The Art of Winning. The Startup Guide

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1 – eagerness to compete

2 – eagerness to keep developing your business

3 – eagerness to learn

Eagerness to compete

Even if at the beginning you are not “one of a hundred”, whom we spoke about in the previous chapter, but you have set a goal and you are persevering to achieve it, in a while you will be able to join the ranks of the most successful entrepreneurs. Provided that you are not afraid of the competition, of experimenting and finding original solutions for market expansion, developing new products, and offering new services, entrepreneurial luck is sure to wait upon you.

Learn from the strongest and the best – this is the most effective way to pass the stage of the original accumulation of capital faster than your opponents. But never steal intellectual property, never infringe copyright: one can steal a bucket of water, but not the spring itself.

Eagerness to keep developing your business

Being an entrepreneur always means being an “owner” rather than “someone, who holds the purse strings”. He or she makes the money work through creative projects, and then hires managers for these projects. A rentier, i.e. someone who lives off the interest from their investments, is not an entrepreneur. Stopping and saying “that’s enough” means reaching the level of your own incompetence. Surely, there is nothing bad about it in itself, but when this moment comes, even the strongest leader stops being an entrepreneur.

Eagerness to learn

You can widen the limits of your competence. And every time I reach those limits, I tell myself: if you do not learn, you will turn into a lifelong manager. Mind you, being a top-class manager is good too, but I have always wanted to have a business of my own.

There is a number of gifted entrepreneurs, naturally talented people, capable of building a business out of thin air, as they say. But the majority have to keep improving their knowledge and raising the level of their professionalism.

– Business case —

…I have already told you about my experience of working in a big corporation. Half a year did it for me. And the biggest vice that I discovered in the course of those six months was the domination of ignorance on all management levels. Their way of thinking was decades behind our time. It is no wonder that for many years now Russian automobile plants have been virtually devoured by foreign companies, but not as leading businesses bought as successful investments, rather as platforms for a fast entry into the Russian market.

Having returned to the world of entrepreneurship, I left my position of a CEO for that of a hired manager and went to study first to Switzerland, then USA and Japan. I wanted to absorb the most progressive ideas in industry, marketing and logistics, understand how the already successful businesses develop, and how one can continue building up their entrepreneurial success.

The thinker, researcher and classic capitalism author Karl Marx said that when someone “learns to walk he also learns to fall, and it is only through falling that he learns to walk”.

One of the elements of a successful business is the choice of the right field, or, as the youth like to say nowadays, the right “turf”. It is possible that after all the failures and misfortunes in the area you originally set your heart on, you are still willing to persevere. However, you are very unlikely to achieve anything. The failures will overstrain you, undermine your abilities, and, most importantly, destroy your confidence.

Never be afraid of experimenting with searching for a suitable field and environment for a business.

For example wholesale purchasing of food from individual or collective farms and subsequently selling it by retail is rather a simple thing, but it requires a lot of physical labor (driving around, meetings). Not everyone is able to endure so many business trips and negotiations. Then the entrepreneur, having no time to manage all aspects of their business, decides to engage hired employees. They have to share profits with them, and at this point it is important to balance the expenses, in order not to go bankrupt. Lack of profit or, even worse, loss of money is bound to cause disappointment and break your entrepreneurial spirit. Making profits is the main purpose of any business.

If an entrepreneur, does not set him- or herself the goal of making profits, but is trying to fulfill the desire to be appraised by someone without relying on the final results, they will inevitably find themselves at a dead-end.

In the world of entrepreneurship success is estimated solely by the results, not the intermediate actions. After all, the winner is determined by the score. Remember that the people around are not going to judge every step you take.

Admirers, critics and analysts – everyone who is ready to buy the fruits of your labor and call you a successful entrepreneur, will appear only after the results are reached.

If there are no results, everything seems pointless and you find yourself face to face with your failures. It does not matter that the failed entrepreneur was an art patron, that they helped the weak and the poor, the authorities, the security services, or the city administration: they become a “nobody”.

In case a company collapses, a good lathe operator or a baker will always find a new employer. Hired workers have it much easier: they collect diplomas, ranks, titles which have an impact on their competence and the rate of remuneration.

As for entrepreneurs, they might not find their path a second time, having no qualifications, no ranks and no titles. There have been numerous examples in history when owners of great fortunes went bankrupt and found themselves on the margins of life.

Nevertheless, surely everyone has the right to go back to entrepreneurship. A potential merchant or industrialist may return to business even after taking on the role of a hired worker. If a person is aspirational enough to dream of becoming a member of the royal family, getting a title of nobility, earning a fortune of billions, then ambitions supported by the abilities and extremely hard work will help him or her to reach the desired level, or at the very least pave the way for his or her children. That is what happened to Ford, as well as many other well-known European and American entrepreneurs. But 99.9% of people who start their own business do not focus on such ultramundane goals. Maybe, they should: sometimes the impossible is possible!

