A business friend gave me a book “The 80:20 Manager“, I didn’t read it for 6 months thinking it is just another self-help book that is good to read but tends to be forgotten after a week. But this was something that was inline with my established beliefs and it was not hard to follow. It rather, gave me confidence to implement what I believed.

In essence, book is about Pareto Principle applied to management. 20% of selected inputs leads to 80% of outputs. For business, 20% of customers can give 80% business and profits.

Since starting 3 years back, business has been journeying in various ways. Here are a few ways in which we got back our focus in the last 3 months.

Other edible oils trading
With coconut oil getting dearer, consumers were shifting from coconut oil to other edible oils. So, our business within the existing market was getting reduced. Demand was shifting from bigger SKUs like 1-litre pouches to, say, 500, 500-ml pouches. So, we started trading in other edible oils like Refined Palmolein Oil, Refined Sunflower Oil and Lamp Oil. With this, we could

• Provide our existing Coconut Oil customers, i.e. Retailers, with a full range of edible oils so that they can source more from a reliable vendor
• Get more income from the same customer at the same distribution expense and more sales turnover
• Use vehicle load fully, keep a better tab of fluctuations in other edible oils

But with it,

1.The focus started shifting away from our core business of manufacturing and marketing coconut oil.
2.Adequate service could not be given to our customers because of supply disruptions from our vendors.
3.Lot of works were to be done in transportation, unloading, loading, accounting, leakage processing, payment, selling in credit, managing working capital etc.

What seems like busy work and turnover was actually not contributing towards building Cocoguru brand or increasing bottom-line. So, we just stopped them altogether. That provided a lot of relief and we closed Sullia godown, released a rented vehicle and saved on a few resources.

Distribution
Wholesalers/Retailers were given a supply of coconut oil through our Sales Van. For this, we had to arm the vehicle with a driver and salesman. To account for those transactions, an accountant was required, and an officer was required to manage the delivery team. These are unrewarding work for a manufacturer but had to be done initially to sell our products. The cost was very high, 40% of our company expenditure was going towards sales and distribution. We had five delivery vans to supply all over Dakshina Kannada district.

I always had a dream to stop doing line-sales ourselves and get distributors to do it for us. However, distributors will take it up only when the brand is popular, and they are confident about selling it. The margins should also be sufficient to sustain their business by only selling coconut oil.

The tough decision of increasing our selling price has made it possible and very soon. We left out less productive salespeople, made enthusiastic salespeople as distributors, and gave away our existing vehicles to them at a reasonable price. With this, we could leave out about 12 people from our payroll, stop renting two vehicles, sell 2 of our own vehicles, and save the work of 2 accountants, a Logistics officer and Top Management. Expenses are very low and under control, and the selling price is predictable. When the distributors have to sell to earn their living, their performance is even better, and sales improve.

Leave Customers
With the eagerness to sell more and acquire as many customers as possible, we tend to serve any customer at any cost. But some customers are not worth our attention. Some need discounts, credit, or pampering, are difficult to supply, need a different quality, put restrictions on us, and still never get satisfied. Bolding and leaving them out is a win-win situation for both the customer and us. We can cater to profitable customers better; others can get their desired service from a competitor. For every customer lost, there are a couple of them to be gained.

Piece Work/Contract Labour
If we believe in Theory X, labourers are lazy, they tend to take away maximum wages for minimum work. While employers looks to get maximum work for minimum wages. Mostly the labourers have their say. It is cumbersome for supervisors to get maximum work with quality from them always.
So, to align their work output with their income, we have made a piece work system, where they get paid only for the units of work done and not on attendance. This is system is fair for all workers, they are not paid on seniority, experience or any prejudice, only on output they produce.
In any annual appraisal discussion their only focus is on the revised salary, without any regard to their past performance or skills to be developed, responsibility to be assumed in future. For such people giving instant reward is the way to go.

After doing this their performance have increased multiple folds. Example, for a 5 member team segregating 6 tons of copra a day was very difficult, now 3 members are doing it very comfortably and with better quality.
For bulk quantity loading and unloading, in house labourers weren’t willing to do, so external labours had to be called. Now for 10 paise per kg, they are willing to do.
In packing section, where 9 people couldn’t finish all packing jobs, now after leaving 3 people, the 6 people are having enough time to go for other jobs.

