bad or lack of marketing is even more true for books.

Therefore, the point is a writer also need to be an expert in self-marketing along with self-publishing.

“A successful self-publisher must fill three roles: Author, Publisher, and Entrepreneur—or APE.”
― Guy Kawasaki, APE: Author, Publisher, Entrepreneur. How to Publish a Book

Marketing is an entrepreneurial role of an author. Jeff Goin is a successful blogger and book author left his job and earning six figure income. His latest book ‘The art of work’ is a masterpiece as far as inspiration to work for the self is concerned.

“Clarity of calling comes more through a series of deliberate decisions than it does through any sudden revelation.”

― Jeff Goins, The Art of Work: A Proven Path to Discovering What You Were Meant to Do

If you are reading this post and want to pursue your passion in this single life, this book will not only inspire you but will make you act.

I published two ebooks during last four months and one print book earlier in 2014.

But as a writer apart from working on to improve the writing skills, more time is taken up in social media skills. Be it Facebook or Twitter or Linkedin, promoting the books on online platforms is a significant part of not only of the post writing process but also a pre-writing process.

Here Tim Grahl’s blog was very useful. His blog has exhaustive resources on book promotion and launch. His best-selling ebook is ‘Your First 1000 Copies: The Step-by-Step Guide to Marketing Your Book’

Another very successful writer and self-publisher who helps writers in promotion of their book is Chaldler Bolt. He has also written an ebook titled, ‘Book Launch: How to Write, Market & Publish Your First Bestseller in Three Months or Less AND Use it to Start and Grow a Six Figure Business’

While tips and ideas given in both the books will not give immediate results but will set the writers on a path to achieve the success.

Successful writing should follow successful marketing and for self-published writers, both the skills are critical.

Blog or book, will be successful when the content is engaging and reach out is on all social platforms. This is an activity by itself, which no writers should ignore or left to chance.

Amazon has made the publishing part easier for the writers (Writing part remains as difficult as it used to be). But when the market entry is easy, marketing is equally difficult.

But remember what Seth Godin has written very recently in his blog about Steve Jobs:

“Sometimes he was early, but he was usually interesting. That’s a slot that’s available to more people than ever before, regardless of industry or audience.

Average stuff for average people is getting ever more difficult to sell. If that’s all you’ve got, get something else.” Seth Godin

For all aspiring writers, many ebook sizes are even less than 50 pages. If you have something interesting to say, write, publish and try entrepreneurship. Amazon can help you change your career.

Write something very interesting and market like a Steve Jobs.

“Every heart must have its private bestseller book.”

― Sanober Khan, Turquoise Silence

Sunil Gandhi

Brand, Real Estate Developers and NASSCOM

What a real estate developer wants?

  1. Deals – Land, Redevelopment, Joint Venture, Joint Development
  2. Money – Institutional/Bank Debt, Public Equity, Private Debt, Private Equity
  3. Customers – Buy, Leases

What is the single most important thing which will bring all the three to a developer?




  • Better bargaining power with suppliers – land owners, societies or contractors
  • Better bargaining power for cost of funding and ROI to investors
  • Higher pricing capability

Buy cheap and sell costly is possible when a BRAND does business. This is why a brand commands a premium. Be it real estate or any other business.

Even a brand can attract the best of talents.

But branding is not what it is usually believed it to be.

Brand means:

Fair & transparent dealing, a commitment backed by trust, following financial prudence, delivery as committed, no hidden shocks or cost and help when needed even after sales is complete. Employees going out of the way to solve customer problems.

The brand is not a company logo and stationery, it has nothing to do with brand ambassador, posh office the company operates from, uniform company employee wears or event the company sponsors.

Any activity done by a company merely to sale will not create the brand, but every activity the company does to help existing and potential customers will create the brand.

“Don’t think people are targets for the sale….. rather than focus on people who are buying your products and services, shift your attention to people you want to help… If you are only focused on the sale, you are missing a mega opportunity.”

(Source book: ‘Launch’ by Michael Stelzner)

Brand means company culture reflected from every aspect of the enterprise. Branding does not need an advertising agency, it needs a customer passionate CEO.

