In most small companies, especially closely held family businesses such as this one, the scarcest resource of all, even scarcer than capital, is management time. The fish wholesaler’s managers know the fish business. They spend a lot of time cultivating and maintaining relationships with their somewhat independent Native American sources of supply and their big-city restaurant and broker buyers. They carefully monitor product quality and handling. New developments in packaging and product-line extensions to include other fish and fish-related products are becoming more important. These are the most essential operating and developmental elements of their business. If the company is to grow, more management attention must be focused on these items.

After careful analysis—isolating the transportation issues realistically and substantially from these other higher-level management tasks—the company concluded that contracting out the shipping entirely, rather than leasing or buying new trucks, would be a good choice. Over an 18-month period, the company phased itself out of the shipping business. In doing so, it freed up nearly 20% of the two owners’ time to focus on
the company’s true area of primary value creation, which has almost nothing to do with overseeing the scheduling, main-taining, supervising and driving of trucks. Here the asset-efficiency issue went far beyond how well trucks were used or how well the truck-financing decisions were made. Ultimately, the most important assets of this and other businesses are the skills and knowledge of the people who best understand the dynamics of the business and the directions for its future success. A clear focus on critical core competencies may well be the most asset-efficient direction any company can develop.

Taken From : Cash Rules