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Reasons for Failure – Continued……
We continue our discussion on entrepreneurship by the Pharma Industry employees.
Poor Availability/ Inefficient Distribution
The two points may not always necessarily mean the same but are related. A new pharmaceutical enterprise gets a small distributor who will have limited finances, small team, and patchy coverage of the market. It is a compulsion because bigger distributors will not accept a new, small enterprises, and even if they accept it, the small company will get lost among the larger ones.
Inefficient distribution leads to poor availability of drugs. The patients do not get the medicine when it is prescribed by the doctor. The doctor gets annoyed and refuses to prescribe again. So, it is a vicious cycle. Poor distribution leading to poor sales to poor availability to customer displeasure to lost business to dismal ending.
Inefficient distribution is a serious and tangible reason for failure.
Unstable, Unproductive Sales Team
Both factors affect sales teams. If the enterprise is so small that the entrepreneur is running it only himself, everything depends on him. If he engages a team, which could be expansion after initial success, or starting at a bigger scale, team challenges start.
The first major challenge is to attract reasonable candidates. The enterprise is unknown and small, and it does not give out confidence to potential employees. The pharma market is rife with real-life stories of employees who did not get paid for several months and finally left in anguish, or the company asked them to leave without paying their dues. The candidates therefore are quite wary of joining an unknown venture. Three categories of people may respond: one, the novices who have no idea about the market or the job, and want an employment, any employment; two, those with some experience but are out of job and are desperate to get a job, any job; three, those with some experience who intend to cheat and run away. None of these is good for the new business.
After the hiring challenge, next comes retaining challenge. Quick learners, people with better profile, and serious workers are likely to fly away after a short while. The enterprise is back to square one, trying to find new people. Smaller companies have this big issue; they train people who are spotted and poached by bigger companies. Bigger companies pay better and offer more benefits to start with, and the future is more promising. These cannot be matched by the smaller ones, therefore, the migration from bottom up continues.
Training the barely suitable candidates is the next challenge. The willingness to learn and execute is not there. Those who learn, leave early.
Instability is the biggest challenge to productivity. A new medical representative, even if experienced, takes time to develop relations with the customers. There are too many companies and even more salespersons, and there is constant shuffling and turnover. The doctors say that they do not pay attention to a new medical representative during the first few visits because they are not sure if he will continue. When they see the guy is coming regularly, then they start noticing him. Business will come later, if at all it comes. If the salesperson is changed frequently, the customer confidence goes further down.
Unstable teams are unproductive and lead to serious consequences for the enterprise.
The last two points relate purely to the entrepreneur. Financial indiscipline has caused the death of too many enterprises, even when they had attained a somewhat bigger size. It can come in various forms.
Overspending on the infrastructure – an exclusive office, a decent address, a nice reception, and cool chambers are a matter of joy, but if they are done at the cost of business, these would be disastrous. The title of Chief Executive is enticing and leads to the tendency of showing off. The old business communities of Karachi, the Memons, the Punjabi Saudagran of Delhi and may be some others have shared this. Up to a certain financial status, they must continue living in the old community; when they achieve next level, they can move to a middle tier place like societies; and when they are quite wealthy, they can choose to live in upscale localities like DHA. This is very strong financial discipline which is not seen in other business communities. Pathans have great sense of trade and know how to handle money. Punjab businessmen are nowhere near such discipline. They would be either miser and stingy or too liberal with money. Both traits are damaging.
Financial indiscipline, I repeat, is among the biggest causes of business failure.
Money changes people in many people. Johnny Depp who became hugely successful with Pirates of the Caribbeans movie, after a long career, was asked in an interview, “Do you think money changes people?”. He replied, “I think it does not change people; it only brings out who you really are”. It may sound like a harsh comment, but it is close to reality. As the business grows and money flows in, lifestyle of self, and may be family also, starts changing. In principle, there is nothing wrong with enjoying your money, or even flaunting it. However, if it happens too soon, or is disproportionate to the reality, it can cause serious damage. In many parts of our country, our priority is to make a big house, which is the deadest investment from business point of view. And it can consume humungous amounts of money. After it is made, then there is a recurring cost of maintaining it. Another priority is to own a V8 Land Cruiser quickly, and the wish list goes on.
Lifestyle changes matching the financial status are very welcome, otherwise these put too much strain on resources and lead to failure.
Failures cause huge financial, psychological, and emotional damage.
We have discussed several reasons why entrepreneurs in pharma industry fail. In the next post, which will be last of this series, we shall talk about broad strategies to do better.
To be Continued……Disclaimer: Many pictures in these blogs are taken from Google Images which does not show copyright ownership. If a claim is lodged at any stage, we shall either mention the ownership clearly, or remove the picture with suitable regrets.