Sometime in the mid-1990s, there was a hardworking man who ran a food truck.
His had the most delicious food in the city, and people flocked to his truck.
His business did so well, in fact, that when his son was accepted to IIM (Ahmedabad) he was able to foot the bill with no problems.
His son did well at IIM (Ahmedabad) – graduating from the top of his class.
The father was extremely proud and continued to work extremely hard in his food truck.
He was doing so well that he ordered a second truck and hired more people to keep up with the growth.
When his son came home from school over the holidays, he was shocked! He could not believe all the money is father was investing.
“Dad,” he said, “We’re going into a recession!!! Didn’t you see the latest numbers from the department of labor, or the latest GDP numbers? We are going into a recession! You can’t afford a new truck or new staff!”
The father became very worried. After all, his son was very smart IIM Ahmedabad graduate –top of his class, remember? He continued, “What you need to do, Dad, is to cut costs to get ready for this economic downturn!” So the man listened to his brilliant son.
He canceled the purchase of the new truck and let all the new staff go. But his son had even more advice: “Dad, look at how much you’re spending on ingredients! This is insane! Don’t you know you need to cut costs? Times are tough, and they’re only going to get tougher!”
And so the man found cheaper produce and cheaper meats.
He found out that his son was very smart indeed – it was not long after he came home until the man really started to feel the brunt of the “recession.” The business began to shrink, and people were not coming nearly as frequently.
So, he started cutting even more costs more to make up for it, and even fewer people showed up. “That damned recession!” his son said as they sold the once-thriving business. “That damned son!” the man said as he applied for a job at a local restaurant.
What are the lessons to learnt?
- In Business we have to make decision not out fear or worry, but from growth point of view, as in above example son has applied his learning of MBA and went down cutting cost so drastically that he forgot that the quality raw ingredients are the important part of his products and he should not compromise on that.
- Is there any area where, rather than cost cutting can we focus more on customers, as every single penny invested in quality will be back to us in multiplication?