EPT
I was mainly educated in Canada, but because of my interest and passion in rugby, I've had a lot of exposure to the UK and Australia: the BBC (Top Gear!) For all you non-UK people, the BBC is the British Broadcasting Corporation, and on the BBC they have shows like the Apprentice UK and the Dragons' Den (Shark Tank in the US). It is like an alternate reality of programming, but what I like about the UK versions is that they rarely suffer fools and they speak very plainly — simply put, the focus is more on the business rather than the personalities. Of course the shows are entertaining, but I've personally got a lot out of them, in the sense they are great for review as well as reflection.
While I'm addicted to both, I would like to speak about Dragons' Den because of one of the hosts: Duncan Bannatyne. I'm not from the UK, so until I saw this show I didn't know anything about him. He is solid and authentic so as a result I've become a fan of his. Maybe someone from the UK will have more background on him, but from what I've seen of him on the show and his business approach, I do think he is solid.
Duncan: A Solid Guy
From his Wikipedia page
After spending his twenties moving from one job to another, Bannatyne lived for a few years on the island of Jersey where he met his first wife. With a difficult business climate for outsiders, at age 29 Bannatyne and his wife moved to Stockton-on-Tees in North East England. He has stated that he was penniless and did not have a bank account until the age of 30.
Well he gets an ice cream truck and eventually make an empire of health club gyms and spas across the UK. You wouldn't call him a high-tech guy, or someone who did something innovative or super daring, but the guy is solid at starting businesses. And in all this craziness of the "start-up," the basics really need to be addressed.
In link to 1Part 1, we brought up Reality Check with Guy Kawasaki, because I really wanted us to get a full, in depth picture of what a start-up is. But here... this book is short: it's only 212 pages with large font and double spaces. The title is, 43 Mistakes Businesses Make... and How to Avoid Them. I know what you're thinking: cheesy title for the mass market. But before you judge it, I have to say again: it's solid.
Technology Changes a Lot of Things, Except the Whys...
Everything seems to be moving so fast in the world. At 37, I remember typewriters, having no optical mouse, using BBS before the WWW (I was still a geek), and doing irc on a unix terminal (keyboard integrated unit with green text only). I played pong at the local burger joint, although I must have been 4 at the time. Also, as a seasoned international traveler, I remember having to manually set my cell phone for roaming or having to rent one, but now my Samsung Galaxy Note not only hooks up to the best carrier when I'm roaming, it also even gives me an option if I'm phoning back to Korea or local on how to treat phone numbers so I don't need to even adjust (usually you need to put a + sign when roaming). But, most of all, the internet now is really really coming alive. Streaming video, smart phones integrated with social and location media, and 4G (LTE in Korea) internet via your phone and tablets, and sick laptops that I can run Diablo 3 off of and still work without any issues. Everything seems possible to do and to do cheaply.
Now, with cloud computing, I can do nearly everything without a disk. Some kids don't even know what the save symbol is! Other than Diablo 3 and StarCraft 2, I haven't used a CD to install anything – and even then I wanted the box! – I just downloaded the digital copy and installed it. I've used a flash drive about 3 times this year, when I use to use 5 or more portable hard drives. Why? Because we didn't have wifi like we do now, with it's coverage and speed. I can even remember getting screwed multiple times by just saving my documents in my email and going to the print shop only to find out that the internet was slow or the server was down or that they didn't the latest version of Word, so my document was screwed and I couldn't even download a proper viewer because there was only Word back then.
But some things don't change, no matter how connected or savvy we are with the technology and the world around us. We appreciate quality entertainment; we still get inspired; we need relationships; and eventually when all the hype is over, you're left with a business that either works or doesn't. At the end of the day, when you're at home with your family or significant other, a great movie, and food, a good time is just what you need. That is the nice part of life. In business, when you've finished with the power point presentation, the happy exponential growth projects, paid the salaries, and fixed costs, you're left with your profit. And really, no matter how good everything looks, how advanced, or progressive, it will be the profit that allows you to "connect the world" or "bring information to everyone".
