Who Should Start A Business

Volume II

Who Should Start A Business?

Now that we know why one should start a business, the next question that should be asked is: Who should do so? As discussed in the previous posting (Volume I), not everybody is cut out to be his own boss. It takes more than simple ambition. The demands, on a business starter are great, numerous and costly and not just on the financial level. The toll on health and on family relations is even greater than the financial risk. The ideal Entrepreneur needs to wear several hats, (S)he needs to be the consummate paradox; both visionary and  practical; a great leader and a greater follower; a Jack of All trades and an expert. Most importantly, the new entrepreneur must be steadfast, intrepid and laser focused on reaching his/her goal.

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It takes a certain type of person to be able to see a need for a product and service and then visualize the extent of its potential market. From there S(he) must also be able to envision the entire process from conception to delivery to that market. It seems simple, doesn't it? Just look around you and observe people go about their day-to-day lives at work, home or during leisure time. There's always something missing, a process that can be shorten a step or two to speed it up. A concept that can be simplified so access to larger amount of users can be opened further. An existing tool that is on the verge of being obsolete because the way of using it have changed and it is no longer as adequate as it was originally conceived. That tool can be tweaked a little bit to adapt it to the new materials or way of doing things and, just like that a brand new tool perfectly relevant to today's way of doing things is born. Yes, most of us, with a little observation and patient thought process can come up with a few new ideas. Then why don't we see, new business popping out every minute out of every day all over this great nation and over the entire world? Well, they probably do. But it is not always news worthy and therefore not always reported or even talked about in the very preliminary stages. But that is not the point I'd like to make. Everyone can have the vision, everyone can even see the entire path of the step by step process from conception to realization. The difficulty lies in what happens after the Euphoria of discovery has passed. The impediments on the road to success show up before the first step is event taken. It rears its ugly head from the second the visionary speaks of the idea to his family and friends. His/her "Idea" becomes a huge target for everyone to shoot  flaming arrows. That's were conviction and steadfastness is needed. One must be able to see the general terms of what is to come in all aspects. One must be able to see in his mind where the future business could be 1 year from then, 5 years, 10 years and 20 years. One must be able to plan in his mind what will be the oppositions the traps, the pits in the road to the successful acquisition of a solid market share. It takes creativity, mental fortitude, the ability to dream with eyes wide open  and shut off the background humdrum of the Naysayers. 90% of the great ideas are mentally aborted before they have a chance to be birthed.

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Businesses, however, are not built in the clouds in Utopia, they are created in the harsh reality of the present world. The business starter besides being a visionary and a fruitful dreamer, must also have both feet firmly planted on solid ground. He must be more Cartesian than Descartes. He must be pragmatic and take care of the nitty-gritty details that end up crashing the company right after the take off, if neglected. Little things, as intellectual property protection, proper licensing, legal and fiscal representation can kill a project before it has a chance to reach the very first step. Those details can not be delegated by the Business starter to anyone. S(he) must seek professional counsel, but must be on task personally particularly on the conceptual and planning phase. S(he) must know every single detail of what, how, where and when and most importantly How Much. S(he) must know his/her business plan better than the back of his/her hand and S(he) must be able to understand it so well that S(he) could explain it to a 5 year old in 10 words or less. The Entrepreneur, must know exactly what it will take to produce the product/service, what means will be required to do so, with projection of 1 year, 5 year and 10 years. Who will supply the necessary parts, ingredients, materials or whatever is required for the fabrication of the product or the delivery of the service? What will be the overall cost of production of such product or service? What are the logistical details for receiving the necessary goods and delivery the  end-product or service to the client base? What unit profit margin can be expected? What is the breakeven point below which one cannot afford to remain long particularly in the launching phase? All those pesky little details must be taken under careful consideration. Being able to see the Big Picture is important, but one must also realize that the level of resolution and definition of the Picture is proportionate to the amount of tiny little pixels per square each. Each Pixel is a very important pesky little detail. See the forest and not just the trees is good, but one must understand that there wouldn't be a forest if not for the trees.

