Vic the Businessman: Case Study

Vic as a Businessman
Strengths
Personally a good man Gets loyalty and belongingness from employees Knows how to make money Puts customers satisfaction first Rash decision making: does not plan Lot of self pride Does not value skill and expertise Does not segregate business from self

Weaknesses

Vics Business
Strengths
Creditworthiness Loyal employees Customer consciousness

Weaknesses
Unrelated diversification Faulty financing Unclear shareholding among family members No system of accounting No market research Unprofessional management

Profiling of Vics Business

Age
Curious Goods Perfect Timers Watch Repair Tie Furniture Hotel Boat Old Old Old Old New New New

Size
Big Big Small Small Big Big Small

Skills

Interest

Available Yes Available Yes Available Yes Moderate No Not No Available Moderate No Available Yes

Cost analysis
(Rs. 000) Curious Perfect Tie Mfg. Watch Goods Timers Repair 2500 600 120 150 2300 10 2310 190 55 40 95 95 0.076 1250 1250 300 10 310 290 300 40 340 (50) 0.483 704 -104 100 4 104 16 60 16 76 (60) 0.133 570 -450 25 10 35 115 50 40 90 25 0.766 117 33 Sales Variable Cost Material Overheads (20%) Contribution Fixed Cost wages overheads (80%) Profit/(loss) PV Ratio (contribution/sales) BEP (FC/PV Ratio) Margin of Safety (actual Sales BE sales)

Profitability and Business Risk Matrix

PV Ratio Curious Goods Perfect Timers Tie Manufacturing Watch Repair Low High Low High Margin of Safety High Negative Negative Low

Conclusion
To run a business successfully one should have
skills required for the same, interest in the business and a combination of either
high profit margin-low sales volume or low profit margin-high sales volume

Advice
Retain watch repairs, watch manufacturing, Curious Goods and boat business. Sell the business interest in hotel project, furniture and tie manufacturing. Use the money to pay of the loans and consolidate the business. Convert family loan to equity and create comfortable debtequity ratio. Evolve a simple but effective accounting system to control and monitor the business. View business separate from self. Professionalize.