Let's Put Aside the Start-Up Glamour For a Second
On Dragon's Den, you see a lot of different types of businesses, entrepreneurs, and levels of sophistication. Some guys are old, some are young, some sexy, and others ugly as hell, but they all want to start a business, and regardless of their experience or looks, for the Dragons, they want to hear about why they should invest. They want the numbers and the real point of it all.
The majority of the time, it's very disappointing. People don't know the size of the market, what it costs to make their product (or the real costs including salary), and if the product really has a selling point or can even support a business. These guys aren't usually high tech start-up guys. They are looking to expand their guitar selling business or launch their own line of baby clothes. They can't hide behind X numbers of users have signed up with us and we are featured on this and that website. They have a product which everyone kinda has and they are forced to compete and make their product profitable, a unique enough of a market position to generate the continued sales and growth and they need to show that they can manage costs.
Some of you are reading this and you're in high school and others of you are in your late 20's but have never considered business at all. In fact for some of you, it's a dirty word. But not all people who run or start a business are in it for the money. Instead, it may be for independence or they simply don't fit in the regular corporate world.
Others of you have gone through kickstarter and have the book Reality Check and are going through it and dreaming of being the next Instagram or one of those projects that get funded 5000% over its target. For both cases, this is a book to start with for a truly practical approach that covers a super wide range of essential topics, but with that knowhow insight that just gives you pure, practical points to start from. To go into the theory of each topic in real depth would be a book in and of itself. But Duncan cuts to it, so even if you know nothing, or you think you are a tech demi-god, it will point you in the right direction.
A Tiny Bit of Knowhow in Understanding Business in Practice
Before we get into the book, I want to share some personal knowhow about what business is. I've never read it anywhere else and it took a long time to come to and to articulate, but like all real knowhow it should seem simple and obvious after I mention it.
I didn't start in business. In fact, I hated business because I didn't know enough about business when I was kid to think that it was anything more than just being a sales person. Also, being a deeply abstract and intuitive thinker, I just thought business was for mindless materialistic idiots who were soulless fuckers. But through the course of life, I became cynical about everything else because I wasn't just a thinker. I was doer and I pushed myself to find solutions, and in the end I realized that I had to get my own shit in order before I could be of use to anyone else. Thus started my education in business when was about 24.
The main thing I eventually learned about business wasn't that it was a game or that you need to be aggressive (it is part of it later on), but that the smarter you are, the worse you are at it. The more complex of person you are, the more you suck at it. And the more you think and want to understand the whys, the more likely you'll never have any results.
I'm not saying business people are idiots, far from it, but the way we are educated at the highest tiers of our education we actually focus on the theory behind the practice and how we get to that theory. But for most fields outside of sciences and business, the application of the theory is simply hypothetical, a discussion between different schools of thought, no one is really right or wrong, but rather it is their "position." In the different fields of science, sometimes there are limitations in time and technology to test theoretical hypothesis, and it may be that some theories stand for decades before they are disproved. Not so in business. In fact the complete opposite is true.
New theories and ideas in business are put into action every day. Some get discarded because they can't be executed by a team capable enough (shitty execution) or the market isn't ready for it (too early to the market). Some theories or strategies get blown out of the water because the company goes bankrupt following it and whatever doesn't work or doesn't have a result gets ejected pronto or else it's your job. You can hold on to your "subjective" position all you want in business, until you put your job on the line or you lose a crap load of money and you get canned. In fact, in business, most people really don't want to state they have any position, except for sharing the same position as the guy who signs your pay check.
In reality, strategic need rarely comes up in business. It all boils down to how theory is applied in business. Business theory is only valid in certain business life cycles — instances which come around every 5-8 years (start-up, new competitors, shift in consumer behavior, new technology, etc). If you don't realize that you are in that industry stage, well, hell, you just missed out and you might not even know it because, for most businesses, proper business execution of the operation is more than sufficient. Basically, common sense in business trumps strategy about 98% of the time (except in extremely competitive markets or the examples listed above). But it is also in those mature competitive markets where 1% additional market share equals $5 billion more, e.g. laundry soap or tooth paste.
