This Is How A Street Vendor Taught Me The Business Management!

I lost millions to learn some simple business lessons. I didn’t go to business school. Whatever I do now is purely on experience and learned all lessons by paying huge money.

Learning business management in school is good, and it guards you against making costly mistakes in business. Your experience crowns your knowledge and makes you a king in business.

I was in Chennai, India, for six months during the year 2000. I failed miserably in my business and lost everything that I earned and what we had. Whenever I feel low and had no one to share with, I visit Marina Beach, the world’s longest beach in Chennai. Find a calm place near the shore and sit for a few hours.

“Never Give up”, that’s what the wave teaches us!

After sitting for a few hours, I will settle, and the waves never settle. It has more responsibility to make many people settle down, and it is a never-ending story.

I still remember that day, Diwali eve, Wednesday, October 25, 2000. I don’t have a penny to travel and meet my family. I was missing my wife and two-year-old daughter. Feeling alone, and visited Marina beach thinking that the wave will alleviate some of my pain.

The beach was more crowded on that festive eve, and I managed to find my lonely place, a little far from my regular spot. I used to buy ‘Sundal’ (a recipe made of peas, coconut and mango) from a boy who regularly roams around that area. I couldn’t find him on that day. When I was about to leave, I found him a little far, and he was selling value innerwear for men. A large crowd was around him and doing great business, and another boy was helping him.

I started observing him, and he was doing that business like an expert. In his busy schedule, he managed to spot me in the crowd and signed me to wait. I was waiting and wondering how a ‘Sundal’ boy doing cloth business.

He came after 30 minutes and said it is a seasoned business and do it for a couple of weeks during the festival season of Diwali and Pongal. He said he would make few thousand during this period which would help his family living 500 miles away from Chennai, as he is the only breadwinner of his family.

I learned a lot on that day which would cost a few thousand dollars to gain knowledge through formal education. It is available FREE even now around the corner, and we need to have eyes to find it.

So, What did I Learn?

Lesson 1: Business Adaptability / Change Management

I wonder how he changes his business depending on the requirement of people. Staying relevant and adapting to the needs of people in your business results in success. As a businessman, if we try to adapt to the customer requirements, overcome the roadblocks, and deliver accordingly, success follows.

Lesson 2: ROI per Squarefeet

His small stall (just a mattress spread on the beach sand) was not more than 8×8 size, a total of 64 square feet. Based on market potential, the sales estimate and money received per square foot of selling area is threefold more than that of average retail stores was making at that time. I realised that the unorganised sectors are contributing more than 50% of the country’s GDP.

Lesson 3: 100% Conversion Rate

It is never possible in retail or any business industry. On that day, I was witnessing there a 100% conversion rate. The conversion rate is the proportion of store visits to the number of customers who make a purchase. Business stalwarts used to sit in their meeting room for hours and discuss how to improve their conversion rate?

Here, he saw his customer and who they are and what is their expectations and the price and promotion keep changing dynamically and ends up in a Sale. What a strategy?

Lesson 4: Sell-through rate

It is the percentage of units sold vs unsold or to be sold. 

We usually arrive at this by calculating the number of units sold divided by opening stock multiplied by 100.

He quickly did maths by visual calculations and pushed the unsold products with more offers on price and rest on a good profit margin. End of the day, he needs to run out of all stocks he has, as tomorrow is the festival day and no sales thereafter.

Lesson 5: Opportunity Market

I forget time and continue to watch and soon tried to help him in his business. It happened to me unknowingly.

When time moves on, some of the product was out of stock. I was expecting that he would say ‘no stock’ when someone asks for it. When the customer asked for the product, to my surprise, he asked me to look out for his business for seconds. He rushed to his friend, who has a similar setup nearby and picked up a few stocks that the customer wants and sold it with a good margin.

Oh man, that was great! Where there is an opportunity, you should gain out of it and never miss that opportunity.

Lesson 6: Gross Margin Return on Investment (GMROI)

Money spends on inventory and the money earned on that results in your GMROI.

It was 9:00 pm, and only a few people were around the beach. He had very few stocks left. May be around twenty pieces left. He started selling those for half the price that he was selling them before. The overall profit margin was outstanding, and this doesn’t affect his margin much.

Moreover, taking this leftover to his place would cost more than the cost of the product.

Lesson 7: Corporate Social Responsibility (CSR) Activity/Social Contribution Ratio

It runs out in 10 minutes and is left with the last two pieces. He started packing his stuff, which fits in a small bag and holds it in one hand and holds the unsold items in the other hand. We walked towards the main road and found an old homeless man on the street. He approached him and handover unsold items, and walked away by smiling at him.

We both had tea and talked about the future (I will share in another post soon). Respect towards this boy raised many folds, even though he was just a 14-year-old boy.

Take Away

Look around and try to figure out management skills from ordinary people. Never underestimate anyone based on their look, education or work. They portray a wonderful quality of life, and we need to learn from them. Education gives the knowledge to work, and the experience provides more skills to perform.

I wrote this simple quote on that day.

“Understand the rhythm of Life; Move with the wave; Celebrate your success with a louder sound, as a wave does it”

© Rajalingam Rathinam