Overall, we could leave about eight fewer performing people, and better-performing people are getting handsomely paid. Form 30 labourers, we have brought down the count to about 20; work is getting done faster and better, and existing labourers are fully engaged and satisfied.

With all these steps, the amount of administration work has come down drastically. Again, a couple of people who have become redundant were left out. With this lean an organization, it is possible to even double the business without having to add any headcount. Any decline in business can also be managed with minimum overheads. With operations focused and streamlined, the way forward is to grow sales through advertising and appointing distributors to cover more areas. From accumulating losses for 2 years and not knowing the way forward, this is a very pleasant situation to be in.

We market Coconut Oil all over Dakshina Kannada district for edible use. In order to prevent unhealthy competition that erodes everyone’s profits, an association is formed among all oil millers. The Minimum Price is set weekly, and all oil millers are expected to follow it in the selling price of their respective brands. Cocoguru started with its Price at 1 Re premium when the association started 2 months back. Now, we will increase the premium by one more Rupee and then set a premium of 2 rupees on a product that is valued at about 150.
The following are our thoughts on the price increase.

• Increase Brand Value – Brand Value is measured as Price Premium x Increase in sales because of use of brand name compared to an unbranded one. We invest in increasing our brand value and then look to encash it.
• Signal of Quality – It is otherwise very difficult to communicate the value of our product w.r.t. that of competition. One of the easiest and sure-shot ways is to increase Price. While comparing two shirts that are seemingly similar, we tend to think that shirt that is higher priced as one that is better. Food served in a star hotel is supposed to be better than one served in an ordinary hotel because one gets a higher bill there.
• Reason for Purchase/Sale – People should buy our product because they want it and badly want it, not because it is available at a lesser price.
• Increase Responsibility – By increasing the price, in order to maintain and increase sales, one must back it up by improving the quality, service, and marketing, as well as being consistent and responsible. This will again be good for the brand.
• Satisfaction – Company employees, suppliers, salesforce, distributors, retailers and consumers all feel very satisfied, have prestige in being associated with the brand.
• Insulate from competitor moves – Lower priced brands are always under threat from new entrants and competitive price moves. Whereas premium brands are harder to topple by competitors. Competitors must work very hard to build their brand in order to acquire our customers.
• Prevent Bargains – When our selling point is lower Price, customer always tend to bargain. Transaction then happens only when we yield to the bargain. If we yield to those who bargain, then the one who doesn’t bargain suffers, eventually he too starts bargaining. For a routine FMCG sale, bargaining with the same customer every week is not a smooth way to deal.
• Futile Price Wars – Price as a competitive advantage is never permanent and not worthy. We can gain a temporary sale by selling at a lower price. But competitor will immediately react by selling his at an even lower price. This will end in a price war with no winners but all badly wounded losers.

Going forward we like to increase the price gap and eventually not lend Cocoguru to price comparision with another brand. Every aspect of our business is undergoing continuous improvement, Price will also undergo improvement accordingly.

From the company, we organized a one-day trip to Mullaiyanagiri for employees on Sunday, 8th June. Twenty-five out of our 38 employees have been able to make it for the trip. Ten ladies and 15 gentlemen, their ages ranging from 20 years to 55 years. Here, I would like to summarize the facts and share my opinion on the trip.

After a hectic season ending this summer, we wanted to have a break from routine and have a relaxing session. The group otherwise formally organized with hierarchy, powers and responsibility, will now be informally organized with personal friendships and similar interests.

Usually, in business operations, it is me who makes final decisions or takes tough calls where the buck finally stops. But for this trip, I delegated the responsibility of organizing the trip to my younger colleagues and future leaders, Nanda Kishore, Vinod and Shiva Kumar. They are trekking freaks themselves, too. I only briefed them about the duration of the time, which was 1 day. i. e. Sunday without affecting our regular work on Saturday and Monday, people – our employees only and not their families, place – a scenic place nearby and budget – 800 per head. They went ahead, selected the place, went there one month in advance to understand the place, booked the bus, arranged for lodging and food, and arranged to pick up and drop employees from far away places.