So that was the background to the knowhow.
You know in math class you always go through the proof of a formula, like how a formula is derived by eliminating this and that, and then you end up with e=mc2 (is that even valid anymore? [e/n: yes]), but that simple physics equation may take up 3 pages of proof and 20 years of academic research to come to.
In class your professor says, "Hey you need to understand how to derive this formula," and when it comes exam time, all you've done is memorized the sequence and put in all the step to get the full marks to get down to the formula rather than really work it out. And then when it comes to your actual questions, you just plug in the numbers into the formula, "Mmm...does c mean this value or that value... not sure but lets plug it in and if I get a number that matches one of the multiple choice answers, that is my answer!"
But in business, the mindset is totally the opposite. They don't give a shit about the proof, then just want the formula to work with, so they can plug stuff in quickly, and the emphasis is on getting the result correct, so getting the correct algebra to get the final answer from the formula is extremely important (e.g. even if you got the right formula and values, but you screw up the basic algebra to come to the final answer, then in business terms you would have screwed your operations even if your strategy was right). So what becomes extremely important is not the theory, but rather just picking the right formula and just executing the operations well. Because, again, in business, usually the strategy is very simple to deduce: it isn't rocket science ([e/n: unless you're SpaceX]), so everything rests on the execution side.
So in business, you don't give a shit about the proof of the formula, you just want to make sure that you get to the right final answer via good algebra. In fact, if you bring up issues like "Is this the right proof for this formula, are we applying the right values/metrics?" you'll screw yourself and your company because business is really about the algebra, because that is where most businesses fail. And your boss will likely basically say, "Do I look like I give a shit if this strategy is fundamentally correct? Go pick a strategy that fits with this situation and stop fucking around and thinking you one of those fancy pants consultants."
TL KnowHow and Your Business Project (Start-Up or Otherwise)
If you can just get an inkling of what I'm getting at, then that is enough for now because in business: as you do it, it will make perfect sense. If you think you can figure out exactly what I mean by just thinking about it (cause you don't have enough work experience to automatically see it as true), then you, my friend, are falling into the professor trap (and in business the saying 99% true: those who can't do — teach). So let's just leave it at that.
But an example of a business formula is: if you have a restaurant – I don't care what kind – if your location doesn't match the type of restaurant it is, you're fucked, but if you match it well, just get the operations (algebra) sorted and that's it. So say you have a fast food place, you need foot traffic. If you have an upscale bar, you need it in the trendy area of town, and where there is night foot traffic. There are exceptions, but, again, the exceptions are because it is highly competitive and you had no choice but to be innovative and strategic. Say you have a coffee shop, but no foot traffic; you could have the most fucking amazingly hot waiters and waitresses, the best fair trade coffee beans crapped out by happy monkeys, and $2 million in renovations, but you'd still fail because you missed the one critical factor: location. But say you have the best location. Well then, it is hard to fail unless your business fundamentals suck, like not pricing things properly or having below average food.
In business, if you have the right formula or what we'd call – in management speak – the "Key Success Factor" covered. If you just operate your business soundly, you'll make money relative to the average of your situation. And that is the big thing: there are millions of businesses that just do okay, but sometimes that is $100k or $300k a year and that little coffee shop with the old Chinese lady and her pretty young daughter maybe making more a year than the doctor who is buying the bagel from them.
The Second Book of Reference: 43 Mistakes Businesses Make
So the book is, 43 Mistakes Businesses Make...and How to Avoid Them. I love the title because why the hell is it 43? Why not 40 or 50 or 30? Because, damn it, Duncan really thinks there are 43 mistakes so you'd better just accept that there are, you chobo! For the North Americans who buy this, there may be some locations and words you're not familiar with, but think of it as a cultural venture as well. It was published in 2011, but like all books I will recommend as reference, they will stand the test of time. Reading one book I recommend is like reading 10 shitty, trendy, stupid-ass business books that are published every 2 months.