Tony Hsieh, CEO of Zappos.com is the living example of what a passionate CEO can and should do. He is now on a life mission to spread happiness across the globe. He believes that,

“Companies with higher sense of purpose outperform by 400%.’’

Real Estate developers observed one day strike in protest of suicide by one of the prominent developers in Thane. They blame and perhaps rightly so the delay by Govt. in building permissions and existence of huge corruption.


However, as a representative body what is the role of industry association? I have never seen MCHI doing any good work to either build the good image of the industry or coming out with a best business practice policy for their members. They have a grievance cell, but no public information on how many complaints and against whom the complaints have been received and what action have been taken.

Builders today are known for delay in project delivery, unethical & corrupt business practices, no transparency in square feet, they sell to the buyers, not offering conveyance as per statutory requirements, selling the project before all approvals are in place, lack of customer focus or sensitivity, over borrowing, lack of financial prudence, increase in NPAs and many more brand destroying practices.

Members conduct destroy the brand of the industry that too when no action is taken against the errant members.

Isn’t it the duty of the industry association to;

  • Build good perception about the industry,
  • Help & educate members in adopting best practice,
  • Educate home/office buyers about how to deal with their members to safeguard own interest (SEBI’s investor education programs is the clue)

All the above initiatives will greatly enhance the image not of the MCHI but of the entire industry.

However, we see MCHI active Only and only during property exhibitions as if their only focus is helping their members to sell.

Building brand is the joint responsibility of the both – an enterprise for the self and its industry association for the industry it represents.

Indian IT Industry is US $ 14 bn in 2015 while Indian real Estate Industry was at US $ 93 bn in 2014 and is expected to reach US $ 180 by by 2020.

The size of both these industries is significant. But look at the website of MCHI and NASSCOM. Though MCHi is not representing all India real estate developers, but when MCHI is at this level what we can expect from other cities and housing associations in the country?

Web sites are the indications of roles both industry associations are playing in promoting and creating an image for the industry.

“ Nasscom played a significant role in establishing a brand image for India in global software services market.”  Prof  Subhash Bhatnagar of IIM-A writes in his paper India’s Software Industry.

Regular seminars, conferences, knowledge repositories, magazine, setting up of business standards and practices, disciplinary action, etc etc many things an industry association can do and should do in promoting the industry and parallelly uplifting the members to the best business practice standards.

Real Estate entrepreneurs and industry associations should introspect what ails their industry. What should have been done and not done? Reimagine your business practices, reimagine your brand building exercises, reimagine the role of industry associations.

NASSCOM is the perfect example to follow if this significant industry wants to grow with dignity.

At the cost of repetition, member and industry associations both must read and act on the following wisdom.

“Don’t think people are targets for the sale….. rather than focus on people who are buying your products and services, shift your attention to people you want to help… If you are only focused on the sale, you are missing a mega opportunity.”

(Source book: ‘Launch’ by Michael Stelzner)

Sunil Gandhi

Are your business easy to deal with?

“The World Bank and the Centre are working on expanding the coverage to include an analysis on 344 parameters as part of the Business Reform Action Plan for 2016.”

Times of India – 15th Oct 2015

Each state will be measured on ease of doing business on a 344 parameters. 344 is a whopping number. If there are 344 parameters which influence ease of doing business, imagine how difficult it is for the business to do business. Because even 10% parameters not made easy, ease of doing business goes for a toss.

First and foremost, this 344 number is mind boggling. Imagine if our fitness is measured on the basis of 100 parameters, becoming fit becomes a Herculean task.

But the detailing is good so as to not miss out on any parameters. I am sure they must have a grading and a weightage system, to give adequate importance to the major parameters. 

ease of d

This brings us to look inward, which we seldom look. What is the ease of doing business scorecard of your own company for your customers? This is very important.

Ease = More Business. Ease = Quick Business.

Imagine buying an eBook from Amazon. If you have not purchased any eBook from Amazon, it would be heartening to know from wanting to read the book to reading a book is a matter of less than 2 minutes. By the time your noodles get ready, you are reading the book.   