 

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Just like it takes a village to raise a child, it takes an entire professional community to start a business successfully. No matter how talented the Entrepreneur, s(he) can't do it all alone. Finding the right team is not limited to finding the right business partners, who will each bring the proper amount of funds and/or knowledge, to complete the Executive team, although it is very important. It is not just about finding the right employees, who would espouse the new company's philosophy and believe in the same goal, although that is also very critical. It is about going beyond the inner circle of Employees and Management/ownership.It is about being able to finding the right suppliers and creating a real relationship with them, not just, based on a "I buy you sell, you charge I pay, You deliver I receive, platonic relationship. There needs to be a symbiotic relationship between the suppliers and the company. They need to be involved at a deeper level. The suppliers financial well being needs to be improved by doing business and by seeing you succeed and jeopardized to some degree, if you are doing poorly. This can not be done by sheer will. It takes careful planning in the selection of your supplier. Not necessarily the cheapest, nor the leader in the market, but someone who can be relied upon, who gives you a fair price/quality ration coupled with a good delivery lead time and overall someone who needs to grow as much as you do. That, however is not the only important aspect of the relationship.

The Entrepreneur must, as soon as s(he) can, establish credit with the suppliers. It is primordial for the company's cash flow. To be able to receive the goods, go through the process of fabrication/delivery of final good/service to the company's clients and collect on such before any disbursement is made to the suppliers is ideal. Cash-receivables before Cash-payables is always preferable to the opposite whenever possible. To be able to do so in the very first months or even the first couple of years is very difficult. That is why it should be planned from the very beginning in the conceptual phase. Obtaining such an advantage doesn't depend only on the agreement between the Entrepreneur and his/her suppliers, after all, the suppliers are businesses also, subject to the same logical rules of arithmetic. The Entrepreneur must provide a way to assuage the fears of the supplier running the risk of not collecting on his goods if the new enterprise fails prematurely. That's why the Entrepreneur must also work with his financial institutions, so they can take the responsibility of payment for the Entrepreneur towards the supplier, in case of default on the payments on the Entrepreneur's part. This brings us to the Bankers. The Entrepreneur has to convince the Bankers to go along with his company and afford him the financial fortitude that will calm the fears of non payment of his suppliers. Again, Banks are businesses too and they cannot take on such a risky responsibility without getting something in exchange. That's why, in the conceptual phase, the capital projected must include, not just enough funds to cover the launching phase, but sufficient additional funds to cover at least 6 months, preferably 1 year of a full budget. The additional funds can be safely held at the Entrepreneurs bank and earn interest in a relatively liquid investment vehicle, thus providing the bank benefiting from such safekeeping with a valuable collateral to cover their own risk in this endeavor. They are several financial instruments that can be used to that effect but I will not stray into a description of such details, as it is not the subject of this dissertation.

Every thing mentioned above are basic business management 101. However, even if all the Entrepreneur's "Ducks" are all in a row on the planning and financial side, there is no guarantee that everyone will follow his wishes. S(he) must be able to convince the suppliers/creditors to follow his/her plan. S(he) must convince the bankers to follow his/her financial strategy and most likely put up a collateral. S(he) must LEAD so they can FOLLOW. S(he) must know the business plan like his/her own first name, s(he) must be able to communicate and project his/her vision clearly enough and with sufficient confidence to convince everyone to take a chance on the new Enterprise. Projections and planning are just the first part of the equation. It must be solidly realistic, it must show that the Entrepreneur is agile of mind, and extremely aware that nothing, no matter how minutely planned it is, ever goes perfectly as expected. The Entrepreneur must convince everyone that the company is nimble enough, flexible enough to regroup, analyze and adapt at neck-breaking speed, each time an impediment surges on its path.

However, as difficult as this seems, it is not enough. Creditors, suppliers and bankers are not the only groups the Entrepreneur must lead. S(he) must also reach out to the community of his client base. Develop a relationship with its market. Be close, in all the sense of the term, to its clients/customers, so it can keep the finger on the pulse of the market. The Entrepreneur must also reach out to the authorities within the local market to ensure that a lack of communication and compliance does not hinder the launch of an important project. Too many successful companies have neglected that very important aspect and as a result have become over extended financially when a major investment has been blocked by some local government for some reason and ensuing litigation have dragged the company under.As the former Mayor of New York City, Rudy Giuliani, famously said: "Don't mess with City Hall". The Entrepreneur must LEAD the entire community into following along with his objective in order to have a better chance at success.