He writes for the every day person, and he gets right down to it, and, honestly, a lot of crap in business is a bunch of overblown words and concepts that really boil down to something simple. Your understanding the process is everything, the rest is just labeling. If you start labeling in business, you just look as though you know something. In a lot of other fields you can continue to just bullshit, by hiding behind terminology, but in business you'll eventually get burned for it (unless you are a stock analyst lol).
Stuff You Should Do
Get the book and read it. Seriously. If you can't even go and read the book, don't post here looking for some magical answers that will broaden your mind.
Go to the library or go online to fastcompany.com, and read as many issues of Fast Company magazine as you can.
Just read as much as you can, even if you don't understand it whatsoever or are uninterested. You just need background on these companies.
Go watch at least 10 episode of Dragon Den's UK. Don't ask me how to find it; use your resources. I'm sure you can find it on YouTube.
Read this book again and let's discuss it here.
Make another separate business plan based on the 43 aspects of this book (well it won't really be a business plan but rather a personal executive summary). This is still working off our our link to part 1Part 1 project.
You'll see two different pictures emerging, Part 1 is all about the scope, the vision, the big picture and getting to know the landscape of what you are getting yourself into. But this one is the nitty gritty. If you have the right formula and are positioned for the right algebra/operations.
Even if you don't give a crap about start-ups or business, but want to read at least one business book cause you figure, 'what the hell', then read this one. It will simply allow you to articulate a lot of the things you see around yourself and again, business isn't rocket science.
Just to Close
a. Warren Buffet
I want to share an example of one the richest man in the world: Mr. Warren Buffet. The reality is that what makes him great from a business stand point (aside from the money) is really how he makes his money.
His public company, Berkshire Hathaway, is sick great. Just google him and the company and spend a week learning about him — avoid any books written by Mary Buffet, she is a hack [e/n: totally an opinion]. Thing is, he totally knows his formula and also when his formula applies. If the formula doesn't apply, he doesn't try to change his formula, he simply moves on to look for another opportunity where it is applicable. I won't get into it because then I'd have to write for 2 days on it, but when asked would he invest in Facebook, he said something along the lines of, "No, I don't understand it, so I won't." Now if you know his background and what his words mean, then you can see the knowhow that I mentioned. Not that I'm comparing myself to Mr. Buffet. Instead, I'm just using him as the perfect example of how the business approach is opposite to that of what we learn at the highest levels of academia. He doesn't change his theory, he just finds where to apply it. And I think that really sums it up.
b. New Businesses
We don't all have to have start-ups. And whether you make a sexy pizzeria with bikini clad waitress in Boston, or a copy center where you get to wear flip flops and hoodies, any successful sustainable business that gives you space to follow your passion is wonderful. Not everything needs to be about making a billion bucks or slogging through a job you hate. And the fact is, when I was university student I made a lot of cash being an apprentice sushi chef at an upscale Japanese restaurant. The work was hard, and I loved it, but that was some hard labour with a very sharp knife. The owner was also the head chef in his early fifties, and was more like an uncle to me than a boss. As such, he would be very frank with how much the restaurant made. Here I was making about $20 an hour plus tips and he told me that after costs he was able to pocket about $300k, and it would have been more but taxes were killing him. As a grad student who never thought about business, it never occurred to me that he could be making that much, like how much a professional makes. And as the boss, of course he took days off etc. I just never thought of it, and then I realized that sure, the work is a lot, but money can be made by any type of business: wall street or main street. And while that is extremely obvious, it had just never occurred to me. The other thing that I realized many years later, after I finished my masters in business, was that the fundamentals don't change either; whether you're a hot dog stand or a Silicon Valley start-up, at the end of the day, you have to apply the right formula then work like a mofo.
I know people can state exceptions to this, and pretty big ones, but those are really like 8 companies out of millions in the world and if you look at a lot of rich entrepreneur founders who got bought out for lots of cash for companies that had no revenues, most of those companies are worth a fraction of what they were acquired for now. In any case, I hope that even if this is a hypothetical journey for most of you, that at least you can see that not all business is about being a materialistic fucker, but instead it is about having options as well.