Search, reading reviews, payment mechanism and e-delivery, everything is so seamless that I have no doubt to state this is the easiest way of buying anything.

Now let’s examine parameters which impact, ease of doing for our customers and therefore, should be evaluated critically to remove all unwanted processes and hurdles.

  • Awareness

Whether we are making our customers aware about our offerings in such a way that they get a clear message about our offerings. Many a times advertisements are so made that it hardly communicates what it should.

The creativity of advertisers should not confuse the message.

“If it doesn’t sell, it isn’t creative.”

David Ogilvy

Creativity and communication, both must be crisp so that an advertisement achieves its purpose of making potential customers aware about what you have to offer for their problems/needs.

Create awareness where your potential customers are ready to receive your message with convenience.

  • Finding 

After awareness when a customer wants to avail the product and services again this is an area of efforts. How to find and where to find is a challenge.

A website  these days is a convenient tool.

But websites are also should be easily found. Selection of a domain name and search engine optimisation, everything matters when customers are out to find about the product. Websites or any other means easily found will have a better chance to get the business.

“In the case of measuring user friendliness and navigation, time needed to find a particular product was the factor considered to be of the greatest importance.”  

Perspectives in Business Informatics Research: 10th International Conference … edited by Janis Grabis, Marite Kirikova  

  • Knowing

After a prospective customer find the product and service next she would do is to now the relevancy to her need. Therefore, at awareness stage and thereafter at buying stage, crisply defining product/service features, ideal customers profile, what it will help in achieving etc should be easily made available.

Any extra effort here can also turn away the customer to more clearly defined product/service.

Features, Advantage, Benefits (FAB) and Unique Selling Points (USP) should be clearly defined and communicated.

All this content will help potential customer sin their buying decisions. More time spent here will save sales cycle time.   

  • Comparing

After knowing about the product and services customers would like to compare it with competing products. Price is an important criterion, but we are discussing only about the ease of doing business and therefore customers should be given ease of comparison.

Even if the company is not giving them ease customers would compare. When they compare of their own, it will take time, chances of visiting competing products would be more on the competitors website or store and therefore giving them comparison facility on your website or store is a good business decision.

There are many product comparison sites. Use them (Credible sites only) smartly to your advantage.

Offering an ease, even though it’s comparable to competitors’ offerings will have a positive impact on buying decisions.

  • Buying/Availing

After comparing final decision comes to buying the product or availing the service. Ease of buying is also an important consideration.

Many times a great product launch advertisement campaign not followed up by the availability of the product at the nearby store makes it worthless.

Easy availability – be it online, mobile, nearby retail store or nearby mall or home delivery – everything counts.

Many times payment methods and options are not convenient or secure  and business is lost.

This is the most important in the entire hierarchy of the buying process. Many times we go to buy something, but non-availability with ease turns customers away.

  • Technical Training

Some products need technical training for users before they can use it. What training material, who are the people and medium of training, frequency of training, quality of trainers everything can influence the ease of doing business.  

Easier it is to learn and easier it is to handle the product/service more it will result in sales. Post purchase it can help with more customer referrals.  

  • After Sales Support

Many companies are conscious about pre-sales ease of doing business, but once we become their customers after sales, repair, return everything is a hardship.

I have to dial so many punches if I wish to talk to call center executives of my bank. But the same bank will send their executives at my residence to open an account.

Another interesting example is my internet service provider once used to send me a bill with customer care number at the back and bottom of the bill. That part will have to be torn and attached with the cheque. So once I make the payment I won’t have customer care number handy and I will have to struggle to get it.

Post sale ease of after sales are very important determiners for retaining a customer and not getting negative reviews. 

I am told that a leading holiday resort company will do anything to make new customers, but once one becomes customer booking to avail the service is difficult.

When designing an ease end to end processes, touch points and cycles should be thought through and implemented. 

  • Return

They sale 24 X 7 but have rules and T & C for returns.  E-eCommerce companies know this and therefore, they have made their return policy easy to encourage prospective customers to buy.

