Give More Take More

Taking a risk in investment is a gamble and only those who have the capacity to bear the loss should take plunge. Expansion sounds very impressive in business but it should be done as per the capability. Crossing one's own limit while taking a financial risk may weaken the status in the long run

Indian IT market is witnessing a momentous growth and the sector has
tremendous potential for everyone involved in the business. The package of
success comes bundled with risk and challenges and one has to accept them in
order to create a space in the competitive environment.

Opportunities

A sound and healthy business is directly proportional to a high rate of
investment and one needs to take a risk in business to expand their presence. A
higher scale of profit can be touched only by taking initiatives and by
leveraging on investments. Exposure to high risk is very essential but it must
integrate some clear-cut methodology so that there is a defined fund management
and the terms and conditions are calculated well in advance so that there are no
additional payments at a later stage.

Limitations

Everyone has their own boundary and it is very essential to recognize it
because a risk can prove to be fatal if that limitation is crossed. There are
many easy sources of funds available in the market and solution providers can
enjoy the benefits of business expansion. However, they should understand their
actual capacity to repay the amount because taking a risk is a good decision but
it should be done within the individual's limit.

The right way

Fund allocation plays an important role in maintaining consistent growth.
Weightage should be given in terms of business values. If any particular section
has a greater opportunity and demand for more funds, investment should be done.

Fund allocation gives support for calculating and minimizing risk if it is
done intelligently.

For taking any risk funds, should be allocated in such a way that if even one
section fails, it will not raise the situation of bankruptcy. While investing in
different sections, there should be some portion of fund kept aside for meeting
losses. Fund reserved for support helps in chalking out the game planning.
Chances of survival exist only with a judiciously planned fund allocation
otherwise things may go haywire.

Easy availability of fund opens up a path for solution providers to achieve
success and high profit. They can earn good marketshare in a shorter time
period; however, this is not the right formula to maintain consistency in the
market. There is no shortcut to achieve profits in business and one should not
do the mistake of taking the risk of high investment with low capability.

Playing the bandwagon to get rich quickly is not a judicious method. Partners
who follow the concept to become rich quickly by short term business planning
have to pay a lot in the long run. Partners often get trapped in a viscous
circle of loss, when they follow the lucrative path to do quick business and
earn quick profits. Selling products at lower costs leads to negative results
and is not the right way to establish a strong position in the market. It can be
attractive for a while but it is not efficient in the long run. It is not a
prudent decision to get clients by offering them products at lower costs.

The game

In the fund and financial zone of IT market, there lies a game of 'rich getting
richer and poor getting poorer'. The root cause of this trend is easy
availability of funds for those who are financially strong. Nobody stands in
support of the not-so-strong party and the world speaks louder only for jacks.
To get more funds, one has to be financially strong and there is no place for
the needy.

While sanctioning funds, credibility of the borrower plays a crucial role.
Trust is generated for parties who have a consistent business track and
sustained financial growth. Lenders need to be cautious for non-prudent clients.

Rule of the thumb

Though there are many sources of funds available in the market, the major
ones are private banks and credit limits sanctioned by distributors. Investments
should be done rationally and not just for quick earning. The core objective of
all transactions should be 'give more in order to get more'.

Solution providers who are not strong enough to take a risk should not take
it. Organic growth is very important for a sound and healthy business. High
risk, low fund option is an unjustified path that brings loss and failure and
hence it should be avoided.

In the internal matters of an organization, there are many expenses that
collectively amount to a big sum of money. Such expenses like rent, traveling,
telephone etc should be adequately minimized.

Alok Gupta

The author is CEO of Softmart Solutions, New Delhi and can be contacted
at sales@softmartonline.com