I'd close this post with a quote from Duncan's book, but my son has stolen it and hidden it somewhere. I'll put one in as soon as I find it. Instead, you'll have to settle for this:
![[image loading]](http://a7.sphotos.ak.fbcdn.net/hphotos-ak-ash3/527890_376380459083094_1899829627_n.jpg)
43 Mistakes Every Business Makes...and How to Avoid Them
by Duncan Bannatyne
Mistake 1 Commentary July 23,2012
+ Show Spoiler +
***Mistake 1***
Not Taking Good Advice
EXCERPT
"Getting advice in business isn't hard, but getting good advice is. Everyone, from your customers and your suppliers to your staff - not to mention friends and family - are all very good at pointing out where you're going wrong. The problem is that very few people will tell you how to put things right. And the people who do make suggestions are very often the bankers, lawyers and accountants who stand to make more money from you if you do what they say. . .
This perhaps explains why entrepreneurs get used to ignoring advice. They tell themselves that no one knows their business as well as they do, that no one has their vision for the company and that everyone is after a piece of their success. The result is that good counsel is disregarded along with all the rubbish suggestions. "
Good advice, damn is this difficult to come by when you're an entrepreneur or starting something from scratch. The reality is, in the context of business, if someone is really qualified to give you good advice, they won't, unless that someone has a real vested interest in your business or well being, e.g. family or bank or father-in-law who fears for their daughter's financial well being (as in my case lol).
Thing is, in business, we don't give advice, well not for free. We aren't hear to prove that we are smarter than you, to prove a point or to win an argument, we actually understand that our knowhow and time is extremely valuable. In that sense, what you'll find that in professional business, people are always looking for someone who will give them some insight and spend some time with them. If I'm having a talk with anyone on business related topics, I'm not going to correct them ever, unless I like them. And if I like them, I'll hint at it once, if they show no signs of understanding or want to argue for argument's sake then I'll smile and say, 'yes, well, alright then'. In business, we let people shoot themselves and bleed out and anyone who is just freely giving out free business advice like it is worth something, well it's not worth shit, it's probably worth negative shit.
FIRST STOP BANKERS!
But really the first place for solid advice is usually the banker, simply because it will be probably the first business professional that you will have to encounter, whether it is for a business account or business credit cards or even a loan. And while on the ladder of complex business minds, they rank quite low, but they've seen a lot and they are professional in that they have standards and experience in what is a relatively risk free business structure with a return.
Just a cursory view of your business plan by your local bank officer who handles business loans, would give you a lot of feedback in that they can immediately point out what your plan is lacking on and also ask you many pointed questions that no one from a non-professional business background would ask, like projected sales and the relationship between fixed and variable expenses- which aren't difficult questions to answer, but are questions than need to be answered.
MY OWN PERSONAL UNDERSTANDING- CORPORATE ONLY
My uncle was vice-president of LG electronics from the mid-80's to the mid-90's. When I arrived in Korea in late 2002, my uncle had already been retired for a few years and the most he could do was introduce me to family friends who had grandchildren that I tutored in English once a week and got fed a proper family meal from. But their own sons were some of the leading professional of their fields in venture capital, telecommunications and brand marketing. As I was studying my masters in business, they'd let me know what they were involved with and they'd explain things to me from a leading position. Most of the time, it would start with, 'David, that is all bullshit, just focus on this one aspect and the rest develops from there'. Of course, I would also have talks with my uncle once a month (as I tried to get as many free dinners as possible from everyone while I was studying), and I learned it took to a really solid executive. I wouldn't be where I got in my corporate career if it wasn't for their over dinner talks. But of course, not everyone is as lucky as me to be in that situation.
