What separates extra-ordinary business from ordinary ones

Most businesses realise less than 10% of their potential while others rise to extraordinary heights. What separate an ordinary business from an extra-ordinary business is not the quantitative aspects rather the qualitative points.

Here we are going to discuss those qualitative factors that will have a long-term bearing on the business.

A. Financial Management �

� The management should encourage effective Balance Sheet management involving sufficient cash balances and relevant Working Capital management.

� The management should also encourage giving due regard to conservative accounting treatment.

� The finance department should ensure that sufficient transparency is maintained as suggested by accounting guidelines prescribed by ICAI and IFRS in future.

� The most commonly abused accounting practice is about related party transactions. The accounts and audit department should ensure that there is due compliance of Related Party Transactions in spirit and not just by the letter of law.

� The Balance sheet shall contain everything that shareholders should know for proper assessment of the company.

B. Strategic Management �

� The organization should define the vision and mission clearly. The business targets should be fixed and should be divided with parts delegated across the organization structure.
� Any new development in the industry and strategies of the competitors should be evaluated pro-actively rather than reactively and management should be ready with the corresponding counter-strategies.

C. General Principles �

� The organisation should be due compliant with the provisions and regulation of various statutes and should ensure timely payments of all the tax liabilities.

� If it is a listed entity the responsibility increases many fold. In listed companies, the shareholders wealth creation should be regarded as prime objective as they have invested their hard-earned money. Other stake holders such as creditors, debtors and lenders should also be regarded in organisation goal-setting.

� Proper public relations should be developed for constant communication with media to avoid contradictory views.

Extraordinary business is synonymous with business success.

Understanding that a business derives its revenues as part of a larger system � getting value from and contributing to that system � is what history has shown separates ordinary businesses from extraordinary ones. For last three decades India has produced several extra-ordinary businesses such as Infosys, Bharti etc which truly can be differentiated from ordinary ones