Though a few of us visit other places almost every weekend, for a few, it was a once-in-lifetime, once-in-a-blue-moon kind of opportunity. One colleague remarked, for the first time since my college 10 years back, I am freaking out like this. For me, it was otherwise; I didn’t go out till I completed college as I was not allowed. The company management is very happy to provide them with that opportunity and their gratitude in return.
Many of us know each other professionally, but we don’t know each other personally. Those who are working in our branches at Mangalore and Sullia may not know those working at our factory at Puttur. This was a great chance to get to know each other personally. I am surprised at how each of them has different personalities at work and outside work. Some of them, who meekly obey orders from superiors at work, now participate freely.

We started from our factory at Puttur on Saturday night at 10 p.m. and picked up people along the way. Travelled through Charmadi ghats to reach Chikmagalur at 3 a.m. We checked into a lodge only to get fresh and complete our morning activities. They charged 100 per head for the same. Get ready by 6 a.m. I travelled to the base of Mullayanagiri Hill while enjoying hills, valleys, sunrise, and a panoramic view of Chikmagalur city. We had breakfast at a small canteen at the base and started trekking to the Mullayanagiri peak 4 kilometres away. Everybody enthusiastically marched along, playing many pranks along the way.

We saw many tourists like us that day since it was a Sunday. Being the highest point in Karnataka, it should certainly attract many visitors. We could see lush green mountains, green either with grass or trees. I observe that the ghats on the western side of Malnad have more trees, and the ghats on the eastern side of Malnad have more grass.

Mullayanagiri peak has a small temple on top. It also has a couple of caves where one go a decent length inside the hole of hardly 1 metro diameter. Such a cave experience was first time for me, for a claustrophobic, it can be quite an experience. Once can reach the top through well laid out steps, instead we climbed form the back side of the hill to reach the top to enjoy a full 360 degree view of other landscapes visible from top.

We started descending down at 10 a.m. Reached the base at 11 a.m. We had ordered for lunch at the same place where we had breakfast. Since we had to go to Bababudanagiri next and had nothing to do here, we had an early lunch at 12 p.m.

The mobile tower on top of Bababudganagiri is clearly visible and just a 2-hour trek from Mullayanagiri, but along the road, one has to travel 20 km. The road is still under construction, so we had to park our bus well before Duttapeeta and go by public Jeep. He also took us to another place 4 km away with a small lake and viewpoint. I finished that part of the site by 3 p.m., and it was time to come back.

The weather was excellent for sightseeing. It was bright and sunny; there were no clouds, so far-off places were visible. There was no rain, so cameras could be taken out without fear. The rainy season is yet to arrive formally, so all the streams and rivers have no water. At that altitude, the humidity was low, so unlike in Puttur/Mangalore, where we would sweat profusely without doing anything, there we were not sweating at all. It made it so much easier that we were trekking easily, even under the midday sun. But when we were heading back after Mudigere along Charmadi ghat, the rain came, and it stopped us from enjoying the breathtaking views of the ghats. While going up the ghats, we couldn’t see because it was night, while coming back, it was raining. I can’t complain about it when we choose to travel in the rainy season.

Dinner was ordered at Suprabha’s uncle’s place at Somanthadka off Ujire. Thanks to their family for arranging it. After dinner at 8 p.m. we reached Puttur at 9.30. People were dropped to their respective places by 10.30. A satisfying and pleasurable trip comes to an end. Bad thing being, People had to come back to work on Monday as usual after this

Thanks to the organizers who made the trip a jolly ride without hiccups. I would like to highlight their responsibility and sacrifices. After such a tiring journey, they dropped people off at their homes in their personal vehicles. They gave us the best opportunities while they took away what was left. On a 22-seater bus, they sat near the driver and didn’t sleep for a moment in their entire night journey. They freshened themselves up at the bus stand while the rest of us did it at the lodge to save time for us. They came first and went back last. Not many appreciate them for the good things they have done, but any shortcomings are immediately observed and mentioned. It is not easy to hold 25 people together throughout the journey and make everybody happy, but they did it. This will give them a good experience of how to lead in their organizational duties in times to come.

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