DON'T DO IT DAVE
Fast forward to many years later when I decided to leave a very influential senior executive role of a massive UK company, to start my own company under a new set of investors, the #1 advice I got was, 'Don't do it Dave'. The reason for was was obvious, I had a young family with another baby on its way, I had spend a couple of years crushing my way up the corporate ladder as well as getting some solid results in the industry that I was in (sorry I don't share that info here). And while I had initially left because of an informal offer for private equity, it didn't work out for a number of reasons, and I had investors who wanted me to lead a new company for them. So I had the chance to go back or start a new company with funding (the story is a bit more complex than that), and most of my friends, family and colleagues were like, 'Don't do it Dave.'
It took all the insanity/courage/ego to make the choice to do so, but being in a seasoned senior executive in a large corporation has nothing to do with running a new company or start-up, even though I had read all these books and thought I wasn't going to screw up that badly. But two thing were the result of this:
#1. I didn't really listen to anyone because I didn't really have anyone in a position to get advice from, because most of the people I knew were all in corporations and no start-ups whatsoever, and in terms of industry or professional advice, I was already at a senior level.
#2. I didn't bother trying to find anyone because I thought I could just figure it all out anyway and with my network and knowhow, I just didn't think the same rules applied to me.
Boy was I brutally wrong.
YOU NEED ADVICE
Thing is, running a start up or new company or business is extremely difficult and it so tough, you just want to quit, you just want to give up, no matter how successful you were before or how confident you were to start, you just get destroyed. And the thing that usually keeps you at it is this 'vision or self belief' which is absolutely necessary to do something like this, but which can in the end shut down your critical thinking abilities, just because you're just so focused on survival.
For the expectations that I had of myself, for a year or so, I didn't think things were working out at all. I was in full blown survival mode. By my original projections we should have been xM up, but we were just making a small profit per month and it was brutally humbling. That for all my knowledge and accomplishments in the industry, I had no knowhow in starting a company. For me, I needed up in full blown survival mode. It wasn't until I got on board a very specialized consultant that I moved past just surviving because he was a consultant that had a lot of experience only in start-ups in our industry.
Now normally I wouldn't take on a consultant, lawyer or accountant, unless it is a necessity situation, ie. contracts or financial audit statements, and if you need a consultant to figure our your initial business, well then don't do it. But this consultant came via a personal introduction and we didn't really get into things until a few months after we met did I ask him a very pointed question. His answer was extremely insightful and then I began to pick his brain for 3 hours and brought him on board shortly thereafter.
I mention the above just to give more background in where I'm coming from and to say that, you could be a brilliant executive, brilliant at coding, or just plain awesome at what you do or make, but running a new company is an altogether a different beast and there is a lot of information out there, but getting advice from someone who has done before in your own industry is absolutely better than any other resource you could hope for.
KEY TAKE AWAY POINTS
1. Take it as a given you need to get good advice
2. If it is your first time running a business, then you lots of different types of good advice and try to get it for free, like what lawyers to use, which banks, how you should set up your accounting etc,
3. The best place to get this advice is really from someone who has done it before in your exactly same field, the problem with generic advice is that it may be good, but there is a limit in how you can apply it, you need advice that can be detailed enough to tell you how many times do you really need to turn the nut on the bolt to make it stable, like the real details.
4. Ask anyone you know if they know anyone, email people, twitter them, pm them, do whatever you can to get any time to get their feedback, because whatever is common knowhow to them, maybe ground breaking for you.
5. Advice that is freely given, without any vested interest is usually generic crap, so while a lot of people are against this; pull as many favours as you can to get the right advice. I know, everyone wants to be able to say they did it on their own, well put aside your ego and sense of worth and know that the bigger picture is that if you're successful then you can make a charitable donation or something later.
6. As Duncan mentions, everyone can tell you what's wrong, but most can't tell you how to make it right, but if they aren't from your field or have start-up experience, the advice is probably worthless.
7. Look to trade advice if possible, at first me the consultant traded advice, he'd ask about metrics at an established company level and I'd ask about metrics at a start-up level. That is how we first started talking seriously.
8. Some industries are far more competitive than others, but if you're not in a super competitive industry, then even asking other start-ups in the same situation as yours to get together for some coffee and meet and talk could be productive.