Easier companies made their return policy more sales they can generate.

“Zappos’ famously easy return policy is another example of this – there is less friction for the customer to buy because they know that if they don’t like it they can return it. But once they have the product in their hands, will they really return it? Probably not. They’re already committed.”

6 Psychological Triggers that Win Sales and Influence Customers by Mark Maccdonald

Ease at any stage quicken and boost sales.

  • Repair:

Maruti is selling more cars because buyers know that they have service centers and even mechanics across India, almost anywhere.

Repair and service requirements and assurance is an important buying decision.

I find it difficult to have a service center for one of the leading music system brand. The same is our experience with many mobile companies. Someone once send

me his mobile for repair from Ahmedabad to Mumbai. A very big brand, but written off by me as having limited service centers and struggling to find one is not my cup of tea.  

Our buying decision does get impacted with repair and service easiness of the products.     

  • Disposal/Sale

Sometimes ease of product disposal is influencing our buying decisions. Many times we are told particular car brand can fetch more resale value. More demand for resale means easier reselling.  

Ease of product disposal is also important.

“Concern about environment , coupled with a need for convenience has made ease of product disposal a key attribute in categories from razors to nappies.”

Consumer Behaviour,  By Michael Solomon, Rebekah Russell-Bennett

Do we not consider while a business entity whether winding up is easy? Be it product or service exit, disposal and winding up matters while making a decision to avail at the first place.

I know a case study where a leading telephone database company had entered into an agreement for a period of three months, but it was almost not possible to foreclose. The customer tried by stop payment instruction to the bank, but that entails cheque bounce charges when EMI cheque hit the bank.

Customers don’t need it, but we will force him and keep offering our services. No or inconvenient exit is an important entry consideration.

We all know how entering without complete exit knowledge did cost Eklavya his life in Mahabharata. The point is ease of exit and disposal matters, sometimes matter the most.

While every business entity has a right to ask the Govt to make it easy to do business, but at the same time it is their responsibility to make it easy for their customers to deal with them not only at every touch point but at every stage of the business.

We have plenty of audits – from RBI to SEBI to Income Tax to Companies Act to VAT to Forensic & what not. All are about compliance, but nothing is about customers.  An audit about Effortless Customer Experience or Ease of doing business will add tremendous value to the business.

Isn’t it in the interest of business, entrepreneurs should follow the Prime Minister Narendra Modi in making it ease to do business for their customers, a top priority? Ruthless focus on ease of doing business & bettering the customer experience will make the business more humane and in the process more sustainable.    

Sunil Gandhi

How to avoid Financial & Social Bankruptcy?

A few years ago, one of our clients approached us to help them in raising finance for their packaging unit. Two entrepreneurs, well one entrepreneur and one technocrat. The entrepreneur was riding on the passion of the technocrat. (Technocrat’s blind passion is many a time reasons for business failure).

They had identified machine from Germany to manufacture packaging items for the food industry. Technocrat was extremely passionate about the capacity and quality of output of the machine. They were confident about sweeping the packaging market with the first of its kind machine imported in India.

With equal enthusiasm, an Information Memorandum was presented it to the bank. When any company approaches the lending institutions their financial projections will match the lending institutions’ requirements. As it is done by professionals, knowing the lenders’ requirements. It is the lender’s duty to assess the possibility of achieving the same. (However, it is in the interest of entrepreneurs to make the realistic projections to know the feasibility of the project. The entrepreneur can not fool lenders before fooling the self).

The bank primarily agreed with the project, however being a technical project and machines were imported for the first time in India, they involved their technical team for viability study.

This one man technical team visited the site where land and building were ready, in addition he took some information. They analysed some data and submitted their TEV study to the branch. Thereafter, with due process of processing at appropriate level, the loan was sanctioned for this green field project.

The promoter had a property – i.e. land and building worth US $ 1 mn free from any encumbrances which were offered to the bank as collateral security. The term loan was disbursed as per the bank’s norms. Machine import order was placed. Advance payment was also made. All preparation to commence the production was on a fast track.

