Saturday, May 23rd

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truly random

random explorations of entrepreneurship & business

My definition of war

Posted by: Krishna Kumar in in the news

Tagged in: mumbai terror

Consider this:

A group of people, heavily armed, presumably of foreign origin, land on your beaches at night and starts firing at people in the streets and hold hundreds hostage.

In my dictionary, this is war against the country, as blatant as it can be.

Some where in between the non stop coverage of the latest Mumbai terror attack, I saw some statement being made that there would be no long term business impact.

How insensitive!If you remember, 9/11 was what nudged the US into their last recession.


I was talking to an entrepreneur friend, who runs a event management business out of Bangalore. He is one of the best in the and his services are always in demand for the most talked about shows in the country. He is facing a spate of cancellations. And these are not sporadic. Cancellations through to mid December is 100%.

Another friend has a similar tale to tell. All business visits into the city of Mumbai and into many other cities of India by foreign delegations are being canceled more politely, being indefinitely postponed. 

Travel tourism and advertising are already down given the global economic crisis. And on top of that, this.

Trust the politicians to tell all these people that there will be no long term impact !

I have long been a fan or poetry. I was going through some old classics earlier today, when Kipling's immortal poem "if" struck me with new meaning.

what you should do, given current troubles - particularly apt for  entrepreneurs and CEOs:

IF you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don't deal in lies,
Or being hated, don't give way to hating,
And yet don't look too good, nor talk too wise: 

A bit of special advice for entrepreneurs follows

If you can dream - and not make dreams your master;
If you can think - and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build 'em up with worn-out tools:

The next stanza is not particularly suited to the context. So I am not reproducing it here ;)


I have many friends running small businesses - mostly under 25 employees. And most of them have never had it so good. In fact some of them confess that they have more business now than before. What is happening ?

Consider the outsourced content development - writing and editing- business.

Large content organisations have frozen recruitment and are outsourcing any new work to smaller operations like this one, who in turn uses a mix of full time employees and a network of work from home freelancers to keep costs and overheads down. Result - more work in tough times. Even some larger outsourcing setups are sub- outsourcing to operations like these!

Or consider the small advertising agency owners

Their client lists today included some of the blue chips in the industry and they too have their plate full. How? The big spenders are moving out a lot of work from costlier full service advertising agencies to smaller creative-only shops like these which charge only fraction of what the biggies do. (and there is no agency commission on media releases either).

Then there is the small market research company.

There too the story is similar. They had taken to the internet in a big way right from the beginning, both as a differentiation and also to keep field costs down. Like with the advertising agencies, they are also getting morel work from big ticket clients who are moving business away from larger agencies.

Obviously, there has to the pain point - the problem area. What is their biggest problem area? Payments that get delayed.

consecutive quarters of negative GDP growth signals that an economy is in recession.

2.  Is it the same as a slow down?

Absolutely not. A slowdown means that growth is still happening, but at a slower pace than before. For example, if  say India was growing at 9 % pa for the past few quarters then a growth rate of say 5 % for the current quarter is a slodown, but not a recession.

3. Is a recession a normal occurrence?

 According to the traditional theory of business cycles, a recession is a part of a business cycle. Clement Juglar's 8 to 11 year cycles had periods of expansion, crisis, recession and recovery. But these theories have been disputed. Even the concept of business cycles has been questioned.

4.  Can we know in advance about a recession?

Unfortunately not. While predictions can be made, you do not know when a recession starts, because, by definition itself, you need two quarters at least of negative GDP growth. Given that these figures are corrected after they are announced, it si quite possible that an economy is in an out of a recession even before it is formally stated.

5. Does a recession mean that all companies are badly affected?

No. A recession is an overall measure of an economy - a country. Within it, different sectors an companies could be impacted differently. Some could actually do well during this period.

6. What is a depression?

A depression is a long and sustained period of recession. 

7.  Is India in a recession?

No. The Indian economy is facing a slow down and not a recession.

8. What causes a recession?

Many different things can lead to a recession. The events of 9/11 led to one in many countries. The series of recessions in Japan from 1989 was a result of the asset price bubble [1] [2] when high stock prices and high land prices collapsed.

9. What are the aftereffects of a recession?

That again depends on a number of factors including cultural ones. Japan for example never fully recovered. The manufacturing might was lost to Korea and China amongst others. In the US after the great depression of the 60's  saw a period of reconstruction and innovation that redoubled its position as a super power.

10. Which countries are currently in recession?

Germany is.

OECD's latest economic projections for US, Japan and Euro area starts off ominously enough "The OECD area economy appears to have entered recession, and unemployment is now rising in many OECD countries. OECD projections point to a protracted downturn, with GDP likely to decline by a 1/3 of a percent in 2009, but the uncertainties are large"

11.  How can I best ride through a slowdown?

Read the cover story of  our November issue for tips :)