I think the main advantage of working in a new company incubator or funding program like Y Combinator (early stage seed funding 10k-50k) is that free access to advice that normally you couldn't get.
*Just as note moving forward, if you do have a question that is related to the books and the topic, please post it here rather than PMing me, I can't answer everything and it also makes me more invested to reply to post that shares the info rather than just replying to multiple PMs.
Not Taking Good Advice
EXCERPT
"Getting advice in business isn't hard, but getting good advice is. Everyone, from your customers and your suppliers to your staff - not to mention friends and family - are all very good at pointing out where you're going wrong. The problem is that very few people will tell you how to put things right. And the people who do make suggestions are very often the bankers, lawyers and accountants who stand to make more money from you if you do what they say. . .
This perhaps explains why entrepreneurs get used to ignoring advice. They tell themselves that no one knows their business as well as they do, that no one has their vision for the company and that everyone is after a piece of their success. The result is that good counsel is disregarded along with all the rubbish suggestions. "
Good advice, damn is this difficult to come by when you're an entrepreneur or starting something from scratch. The reality is, in the context of business, if someone is really qualified to give you good advice, they won't, unless that someone has a real vested interest in your business or well being, e.g. family or bank or father-in-law who fears for their daughter's financial well being (as in my case lol).
Thing is, in business, we don't give advice, well not for free. We aren't hear to prove that we are smarter than you, to prove a point or to win an argument, we actually understand that our knowhow and time is extremely valuable. In that sense, what you'll find that in professional business, people are always looking for someone who will give them some insight and spend some time with them. If I'm having a talk with anyone on business related topics, I'm not going to correct them ever, unless I like them. And if I like them, I'll hint at it once, if they show no signs of understanding or want to argue for argument's sake then I'll smile and say, 'yes, well, alright then'. In business, we let people shoot themselves and bleed out and anyone who is just freely giving out free business advice like it is worth something, well it's not worth shit, it's probably worth negative shit.
FIRST STOP BANKERS!
But really the first place for solid advice is usually the banker, simply because it will be probably the first business professional that you will have to encounter, whether it is for a business account or business credit cards or even a loan. And while on the ladder of complex business minds, they rank quite low, but they've seen a lot and they are professional in that they have standards and experience in what is a relatively risk free business structure with a return.
Just a cursory view of your business plan by your local bank officer who handles business loans, would give you a lot of feedback in that they can immediately point out what your plan is lacking on and also ask you many pointed questions that no one from a non-professional business background would ask, like projected sales and the relationship between fixed and variable expenses- which aren't difficult questions to answer, but are questions than need to be answered.
MY OWN PERSONAL UNDERSTANDING- CORPORATE ONLY
My uncle was vice-president of LG electronics from the mid-80's to the mid-90's. When I arrived in Korea in late 2002, my uncle had already been retired for a few years and the most he could do was introduce me to family friends who had grandchildren that I tutored in English once a week and got fed a proper family meal from. But their own sons were some of the leading professional of their fields in venture capital, telecommunications and brand marketing. As I was studying my masters in business, they'd let me know what they were involved with and they'd explain things to me from a leading position. Most of the time, it would start with, 'David, that is all bullshit, just focus on this one aspect and the rest develops from there'. Of course, I would also have talks with my uncle once a month (as I tried to get as many free dinners as possible from everyone while I was studying), and I learned it took to a really solid executive. I wouldn't be where I got in my corporate career if it wasn't for their over dinner talks. But of course, not everyone is as lucky as me to be in that situation.
DON'T DO IT DAVE
Fast forward to many years later when I decided to leave a very influential senior executive role of a massive UK company, to start my own company under a new set of investors, the #1 advice I got was, 'Don't do it Dave'. The reason for was was obvious, I had a young family with another baby on its way, I had spend a couple of years crushing my way up the corporate ladder as well as getting some solid results in the industry that I was in (sorry I don't share that info here). And while I had initially left because of an informal offer for private equity, it didn't work out for a number of reasons, and I had investors who wanted me to lead a new company for them. So I had the chance to go back or start a new company with funding (the story is a bit more complex than that), and most of my friends, family and colleagues were like, 'Don't do it Dave.'