Finally, the machine arrived and was to be released from custom by paying duty. There was some technical issue and further disbursement by the bank was delayed by two weeks. There were heavy demurrage charges which were imposed by the customs authority.

Then when the machine was released and arrived at the factory it was the 3rd week of December and there was a closure due to Christmas in Europe. Therefore, Installation was postponed till 2nd week of Jan as technicians from Germany had to travel to India to install the machine and train the people. Further unscheduled delay of almost a month.

Now on the other side promoters could not raise the promoter’s contribution on time and they borrowed from the market their part of the contribution. This additional interest was not factored in the project cost as promoters contribution is expected as capital from promoters.

While processing the proposal, net worth statement of promoters were submitted and immovable property was considered as a part of net worth and bank assumed promoters would liquidate the same to bring promoters finance. This was not possible as the immovable property was their residence.

In between all these, we for our other professional assignment met one of the machine manufacturers in Nasik and incidentally, they were manufacturing the similar machine which the borrower above imported from Germany. We just asked the cost of the machine. To our surprise and shock. the cost was mere 15% of the imported machine from Germany.

The immediate thought occurred – how the project with imported German machine would succeed when the difference in capital expenditure is so much. I wondered whether promoters were not aware about the high cost of Capex they are indulging in? How will they match competitors’ price?

I informed the technocrat partner about the same. He told me their quality will be unmatched. I just inquired packaging is an outer part of the product, whether the market will pay a higher price for things which ultimately will be thrown by the users? But they were confident or rather over-confident oblivious of the market condition.

After a few months when I met them, they were in search of a loan to buy 2nd hand machines at a cheaper cost to bring their cost of production down as their cost of production from German machine was quite higher than the market can absorb. I advised against raising further debt and focussing on marketing to multinational companies where they were getting some success but that too without covering fixed costs.

After a year or so when I met them, I was told they had to sell their land and building to repay to the bank as the account become NPA and property was on sale. They mortgaged their residence to raise a loan to buy that 2nd hand machinery. After selling the factory, they had taken a small unit near Mumbai to manufacture on a smaller scale.

They looked confident that with this small set up they will come out of the financial trouble. I had my own doubt.

Many lessons:

1) The entrepreneur was not literate about the financial implication of their actions.
2) The entrepreneur was fully and blindly relying on the technocrat partner who also happens to be his relative.
3) The technocrat was over confident or rather did not do any homework before indulging such a huge debt and mortgage of property made out of lifetime saving worth US $ 1 mn by his partner.
4) His blind passion about the quality of output and capacity of the German machine was the only drive to set up the project.
5) The bank had done TEV study just for the purpose of record. No in-depth industry / competition analysis was done before committing the debt.
6) Most banks just go by financial projections submitted without trying to test every data.
7) Orders on hand submitted during the time of sanction are not reliable as they come with many conditions and which hardly materialise in reality.
8) Capacity of promoters to invest liquid funds as the margin was neither ascertained by the bank nor planned by the promoters.
9) The bank followed only security and disbursement procedures without going into either technical or market details.

Today they are not reachable. Their cell numbers were changed plenty of time during the last eight years. Of course to avoid calls from creditors. I am sure they must be in serious financial trouble. Once a zero debt entrepreneurs with an asset base of US $ 1 mn in the city of Mumbai now may be either under heavy debt and facing a legal suit from lenders and living somewhere in a distant suburb. They were residing in two of the prominent suburbs of Mumbai.

Debt can be dire. Financial illiteracy and over-confidence of entrepreneurs can be fatal – if not physically then socially. In Indian society failure and bankruptcy are very big crimes.  More than legal consequeces, the social cnsequences are unbearable.

Here I would like to invoke Guy Kawsaki. Someone must play devil’s advocate when any new idea is to be implemented. All pros and cons should be thought through and taken care of. Every action and its implication should be thought through – dispassionately. Rather than doing post-mortem when the damage is done, this kind of pre-mortem is necessary.

