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By Robert Likhang FCIS, ACMA, CGMA, CA(L), Principal Consultant at RL Consulting, a firm of virtual financial directors and company secretaries, and business advisors
The current economic challenges facing the country are fierce and deadly. National reserves will deplete unless the economy generates more funding for the national purse. The decline can be traced back to the 2008 global economic freeze but our fiscal and political decisions as a country have not helped the situation.
Everyone you meet in the major urban areas of Maseru, Maputsoe, and Mafeteng will greet with the common expression “Business is Bad”. We are experiencing a struggling and perhaps dwindling private sector, which means low national revenue will be collected for government to continue its services to the people while the much-needed jobs are also declining.
As a consultant, I deal with issues of revenue enhancement, cost management, risk management on a daily basis. The concepts seem new especially to the SME sector because over the years it has overemployed and in most cases incompetent staff members who were primarily family members or fellow villagers. SME owners have invested in many business sectors but none could stand on their own and be counted as viable businesses. The sector is now faced with increased competition and poor economy.
FAT IS UNHEALTHY
Everyone is going around selling fat reducing products because people are made conscious of the fact that obesity is the number one killer, a source of diabetes, cancer, hypertension among other things. Businesses that have developed fat over the years are beginning to show the symptoms of business diabetes and business cancer too. The business fat comes in the forms of overstaffing creating higher fixed human costs, maintaining too much or too old equipment and plant, which leads to high maintenance and upkeep costs, maintaining business units which are not profitable, or on which the companies do not have capacity to sustainably be competitive in them. Fat is unhealthy and it needs to be addressed to ensure that it holds the appropriate body mass ratio, that is, capacity relevant to competitiveness.
FAT REMOVAL PROCEDURE
People go on fat-shedding procedures. The procedures require changes in the way one eats and live. They may hurt but when consistently applied they lead to a healthy body. The companies must also follow a hurting procedure, which when courageously and consistently applied, would lead to a healthy lean company that will survive even the worst that is most likely to come. In my opinion the procedure should be as follows:
Business success is not obtained by luck or entrepreneurial hype. While both can come in handy, businesses that last are those that embody a good practice of business and use reputable (yet innovative) models. The storms are coming and very fierce. Will you stand?