Venezuela is currently seeing a growing crisis on their hands. Much of it stems from different factors like negative economic growth, hyperinflation, drop in imports, and other factors extending both in and out of the Venezuelan government.[1]
But there’s one part of that we can all learn something from. And it comes from their main source of income: oil. As told from the National Resource Governance Institute,
“Venezuela has the second-largest oil reserves in the world. The country is highly dependent on petroleum revenues, which the government relies on for an estimated 45 percent of its income. The extractive industries accounted for 95 percent of exports and 20 percent of gross domestic product in 2010. Despite a strong legal framework, the president effectively controls the petroleum industry and transparency is weak.”
There are recent accounts that say oil now accounts for over half of Venezuela’s GDP and over 95% of total exports.[2] Talk about putting all your eggs in one basket!
Let me clarify, this blog post is not about to bash socialism, endorse democracy, and tell you who to vote for in the upcoming election so we can avoid a decline as that of Venezuela. There is no hidden agenda. This message will simply be clarifying what we can learn from oil and its place in this Venezuelan crisis.
In the statistics above, it’s easy to see that the country put much trust into a commodity that has a history of instability and fluctuation.
Strike one.
The country was making money (at one point) from oil reserves, yet never capitalized on building and sustaining other possible industries to grow a small economy.
Strike two.
The country doesn’t allow others to shape the values of that commodity and allow for outside affiliation and involvement. They give a lot of power to one man and do not sufficiently ‘share’ the wealth to the country. To what extent I cannot say, but you can clearly see the lack of transparency within the country by their score offered from the NRGA.[3]
Strike three.
In a business, it is important not to rely so heavily on one product or service that you cannot subsidize or grow other profitable areas of the business. Now don’t lose me here, there are thousands of companies built from a single product or service. I understand that.
But it’s the ability to offer that service in different ways, with different options, to be able to repackage it in different ways, which makes a company truly effective.
There are some scenarios where it works and others where it is simply harder. Let’s use a Q-tip as an example.
The Q-tip was designed in the 1920’s by a man named Leo Gerstenzang. He watched his wife stick small parts of a cotton swab to the ends of a toothpick to reach some hard-to-clean areas on the baby. The Q-tip was born.
Now if you look on the box of a Q-tip, or even visit the website (http://www.qtips.com/), you’ll find that its most common use is not even mentioned. If anything, the use for cleaning ears is deterred in the ‘caution’ area where it says ,“do not insert into ear canal.”[4]
What started as a simple tool in order to help primp and tidy a baby, has turned into the Swiss Army Knife of the bathroom and medicine cabinet.
They brought that one product and repurposed it.
But that’s just one product. Well what about a service? Take a trip with me back to when you had that young entrepreneurial spirit flowing through your veins and decided to start your own lawn-mowing business. We can use this as an example.
When you first start out cutting lawns, you typically start with a few family friends – those willing to bear a possible uneven cut or maybe a few hack jobs here and there – and those nearest your home. That’s fine! A customer is a customer, am I right?
You only have one service – you cut lawns. Now let’s say you start growing. You start figuring out that people like a lawn that looks manicured. They want to see consistency in the trim and path of mower. They especially like it when the grass remains are brushed away and there’s no lawn-bomb in the driveway.
You’ve figured out you’re good with the lawns, and you want to stick with it. Great! And here’s where it gets profitable for you as a business – you begin to take calculated risks and attempt to grow.
It’s time to develop a other ways to maximize a simple grass haircut. Surprisingly, this can be done in a number of ways.
You can offer contracts that nail down clients for a certain period of time.
Find a business similar to your and collaborate. You cut the lawn and they’ll trim bushes.
Hire employees and begin to cut more than one lawn at a time.
Start a monthly newsletter about lawns in the area, climate change, and other variables that affect lawns. Have people pay a small monthly fee (or one time fee) for it.
The list can go on and on. Lawn service is just an example and so are Q-tips! Every business has a goal they believe is worth something. It’s our job, as employees and employers, to grow those businesses to the best of our abilities.
Maximizing one stream of income should be a no-brainer when it comes to growing and keeping a business. That’s the lesson we are to learn from Venezuela. How you do it is a matter of creativity and action, but there’s always growth if you look (and listen) close enough.
Although it’s easily forgotten, change is a necessity of growth and a business must be prepared for that. Don’t fall into the temptation of apathy when things are going well.
The hard part is not getting to where you want to be… it’s staying there that matters.
[1] Here’s a good article if you’re interested in reading about the crisis in its entirety:
https://www.thenation.com/article/why-is-venezuela-in-crisis/
[2] https://en.wikipedia.org/wiki/Economy_of_Venezuela
[3] http://www.resourcegovernance.org/our-work/country/venezuela
[4] https://www.washingtonpost.com/news/wonk/wp/2016/01/20/we-have-a-q-tips-problem/