In his book Enchantment Guy Kawasaki writes;

Pre-mortems, according to Gary Klein, author of Sources of Power ; How people make decisions; are a better idea because they can help prevent death rather than explain it. … The team leader asks everyone to assume the project failed and come up with the reasons why failure occurred. … The team then figures out ways to prevent these reasons from happening… the goal of pre-mortems is to prevent the potential problems in order to increase the likely hood of success.

Shouldn’t borrowers and lenders both do this Pre-mortems to limit incidences of – bankruptcy and NPAs respectively ?

Sunil Gandhi

One suicide, one tweet and ease of doing business

Real estate developers in Mumbai are facing the real crisis. Most of the developers are under heavy debt. Project approval delays are well-known. With some 28 plus approvals from various Govt. authorities, one can imagine the time it takes and money involved.

On top of this sluggish market since last few years and heavy overheads. It is survival at stakes situation for many of the small and mid-size developers. When the market can’t absorb the cost and cost is high, the company fails. Here it is a question of an entire industry. We have seen suicide by a well-known developer in Thane yesterday – courtesy; prolonged time for Govt. approvals and heavy debt.

The subject of discussion is not real estate industry, but ease of doing business or rather how it is extremely important, making it easy for entrepreneurs to do business for speedier economic development. Definition of entrepreneurs does not mean only start up, but already stated too.

On one hand, we are struggling with low economic growth and poverty and on the other we have so many hurdles and impediment for wealth creators i.e. entrepreneurs. Unfortunately, most of these impediments are man-made. Be it outdated laws, excess of laws, unclear policies, excess approvals, delay in decision making, corruption and what not.

We are not growing, but we can’t let it free. Government and industry want growth, but enabling infrastructure is in doldrums. Mr. Finance minister every now and then makes statement India can grow double digit but how, when, action taken, ground level changes????

India fares 142 in ease of doing business. The picture is not so good at a company level. Companies which want ease of going business from Govt are equally culprit for making it difficult for their customers to deal with it.

Report on the economic impact of doing business found;

  • In Mexico one study found that a program that simplified municipal licensing led to a 5% increase in the number of registered businesses and a 2.2% increase in wage employment, while competition from new entrants lowered prices by 0.6% and the income of incumbent businesses by 3.2%.25 Other research found that the same licensing reform directly led to a 4% increase in new start-ups and that the program was more effective in municipalities with less corruption and cheaper additional registration procedures.
  • In India the progressive elimination of the “license raj” led to a 6% increase in new firm registrations, and highly productive firms entering the market saw larger increases in real output than less productive firms.27 Simpler entry regulation and labor market flexibility were found to be complementary. States with more flexible employment regulations saw a 25% larger decrease in informal firms and 17.8% larger gains in real output than states with less flexible labor regulations.28 The same licensing reform led to an aggregate productivity improvement of around 22% for firms affected by the reform.
  • In Colombia new firm registrations increased by 5.2% after the creation of a one-stop shop for businesses.
  • In Portugal, the introduction of a one-stop shop for businesses led to a 17% increase in new firm registrations and 7 new jobs for every 100,000 inhabitants compared with economies that did not implement the reform.

Recently, when Modi Govt completed nine months in office Mr. Deepak Parekh, Chairman, HDFC commented his displeasure about the ease of doing business initiatives. Interestingly Mr. Suhel Seth tweeted about this comment of Mr. Deepak Parekh. In response to Mr. Seth’s tweet what people have responded speaks many things:


In my book The Bread is Moving I have stated;

The above comment by Mr. Deepak Parekh and response by the Tweeple indicate a few things:

  • Ease of doing business is important
  • Ease of doing business is equally important at company level for its customers
  • Most entrepreneurs are not aware about the status of the ease of its customers
  • When any business leaders speak on any matter, she must be prepared for the backlash
  • Immediate response to negative comments about the brand is necessary by the company in a social world we now live in

This happens when a country and a company is not focusing on citizen and customers while designing its processes and systems. While designing any system or process customer centricity must be the focus. Failing in this will result in unpleasant experience and delay in work.

Ease equals to speed. Speed equals to faster results and outcomes. However, enormous vested interest, outdated norms, and work culture has made doing business a nightmare in India. The present Govt is trying to dismantle many outdated laws. World ease of doing business ranking has improved by 15 points.

