How does a company survive a turbulent period in its growth phase? K Vaitheeswaran, COO, www.indiaplaza.in, talks about this and gives specific tips on what to do.....

Excerpts:

We started our website in 1999 as Fabmart.com selling music, then changed the name to Fabmall.com and expanded into other categories. Today we are the largest e-commerce company based out of India, serving over a million customers and our business is growing at a good pace. We have about 3.5 or 4 million Stock Keeping Units, which is by far the largest in the country. It has taken us 9 years and a whole lot of effort to reach where we are today.

When we started in 1999 up to 2001, we had money in the bank, and a whole lot of enthusiasm and passion. We were the flavour of the season as we were a dotcom company

2001 to 2005 were turbulent times, difficult times you would not wish even on your enemy. The experience built steel into us due to which we are a better company today. We did a whole lot of good things to cross those times, we did not depend on fortune or luck;

2004 is when we actually saw a regeneration of interest in the space, lot more people were interested in doing commerce with us.

If the company is going through turbulent times, in the start up stages, then it is like taking a small catamaran and crossing a choppy sea during a cyclone, chances of survival are bleak. You have to be lucky to cross that. If it happens at a stage when processes and systems are in place and you've earned money, then the ability to sustain is a lot more. You have more resources, stakeholders, and a proven business model.

When you go through turbulent times, ask yourselves if these are temporary or permanent. Business always goes through cycles and there will be good and bad times. Identify if the crisis is likely to last 3 or 5 years and do you have enough money to survive? If you are an entrepreneur and started with a set of assumptions in mind, evaluate whether you will survive, and plan for it depending on the severity of the difficulty.

If it's a macro economic crisis, it may take anywhere between 18 to 36 months for it to change, it may not affect your business. It is not how long it will take for the crisis to pass, but how long it will take to start positively impacting you business. And the critical question is, whether you can sustain your company for the months or years it is going to take to overcome the crisis. Raising money during a crisis is difficult, so you have to manage with existing resources.

It's easy to run your company in good times, growth is 15% quarter on quarter and due to complacency you start running your business very loosely. During turbulent times you keep a relentless focus on expenses, you want every penny to be spent well, you can only throw effort; you can't spend money, so you start working SMART.

You need good people to stay and average people to leave, but it is the exact opposite that happens. At the back of your mind you do not want the good people to leave but you can't afford to pay their salary. I've had to call 20-30 people to a room and ask them to leave, it is a very difficult thing to do, but you need to focus on the larger good, and not get distracted from your goal.

Turbulence also brings enormous process focus; you want every single process to be super efficient. When you are growing, it is unlikely that your processes are efficient; you are growing because the market is growing.

We ran an online shopping business in this country, when nobody was shopping online, we didn't have customers, vendors didn't want to do business with us, no one gave us credit etc.

At the time, we promised ourselves that this phase is temporary and that e-commerce is going to explode, we were the early in the market, and we planned for the good times. We looked for the things a customers will need from our website, customer will need good products, good prices, efficient logistics, and a choice. We focused on existing customers, Approached brands, showed them the future, built the product, and had good vendor relations and that's why we have such a large product range, today in good times, we have no time to look for products. Today we are equipped to handle competition, because of all the good processes we set up during the bad times.

K Vaitheeswaran is a co-founder and currently the Chief Operating Officer of Indiaplaza, world's largest India centric e-commerce company with operations in Bangalore, Chennai and Austin, Texas.

He is also a co-founder of www.fabmall.com , the company that pioneered the Indian E-commerce Industry and he is also engaged in evangelizing the cause of E-commerce in India.

He was speaking at a Panel Discussion organized by Businessgyan and TASMAC  on the topic ‘How to grow in turbulent times?'  

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