As a rule, going back to being an entrepreneur after a failure is much harder because of the looser label, both an inner, psychological and an outside one. This is another reason why it is not worth going back into the area where you once failed. Of course, there are exceptions to this rule, but there are few of them. It is better and safer in every way to drop out of the game prior to a total meltdown which will give you a small chance of recovering in a different field, either related or opposite.

Business growth, occasional bad luck and even state of instability – these are equally constant elements of entrepreneurship.

Business is more demanding that sports, it is better to give up bad habits and hobbies at the very beginning of your business career. Your regime becomes totally dependent on your work and is no longer regulated in accordance with the orthodox eight-hour working day and a five-day working week. Business takes over all of your free time, especially at the beginning. The environment where a leader finds him- or herself after becoming an entrepreneur requires mobilization of all physical and psychological abilities. This is something that not only a burgeoning entrepreneur, but also their close ones should be ready for. One should not expect to stay afloat working half-steam. This would mean fooling yourself: there is no such thing as half-business.

I have mentioned before that when the business environment starts devouring all the time an entrepreneur has, he or she inevitably hires other people to boost the production and sales. But it will not get any easier unless you concern yourself with the HR policy, get to know more complicated accounting techniques and arrange the production system. In this case it is very important to perfect the schemes and mechanisms of profit-making in the face of the growing expenses (salaries, the amount of rented facilities, transport, etc.). Theoretical knowledge given at colleges and universities is not enough. Until the aspiring entrepreneur fully understands the entire mechanism of controlling overhead expenses in the course of the production process and gains the first profits, they will never get the feel of how their business is functioning. Evaluate the advantages and disadvantages of certain steps you take, dispose of the first and increase the second. And even if the business is growing successfully, one should never stop developing it, otherwise the vector of luck will immediately go down.

The job of an entrepreneur is an endless row of events and struggles. If you are truly interested in business, you should accept a simple truth: entrepreneurs virtually exchange their time, their loved ones and themselves for what they do and love.

Being a “composer”

Becoming an entrepreneur is not something one can do effortlessly. But what you can do is grow into an entrepreneur following the rules of the consumer market and at the same time breaking them. This is something that only people with non-standard abilities and way of thinking can allow themselves to do.

The crucial quality of a future entrepreneur is the ability to “compose” the process. An entrepreneur must be a “composer” or aspire to become one.

It is great for a burgeoning entrepreneur to combine the qualities of a “creator” and an “organizer”. A businessman must not only be able to “create a melody”, but also to “organize” its production and marketing moving from the handicraft stage to the stage of modern structured production.

Creativity, aimed not only at producing goods and services, but also at their marketing is the cornerstone, or one might even say, the philosopher’s stone of entrepreneurship.

Many examples of success on the market are based on exceptions, and it is those exceptions that modern gurus use as the basis of their training programs in business schools. However, the reality of business is way beyond the examples of Coca-Cola, McDonalds, Microsoft, Ford, Trump or Steve Jobs.

The overwhelming majority of aspiring entrepreneurs do not understand how one can create such a miracle as the Internet.

Entrepreneurship is a daily routine full of headaches and hard work which very rarely turns into a celebration of an unexpected financial success. Moreover, success must never be a one-time thing, but a matter of years and stable growth. A business process can be compared to an escalator that only moves downwards. Want to be successful? Walk upwards. Want to get ahead of the others? Run without stopping.

So, your business has taken off, you reached your first success – you allow yourself to buy an expensive car and an elite house guided, at times, not only by your own desires, but rather by the established traditions…

A villa, a yacht, VIP-resorts, exotic countries – out of fear to lose all that the entrepreneur holds on to the steering wheel of their business so desperately that it gives them white knuckles. But as long as you are driving on your own, you remain a manager. This kind of a “split personality” – the owner and the manager – is like being a composer, who spends most of his time at the piano, but simultaneously acts as a musician in the orchestra of his own creation. To avoid wasting energy that can be channeled into creativity, the “entrepreneur-composer” must only “compose” the business, and the management itself can be delegated into the hands of a hired manager.

Success in the competitive struggle is a result of constant growth, as well as an ability to suggest new interesting methods of promoting your products and services and constant renewal. If at the same time the entrepreneur remains a “composer”, they will always be one step ahead of their opponents.

However, there is a limit to any development, so we are inevitably facing the following question: how can you determine your maximum? Should you be satisfied with owing a cigarette stall, a hairdresser’s or a small bakery? Is there a possibility to run a small-sized business your whole life limiting your expenses at the very beginning? Originally no one thinks about how high they will rise, but even those who sell homespun stockings or stamp metal want their products and their mastery to be recognized by the maximum number of people.