There is an interesting book called The Effortless Experience which talks about making the experience of the customers effortless. It has a measurement matrix which measures customer effort score.

“You need to give your customers fewer reasons to be disloyal, and the best way to make that happen is to reduce customer effort.”

― Matthew DixonThe Effortless Experience: Conquering the New Battleground for Customer Loyalty

Making it easy is a business driver. Countries make it for its entrepreneurs and entrepreneurs make it for their customers. 96% of high effort customers become disloyal and 67% of the high effort customers become detractors.  The high effort is stressful and can be a loss making a proposition in competing markets.  A country will lose investments and a company loses customers.

We have seen social media impact of high efforts in the picture above. Every brand is exposed to social media and customers are very vocal on social media. Making it easy should be the top priority for everyone. Use technology or single window time-bound approvals, dismantle outdated laws and norms or reduce the number of punches while dealing with call centers.

Do whatever, but EASE is the way. Whether it’s a real estate industry or license for vegetable vendor high efforts equals to slower economic growth. When customer experience is so important for loyalty, focussing on EASE of doing business can have substantial bottom-line impact.

Want to focus on battering customer experience, focus on ease of doing business and effortless experience. Want to focus on the growth of an economy or a business focus on ease of doing business and effortless experience, want to improve business bottom-line and GDP, focus on ease of doing business and effortless experience.

India knows its world ranking on ease of doing business index. What is your company’s customer effort score?

Want to know more about the ease of doing business and building effortless experience read the ebook The Bread is moving.

Sunil Gandhi

The single most reason why financial literacy is must for every entrepreneur

Mr. X, who was once a very dynamic entrepreneur engaged in the pharmaceutical business, is now under depression for many years. Family expenses and cost of two daughters’ education was borne by other close family members. His wife was doing some domestic work till both daughters completed their studies. The marriage of both the daughters was solemnised with the help of close family members. This is a real life story.

The reasons for depression for Mr. X?

Not knowing the seriousness of debt and mismanagement of money in good times. The account becomes NPA and bank initiated recovery proceedings resulting in the sale of all the assets. Being classified an NPA account holder no more lending by other bankers. He could not recover from the shock.

Yes, debt is dangerous. It is not only killing poor farmers, but even the state of families of small and medium entrepreneurs whose accounts have become NPA is dire. Apart from the financial and economic impact of NPAs, which we all keep discussing there is a huge social impact of NPAs. The vulnerability of families of entrepreneurs who become NPA. Yes, this is a huge social impact. Imagine the plight of Mr. X and his family members.

The NPA is cancer for an Indian economy. At 4.45 % at Gross level and 10.90% at Gross NPA Plus restructured standard asset situation at banks is alarming. These figures indicate almost 11% of banks’ advances are at risk.

Imagine 11% bad and doubtful debts for any company. The banks’ margin spread is around 2 to 4 %, where PSUs are at the bottom and foreign banks are at the top end of the range.

Money is dangerous. The excess money is more dangerous than adequate money. There are many examples of companies ruined just because of mismanagement of money. In India there is a saying that companies are sick, but promoters are not. But this is not the case in every situation. We are seeing the debt impact on the poor farmers. The scene is hardly better for small and medium size businesses. Though the total % of banks’ NPA is 4.45%, SME loan to NPA is 4.58% which means the ratio is higher and families impacted are many.

As per the paper on ‘Non-Performing Assets and Public Sector Banks in India’ presented to the Parliament, factors responsible for NPAs are as under:

  1. Diversion of funds for expansion/modernization/setting up new projects/helping promoting sister concerns.
  2. Time/cost overrun while implementing projects.
  3. External factors like raw-material shortage, raw-material/Input price escalation, power shortage, industrial recession, excess capacity, natural calamities like floods, accident etc.
  4. Business failure like product failing to capture market, inefficient management, strike/strained labor relations, wrong technology, technical problem, product obsolescence, etc.
  5. Failure, non-payment/over dues in other countries, recession in other countries, externalization problems, adverse exchange rate, etc.
  6. Government policies like excise, import duty changes, deregulation, pollution control orders, etc.
    Willful default, siphoning of funds, fraud, misappropriation, promoters/management disputes etc.

