A few days ago I wrote Job or business – part 2….here is the part 3

Look at Risk Reduction techniques

The most important thing that a business does is to create different streams of revenue. Even when you have a job you have to (must) create different sources – dividends, rent, interest, side business. This will ensure that in case you lose your job you are not stranded and not have enough money to meet your day to day expenses. You should also take adequate insurance – medical, life, car, house, fire – whatever is applicable. You cannot ignore risk. l

Know how much to leverage:

It always looks nice to borrow and buy! but no business should borrow money for its expenses – except when it is a start up. Similarly for a family borrowing more debt than 3 year’s Cost to Company looks dangerous. Remember the ratio of Debt to Assets has to be 1:2 or better to have peaceful sleep!

Keep stakeholders happy, but economically

Many companies spend far too much compared to what they earn. As an individual or as a family YOU cannot spend more than what you earn – except temporarily – when you can borrow. However the loan (and interest) has to be paid. So all the stakeholders have to understand and accept that income may not keep growing and that there will be times of low income (illness) and times of no income (retirement) for which reserves (investments) have to be created.

Cash flow vs Profitability

All stakeholders have to understand that a business maybe profitable but maybe re-investing a lot of the cash. This will create cash flow crisis but that does not mean anything if it is well planned. If you knew you were going to burn cash and that cash was already provided for, it does not mean a thing!

Keep Inventories Low

In the home context it is the unnecessary things that you buy. If you have 50 tee shirts, 12 pairs of shoes, 30 formal shirts and 25 formal pants – apart from 3 digital cameras, one unused motorbike….you are getting the drift right? All these unnecessary things are making your ‘money’ usage very poor.

i am sure there are more……can you think of any?


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  1. Hi Subra sir, Excellent article. Point taken that when in job, one should not squander money. I have add on point – There are these fortunate employees who can save major chunk, however In India, salaried class from majority* of companies/factories are living a frugal life. If they were to ask the employer for too much raise, employer can easily replace him with others competing for same job ready to do it at lesser salary. Too much salary also puts one at higher risk, as recession strikes they become most vulnerable. (Imagine a 35 yr old or 45 yr old losing job and trying to find another.) Employer will “almost-always” look at these two options to cut his costs.. The ‘salary raises’ people get is almost-equal-to inflation which means rents, school fees & expenses etc – rise in the same direction and more-or-less same % as salary raise yoy. In addition, to a large extent, the honest income-tax payees are from salaried class only.

    *eg.: General public – school teachers, bank employees, accountants, human resource guys, engineers, line-managers, salesmen, marketing personnel, canteens, medical reps, office transport and many others doing donkeys work etc.. etc.. always live in a hope that tomorrow will be better. With wafer savings, many have to plan for kids higher education, marriage and retirement.

    Unless we belong to minuscule of salaried people who are doing – specialized jobs (doctors for eg), reservation jobs (no explanation needed), or with supernatural talent (that no other person can do), inherited the company from dad (26 year old director who is decedent of Tata Birlas) etc.., the salaried class always struggled. (there are lot of examples of retirees – my friend’s dad, or my uncle around us) It is just a thought..

  2. ‘n’ number of fancy mobile phones, suits/blazers, ties, leather belts/wallets, TVs and A/C’s in every room, silk sarees, wrist watches, goggles, multiple reading glasses (one in the car, one in the office, one in each room…). The laundry list goes on and on….

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