It took all the insanity/courage/ego to make the choice to do so, but being in a seasoned senior executive in a large corporation has nothing to do with running a new company or start-up, even though I had read all these books and thought I wasn't going to screw up that badly. But two thing were the result of this:
#1. I didn't really listen to anyone because I didn't really have anyone in a position to get advice from, because most of the people I knew were all in corporations and no start-ups whatsoever, and in terms of industry or professional advice, I was already at a senior level.
#2. I didn't bother trying to find anyone because I thought I could just figure it all out anyway and with my network and knowhow, I just didn't think the same rules applied to me.
Boy was I brutally wrong.
YOU NEED ADVICE
Thing is, running a start up or new company or business is extremely difficult and it so tough, you just want to quit, you just want to give up, no matter how successful you were before or how confident you were to start, you just get destroyed. And the thing that usually keeps you at it is this 'vision or self belief' which is absolutely necessary to do something like this, but which can in the end shut down your critical thinking abilities, just because you're just so focused on survival.
For the expectations that I had of myself, for a year or so, I didn't think things were working out at all. I was in full blown survival mode. By my original projections we should have been xM up, but we were just making a small profit per month and it was brutally humbling. That for all my knowledge and accomplishments in the industry, I had no knowhow in starting a company. For me, I needed up in full blown survival mode. It wasn't until I got on board a very specialized consultant that I moved past just surviving because he was a consultant that had a lot of experience only in start-ups in our industry.
Now normally I wouldn't take on a consultant, lawyer or accountant, unless it is a necessity situation, ie. contracts or financial audit statements, and if you need a consultant to figure our your initial business, well then don't do it. But this consultant came via a personal introduction and we didn't really get into things until a few months after we met did I ask him a very pointed question. His answer was extremely insightful and then I began to pick his brain for 3 hours and brought him on board shortly thereafter.
I mention the above just to give more background in where I'm coming from and to say that, you could be a brilliant executive, brilliant at coding, or just plain awesome at what you do or make, but running a new company is an altogether a different beast and there is a lot of information out there, but getting advice from someone who has done before in your own industry is absolutely better than any other resource you could hope for.
KEY TAKE AWAY POINTS
1. Take it as a given you need to get good advice
2. If it is your first time running a business, then you lots of different types of good advice and try to get it for free, like what lawyers to use, which banks, how you should set up your accounting etc,
3. The best place to get this advice is really from someone who has done it before in your exactly same field, the problem with generic advice is that it may be good, but there is a limit in how you can apply it, you need advice that can be detailed enough to tell you how many times do you really need to turn the nut on the bolt to make it stable, like the real details.
4. Ask anyone you know if they know anyone, email people, twitter them, pm them, do whatever you can to get any time to get their feedback, because whatever is common knowhow to them, maybe ground breaking for you.
5. Advice that is freely given, without any vested interest is usually generic crap, so while a lot of people are against this; pull as many favours as you can to get the right advice. I know, everyone wants to be able to say they did it on their own, well put aside your ego and sense of worth and know that the bigger picture is that if you're successful then you can make a charitable donation or something later.
6. As Duncan mentions, everyone can tell you what's wrong, but most can't tell you how to make it right, but if they aren't from your field or have start-up experience, the advice is probably worthless.
7. Look to trade advice if possible, at first me the consultant traded advice, he'd ask about metrics at an established company level and I'd ask about metrics at a start-up level. That is how we first started talking seriously.
8. Some industries are far more competitive than others, but if you're not in a super competitive industry, then even asking other start-ups in the same situation as yours to get together for some coffee and meet and talk could be productive.
I think the main advantage of working in a new company incubator or funding program like Y Combinator (early stage seed funding 10k-50k) is that free access to advice that normally you couldn't get.
*Just as note moving forward, if you do have a question that is related to the books and the topic, please post it here rather than PMing me, I can't answer everything and it also makes me more invested to reply to post that shares the info rather than just replying to multiple PMs.