The above study and findings will help bankers to monitor and dealing with their advances. In addition, RBI has earlier this year come out with 45 early warning signs for the banks to know the potential of the account become an NPA. Banks are vigilant about their money, shouldn’t entrepreneurs be equally or rather more vigilant about their survival?

Many a times, entrepreneurs do not understand the purpose of the fund and mismanages the usages. Short-term funds for working capital is used for long term project purposes which deprives the company from much desired working capital and business suffers. This suffering is so much so that if the entrepreneurs do not raise adequate working capital in time the account becomes NPA. Long-term short-term mismatch and fund diversion are rampant across the companies.

Most of the time managing finance for SME entrepreneurs is a challenge. It could be because of not understanding the financial implications of decisions and secondly overconfidence of an entrepreneur about his own capability and understanding. Both the shortcoming has to be supported and plugged by objective professional advice as the stakes are high and implication could be socially fatal.

Every entrepreneur must know about the following important eight financial ratios:

  1. Total Debt / Tangible Net Worth (Should be below 2)
  2. Total Outside Liabilities / Tangible Net Worth (Should be below 3)
  3. PBDIT/ Interest (Should be above than 2)
  4. Debt Service Coverage (Should be above 2)
  5. PAT / Net Operating Income (Higher the better, ideally around 6%)
  6. ROCE (Should be higher than the risk free rate of market return, ideally around 15%)
  7. Net cash accrual to total Debt (Should be more than 15%)
  8. Current Ratio (Should be higher than 1.30)


1) Use actual stock i.e. removing the dead stock and actual receivables i.e. removing the bad debts, while calculating these ratios. You can’t afford to fool yourself.

2) Manipulated ratios will neither save the company nor the entrepreneur)

A weakening of these ratios is an indication of financial stress on the company. Forget bank debt even without debt these ratios are indicators of the health of a business. SME business should first learn to make true and fair financial statement, then only they will be able to analyse their business for their own benefit.

Banks are tightening their norms and systems. It would be difficult to escape their clutches if an account becomes NPA. Be it Vijay Mallya or Subroto Roy escape if difficult and when the escape is difficult entrepreneurs must be ready for the social impact of their negligence or over-confidence while dealing with the borrowed money. Even dealing with their own money would require some prudence and caution.


Being an entrepreneur is easy but we all know the fate of Amitabh Bachchan when ABCL become bankrupt.

I know of a financial advisor who is running a club for NPA entrepreneurs & their family members. Social pressure and stress are so much that, here like-minded people meet and it acts as a stress buster.

Either become financially literate or consult those who are. Flourishing business can die just due to financial imprudence and negligence. Neither for the banks nor for the business, but for the survival of the self and the family, financial literacy is critical.

Share the post if you like it.

Sunil Gandhi

Business Critical ebook free till 2nd Oct 2015

Free Ebook last date extended to 2nd Oct 2015. (Mahatma Gandhi’s birthday)

Happy to inform my new book The Bread is Moving released on Kindle on 27 Sep 2015 will be available for free till 2nd Oct 2015.

Praise for the book: 

“The book is written in a simple to read and ready to execute format. I am sure, you will enjoy reading this book. And without wasting any time, you will start designing your organisations CX.”

Govind Shrikhande, Customer Care Associate & Managing Director, Shoppers Stop Limited

“This book is very apt and timely for Indian market. Especially for hospitals, customer experience is critical and the book tells almost A to Z of it.”

Joy Chakraborty, COO, Hinduja Hospital

“I am impressed with how simply Sunil Gandhi has explained one of the most important aspects of Customer Experience (CX). Citing Indian examples he drives home the point very clearly and I am sure readers will be able to embark on a CX improvement journey right way.”

Manan Choksi, Director, RE/MAX Gujarat, Director

Buy now for Free (Till 2/ Oct/ 2015)

Sunil Gandhi