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If there is a Market for a particular good or service, chances are there is one if not two major market leaders. Even in the smallest niche markets, there is most likely an established company dominating that market, if not locally, at least abroad. The new Entrepreneur should be able to identify these leaders and study them. They are not only the competitors, (if sharing the local market), they are the single most valuable source of data for the budding entrepreneur about his client base. One should learn from these leaders, learn from their successes and most importantly learn from their early mistakes. The reason for their success should be discovered. Their success is the evidence that they know what makes the clients of that market tick. The Entrepreneur must be able to follow the blue print drafted by his/her peers in that market, adapting is as s(he) progresses to its own strategy. Follow their path like a road map where the treasure troves and the pitfalls are clearly marked. The Entrepreneur should also listen to the advice of his team of experts, that is the reason why s(he) has contracted or hired them. Ignoring their input is not only foolish, but a waste of human and financial resources. Following sound advice with a wary mind, eyes and ears wide open is an additional trait the enterprising mind must have. Knowing how and when to follow is just as important as knowing how and when to lead.

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Just like everything in the Universe, everything that has grown to great dimension, did so from a humbler beginning. The mustard seed may be one of the smallest seeds but it produces one of the tallest tree. Most start up business, begins small in terms of capital resources, but also in human resources. The "Skeleton Crew" is usually what gets things started until better days further down the road, affords the business to get some Human resource "Flesh" on its metaphorical bones. Thus the starting Entrepreneur must have enough general knowledge about each and every position required for the enterprise to function and s(he) must wear several hats for as long as necessary. "Jack of All Trades" is usually a fitting moniker for the new Entrepreneur. That general knowledge is necessary because the "Boss" needs to fill the positions himself until s(he) can afford to hire the staff to fill the different positions starting with the most critical after the 'Boss". It is also very critical to have the knowledge so the new staff can be trained by the boss to his/her specific requirements and company philosophy. Not to mention, being sufficiently knowledgeable to enable proper supervising, goal setting and performance evaluating for each position. A ship Captain must know how to navigate, even if he has a chief navigator on staff.

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That being said, there is one expertise, the Entrepreneur must have in the absolute. S(he) must be the ultimate expert in his/her own market before the company is even launched. S(he) must know all that is possible to know about the client base, what makes it tick, what were the past trends, what were the successful products/services of the past, which are enduring till today, what are the clues in the client base's behavior that may herald the upcoming trends. The Entrepreneur must be a super absorbing sponge, soaking all the information about his/her industry and the targeted market. Nothing can be left to chance, chance is already a very large factor one must contend with, there is no need to allocate it a larger space than absolutely necessary. The Entrepreneur must come to know his/her clients better than they know themselves. That is the only way to stay ahead of the game. The only way to recognize rising opportunities and forecast future fasting periods soon enough to prepare for it, reassess the direction and adapt to the new situation as it presents itself. That is the only way to be pro-active. The alternative is to have to react to every single upset and jump from one problem to another, always one step behind at best, eventually losing complete control and ultimately failing. I hate to cite such and overused phrase but the Entrepreneur must Eat, Sleep and breathe his business, his industry, his client base. That may be an all consuming proposition, too overwhelming for most, but that is what separates the successful Entrepreneur from the rest. As the business grows, this task doesn't diminish, but it does get easier because, as the financial and human means grow, the Entrepreneur is no longer required to wear all the hats. S(he) will be able to shed hats, one at the time, until s(he) can focus solely on the navigating of the Enterprise and ensure the team s(he) put together, work to the best of their abilities in their own field of expertise and, most importantly, with each other for the best interest of the company.

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In conclusion, a person with great vision but practical enough to pay attention to details. Who can can inspire people to follow his/her vision and who knows how to follow great examples of success in his/her chosen field, should start a business. S(he) needs to be the Skeleton Key that opens all the doors of the company to be started. All rests on the shoulders of the Start Up Entrepreneur. For that reason, s(he) must be the most knowledgeable, the most dedicated, the most diplomatic, the most decisive, the most fearless and the most confident of all the staff members. Because S(he) is above all, a member of the staff, the most important member of the staff, but a staffer nonetheless. It is a grave error for a business leader to put him/herself above his/her staff, no matter the size of the organization s(he) leads. If the company rules do not apply to the Leader, chances are, s(he) either won't remain in that leadership position long, or there won't be much of a company, much less staff, to lead very soon. Someone who is prepared, ready, willing and able to be at all times the MODEL FOR THE BEST EMPLOYEE OF THE COMPANY and has all the qualities described above is WHO SHOULD START A BUSINESS. Any body else will just waste their time with a an exorbitantly costly and hopefully not lengthy exercise in futility.