Recognition is measured in demand. “I want to produce something worth a dollar, but I want every person on the planet to buy it” – this is the kind of thinking appropriate for a burgeoning entrepreneur.

– Business case —

…I have witnessed a number of my friends open their businesses and then, all of a sudden, change the direction of their ambitions making up new ways of development. One of such companies is now working with tent materials and it has become one of the strongest and most famous in its segment. When they started, the owners of this business (a married couple) were selling shoes: bought them wholesale and sold them by retail, accumulating experience, competence and the original capital. They visited Italian plants, increased the number of sales points, but at a certain moment they suddenly decided to sow tents for motor trucks.

Why would they shift into a totally different field? The answer is simple: they were unable to resist the growing competition within the shoe business. And their “composing” talent told them to change the market, channel their efforts into a field where the competition was not so harsh.

At the moment the tents sowing market was empty and growing. At first they decided to collaborate with “Kamtent”, a company from Tatarstan, but pretty soon an independent company “Nizhtent” was born. In the course of the first decade “Nizhtent” not only became a dominating company in its region, but also started developing in other corners of Russia. The equipment they bought and the arrangement of production sites with dozens of well-trained employees allowed them to make a step towards making pavilions from tent and other special materials, and later rent them out. All that was possible because they chose to leave the “narrowing” show market and move to another one which guaranteed stable growth of their business.

…I started by selling spare parts, but one day walking along the market, I noticed that the components for the dashboard (there were over a hundred of them) were sold separately and all the parts, including the tiniest ones, were in stock. Adding up their prices, I realized: on the same market a full dashboard was two or three times more expensive. I bought all the components, assembled a dashboard and sold it at the nearest consignment shop, thus doubling the capital that I had invested into the components.

In a few months several dashboard assemblers were working in my shops, and in the following years my baby business was already producing thousands of dashboards for the growing automobile market.

Just as one cannot write a score without notes, or become a composer without an ear for music, an entrepreneur can never develop and expand their business without education and discretion.

I have travelled a bunch and studied a lot, visiting various business-schools. One training program in Switzerland was based on a very useful slogan: “Pry!”

Pry and learn: the path that others have already walked is something to be studied as quickly as possible. It is very important to get to know the process better: to try and come to grips with everything that is connected with the supplies, to find out how dealers and distributors work in the field that you are interested in, what are the legal norms, the taxes and the limitations, what licenses are required and how your products or services should be licensed.

– Business case —

…A buddy of mine, having already become a successful entrepreneur in the field of wholesale and retail food trade, made the decision to start a second business. In no time at all he bought equipment for the production of toothpicks and opened a small workshop. He had learned the technological process somewhere and counted that having over fifty shops (and the experience of selling large batches in other friendly retail networks) he would not need much time to make his toothpick business a profitable one. Unfortunately, neither his business experience, nor the perfectly copied technological process helped him, because, as it turned out, he did not have the entire “score” for the process of producing toothpicks. It was very important to determine certain things. How much was the cost of a cubic meter of timber? What quality timber should be used? Was there a possibility for regular cooperation with a serious supplier and how should one deal with the packaging?

He opened that production line, because he owned a small forestry which could provide him with cheap timber of any size and quality. But, as it turned out, timber logging, production of toothpicks, packing and selling them are separate businesses that vary in profits, volumes and complexity. When the entrepreneur combined them, the result he got was a failing toothpick business which he subsequently had to sell along with the logging business. As for food retail, he is still very successful in this field.

…Once I decided to help someone build a business from scratch. I was sure that in order to do that it was enough to use certain knowledge that I had, chose the right product and a place to sell it, and everything would work. We chose the German leather brand “Picard”, bought a sufficient amount of a wide range of products directly from the plant and with the highest possible discounts, brought them to Russia, went through customs, and opened two sales points. Successful sales continued for only ten months, while the owner of the business was in charge of it herself. However, it so happened that she had to delegate management to a trusted top manager. After a while the business stopped bringing profits and was finally shut down.

However “correctly” a business is organized, it should be managed by its owner. No consultant will ever arrange a business so that it keeps bringing profits incessantly without any participation on the side of the entrepreneur, because as the “play” of the business is being written (a business process is never embalmed), only an “entrepreneur-composer” can make changes and be incessantly successful. But the business process itself will never be.

Are you an entrepreneur or a manager?

Business is a process that requires constant management and there is no better manager for your company than yourself. And yet, after a while the entrepreneur should better let go of the steering wheel and delegate the actual business administration to someone else. Negotiation trips, endless lines for various permissions in the offices of state officials, exhibitions, conferences, purchases – thousands and thousands of things to do. Naturally, a lot depends on the business format, but as your company is growing, you slowly realize that you have to hire a top manager, who will take on the responsibility for making quick decisions and for the result.