Are all your eggs in the one basket?

zimbabwe

“Don’t put all your eggs in one basket”
Anon

I love travelling. Travelling allows me to experience unique cultures, see beautiful and interesting sights and most importantly meet interesting people. It’s amazing what you can learn from listening to other people’s experiences.

On a recent trip to Zimbabwe I was fortunate to be sitting on an aeroplane next to a local businessman who was returning home from South Africa. In conversation he gave me his family’s life story. He had several businesses, some urban property assets and was managing to survive despite the severe economic circumstances. His family also used to have several farms, employing hundreds of people. With the encouragement of the government, these farms were ‘taken over’ by so called ‘war veterans’ in the early 2000s with no compensation. In other words, his farms were stolen and hundreds lost their jobs.

Apart from obvious injustice, his position emphasised an important strategy for business owners. I had initially seen this strategy used by a former employer.

The strategy was “don’t put all your eggs in one basket”

Unlike many farmers who had lost their farms in the ‘farm invasions’ the Zimbabwean businessman had survived because he had diversified his businesses, thereby protecting his wealth. Likewise my former employer had carefully separated his business into various categories – operating business, fixed assets, property investments and stock exchange investments. If the operating business failed, then the rest of his wealth was not threatened.

The lessons learnt from my former employer were implemented in a subsequent business. This could not have been done without a very disciplined approach as at times our business struggled. Too often I have seen business owners draw out of their business for private use such as expensive cars, children’s school fees and overseas holidays and then get into trouble with the tax office and creditors when the business struggles financially.

Have you got ‘all your eggs in the one basket’?

If you have, perhaps you need to reassess your situation……

What is your plan?

boer maak ‘n plan

In Afrikaans, the language spoken by the mainly Dutch immigrant descendants living in South Africa ‘boer maak ‘n plan’ means a ‘farmer makes a plan’.  The deprivations and harshness of farming in a foreign land brought resolve and the need to plan to get around or solve these problems.  Having travelled recently in Southern Africa I came across another similar saying in Zimbabwe where people often spoke about ‘making a plan’.

What does the saying really mean?

Not as it appears literally. The ‘hidden’ meaning is that you have an alternative plan (a plan B) when your first plan fails or is impossible to implement. In other words, you need to be flexible and adaptable to solve a problem.

How does this equate to being a manager or managing a business?

As business owners or managers, we need to plan in the first instance. As the saying goes, ‘if you fail to plan, you plan to fail’. See the blog by http://www.stewartclark.com.au/blog/fail-to-have-a-business-plan-is-planning-to-fail-in-business_105s41

However, having a rigid plan may not work if circumstances change. Let me give you an example?

Many years ago in our third party logistics business we were having difficulty in getting our trucks unloaded on time at a retailer’s distribution centre despite meeting their strict time slots. It was OK for the distribution centre to run late unloading you, however if you failed to arrive at the designated time slot you were ‘fined’. What made the situation even worse was that to make the early morning delivery time slots, trucks had to battle peak hour traffic to and from the distribution centre as well as the loading delays. This became an expensive experience – instead of 3 hours it was taking 6 hours to deliver and unload. It was further compounded by our fixed price delivery charge.

We had many meetings with distribution centre management and despite their assurances that the situation would improve, it did not.

What would solve our problem and be a ‘win’ for the distribution centre? Our Plan B.

Making some observations and talking to the receiving team at the distribution centre a plan emerged. All loads were hand unloaded (rather than on pallets) onto a conveyor with the individual cartons being scanned as they travelled up the belt. The distribution centre had a prime mover that was used for moving trailers around the receiving area.

We asked distribution centre management whether we could trial loading a 40’ container instead of an ordinary tautliner semi-trailer. We would bring the loaded container in early in the morning before peak hour, leave it in the receiving area for the distribution centre prime mover to move onto the unloading conveyor when it suited the receiving team. The empty container would then be picked up on the next early morning delivery. After a short trial, it was found that it was a win/win for both us and the distribution centre. Delivery time halved with a massive increase in margin for us and the distribution centre was able to utilise their receiving area far more efficiently.  

The success of the trial enabled us to purchase two second hand and obsolete hand semi-trailers for 10% of their replacement value and establish a unique closed loop delivery system that was extremely profitable.

We solved the waiting time problem and the peak hour travel problem which initially appeared to be unresolvable. We significantly increased our profits by having a Plan B.

Remember in any situation, you should always have a Plan B like the farmer faced with the unpredictability of the harsh African environment…….