Being very close to the Marwaris (for I am one myself, although not a true one yet) I have seen and heard of the journeys of quite a few of them. I am extremely fascinated by the philosophy and methods in which they operate business. But what tops them all is a Marwari’s philosophy of managing risk.
Since one always needs to take a bit of risk to be successful, here’s how the Marwari’s work in the face of it.
1. Risking all the Way
For a Marwari, money is literally god, and the only way to appease this god is by taking risks. That is why, until a decade ago, you would not have seen a true blue Marwari doing a white-collar or a blue-collar job. Doing a job is a temporary occupation for a Marwari, just to learn the ropes before s/he takes the big leap.
No matter how much it pays, working on someone else’s payroll for life restricts a Marwari’s risk-taking capability. It hampers their journey towards financial freedom, it hinders wealth creation. The fear of taking risk would make a Marwari financially average.
2. Making Cash before Doing Big
For no Marwari, success is measured in terms of income, but in savings net of taxes. Even idle cash-in-hand should be invested to earn interest. The aim is to make excellent profits by ensuring high margins and fiercely controlling every paisa, including the taxes paid each year. No wonder Marwaris are often labelled 'Kanjoos Marwaris'.
Until a Marwari family is in the early stages of starting a business, they will curtail expenses, live in a small house (or in the shop itself) till they have made enough cash to buy a house. Availing a loan is the last option for even financing the business.
3. Staying Disciplined
Since money is the end-game as far as business is concerned, Marwaris have amazing control over accounting. Books and inventories are tallied every day. Even if it were on an ordinary piece of paper, all expenses, stock movements, and other cash outlay, including personal expenses, are meticulously accounted.
The people of this community, at least the older lot, are extremely punctual. Even on the occasions of a close relative’s wedding, the business will continue to run. They will ensure that the family attends the celebration in turns, while the customers are seamlessly attended to.
Marwaris are extremely well-connected. They socialize, attend weddings. Networking helps their business and creates a backup pool, if something were to go wrong financially or otherwise. Marwaris are ready to help anyone and everyone – from the most influential businessman in town to their building’s watchman, from the vegetable vendor to the local politician. They skillfully tap into this network whenever the need arises.
5. The Plan-B
Marwaris understand that taking risk without covering the downside is foolish. Thus, they ensure to keep enough backups. They create sufficient contingency funds that power their resilience to take risks. They will invest in safer instruments, like LIC, PPF, gold and Government bonds, without worrying about interest rates or return on investments. They invest in assets or businesses that generate fixed passive income. Moreover, a Marwari father's biggest backup is his eldest son, whom he has trained in the entire business process.
It is also extremely rare to find a Marwari who does not have an insurance, especially Mediclaim or Health Insurance. Of late, term life insurance has also caught up. Marwaris understand the math too well to not enjoy the benefits of insurance. They keep a tab on the coverage, plan upgrades and make sure that such plans are executed at the right time. Ultimately, it is all part of the bigger scheme.