Wrong turn, wise owner, good endingIn a sluggish economy, companies vanish like the morning dew. Some whose businesses fail are never heard from again, while others who learn from their mistakes come back even stronger.
Kim Young-sik, the chief executive of Chun-ho Food Co. in Busan, a maker of natural health foods such as sea oyster pills, falls into the latter category.
Though the food concern racked up sales of 20 billion won ($16.6 million) last year from its line of 50-odd health food products, Chun-ho’s financial picture was quite bleak not so long ago.
Shortly after the company was founded in 1990, one of its first products, a concentrated beverage made of snail meat, became an instant hit in the Busan area and helped fuel a healthful cash flow.
Mr. Kim then made a critical mistake: He broadened the company’s investments to include enterprises such as survival game arenas and massage parlors. Unlike its food business, every other operation tanked, landing the company in serious debt. Business got so bad that the number of employees plummeted from 150 to 5.
“In business, there’s always the risk of failure,” Mr. Kim says. “It’s a question of how quickly you can bounce back and cut your losses.”
Starting over, he focused entirely on the food sector. By purchasing raw materials in bulk, he controlled costs and undersold competitors. With no spare money for advertising, he handed out flyers on the subways. After two years, word of mouth helped catapult sales to 1 billion won per month.
Nowadays, Mr. Kim appears on the Busan college lecture circuit, transferring his on-the-job failures to the blackboard and offering students a glimpse into the real business world.
“Like a ship captain who has weathered some storms, an economic crisis makes company managers even stronger,” Mr. Kim says.
Mr. Kim never again ventured outside his core business -- food ― and the company has never again experienced financial hardship. “I learned that I shouldn’t stick my nose into areas that I don’t have a clue about,” Mr. Kim says.
by Kim Guan-jong