Some thoughts about “Doing business …”
I was invited on Friday to attend a business class at one of the local Universities to give a presentation about Doing Business in the Kyrgyz Republic.
The brief I received was that it should be about “doing business in KG, problems, issues, what’s it like to be a businessperson, what are the necessary characteristics of an Entrepreneur, what are the main problems in your business (Staff, cashflow, legislation, inspections, corruption, etc.).”
That struck me as quite a tall order – that looks like a minimum of thirteen points. Minimum? – yes, notice the open ended “etc.”
What’s more, I was told that presentations normally lasted “about 30-40 minutes – followed by Questions and answers.”
So I sat down and thought about it … and prepared a Powerpoint presentation … worked through it and reckoned that I could fit it into the 30-40 minutes. To be fair, however, a lot might depend on the interactive parts … as I am not the class teacher, I don’t know what they have covered and can be expected to know – so I decided to try the Socratic method – try to draw out from them what they already knew and try to put into a particular context from my experience.
To be honest, it didn’t go quite as well as I had hoped.
I knew I was in trouble before we actually started – and it was all my own fault. I had arrived early and was sitting outside the faculty office for the lecturer to arrive and take me to the room where the class was scheduled to take place. As I sat, I pulled out the printout of the notes that I had prepared to go through them. To my horror, I discovered that I hadn’t packed the flashcard with the file. Although I had the printout – I was on my own without my prompts.
Anyway, we made our way to the classroom – it was quite a large room for the group which only numbered about 12 students. I was introduced – which took away part of my first couple of slides, (after I explained the brief that I had been given), where I intended to cover “who I am and why I am here”. I normally like to start with this because it helps to put things that I say into context. Another person might well say something different. I don’t claim to have a monopoly on wisdom and my background and experience obviously colour what I have to say.
So, I tried to cover the following points, I am:
- British (English) – sometimes it helps – and sometimes it’s a hindrance.
- A former teacher – with an academic background – Theology and Psychology, teaching Mathematics and Computing.
- A Trade Union Official – that normally raises a few surprised looks, but it means that I can usually see both sides of an issue
- … turned Businessman – the General Director of a tour company and running two hotels
- Who came to Kyrgyzstan in 1995 … originally for just one year, but still here
- Invited to the class as a businessman, with 15 years experience in Kyrgyzstan,
In short, I am not a typical investor, a typical businessman – for a start, I am not a capitalist.
I then planned to turn to the question that had been posed for me: “What’s it like to be a businessman?”
Well, first of all, let’s make it clear what we mean when we talk about business. There’s a standard “definition” of business which runs something like this: “…every business requires some form of investment and a sufficient number of customers to whom it can sell its output at a profit – on a consistent basis.”
This suggests six different components:
- An Investment – which most people take to mean cash, money … but it can also represent time, effort and commitment
- A Product – something to sell, either goods or services.
- Customers – without customers, (someone to buy our product, whatever it is), there is no business
- Sales – the actual process – but this can also include Marketing, creating a demand for the product, or simply informing the customers of the availability of the product.
- Profit – The sales should produce a profit – not just cover the cost. Profit is not a “dirty word”, although the reaction of some people here seems to imply that they think it is. I suppose that is partly to do with the fact that people don’t consider the full picture, they see only the cost price and the final selling price and consider the mark-up as “pure profit” and consider it as excessive … It’s probably, also partly to do with have lived under the Soviet system for some seventy odd years. Profit also helps to secure future development for the business.
- Continuity – which implies a timescale – that business is going to be carried out over a period of time … This could be a bit more “controversial” in that some businesses are clearly set up to take advantage of a short-term provision … it might be something like a specific event – e.g. the World Cup in South Africa, or to help someone through their years of study as a college student. These days, many business clearly have an “exit strategy” when they go into a particular business.
I then planned to turn to the next question that I was set: “what are the necessary characteristics of an Entrepreneur?”
Now I am in the Tourism and Leisure industry and I chose to address this question through I quotation that I came across recently. It’s from Frank Case, the owner of the Algonquin Hotel in Manhattan. A very famous, historic luxury hotel.
You can go and look it up: http://www.algonquinhotel.com/ and http://en.wikipedia.org/wiki/Algonquin_Hotel
Anyway, here’s the quote:
“Frequently when making my adieus to friends or customers at lunch by saying, “I have to leave you now, I must go to work,” the reply is, “Why, what do you do”? in a surprised tone.
Well, there is no answer to this, for if I started to tell some of the things a hotelkeeper does, I should be there yet. For instance, supplies in addition to the things you see to eat or drink. About thirty different kinds of paper not including writing paper. Paper for telephone pads, payroll sheets, requisitions, wax paper for kitchens, other paper for bake shop, wrapping paper, white bond for bureau drawers an so on. Stringfive kinds of twine, some for tying up roasts, some for porters, three kinds for upholsterer. Paper for menus, three different kinds. Paper wristlets for lamb chops. That is just paper and string and there is lots more of that.
Four kinds of stuff for cleaning silver−burnishing soap, silver dip, silver polish and salsoda. Soap many kinds, mops, brooms, and six kinds of brushes, furniture polish and wax, cleaning fluid, metal polish, liquid soap, lye and ammonia, wall washing powder. Inks, pens and blotters. Pencils, carbons, ribbons, five different kinds, eight different bound books; glassware, an endless variety, specific sizes and particular quality and price. Sheets, pillow cases, blankets, bed spreads, dimity covers, pillows, mattresses, seven kinds of towels, carpets, hangings, bath mats and then soap again, key tags, coat hangers, Venetian blinds, window shades, net curtains, chintz draperies, pieces of material to recover chairs and sofas, ash trays, luggage racks, all these constantly wearing out, constantly being renewed. Uniforms, aprons, maids’ dresses, lamps, shades (very perishable and bought frequently), matches. Sounds a little like Walt Whitman. And the half has not been told nor have we so much as entered the domain of kitchen, restaurant, bar or engine-room.
While the hotelkeeper does not actually do all this detail buying, he must have a working knowledge of these things, be available for consultation and decisions, and invent ways and means of getting the dough to pay for them when the bills come in.”
This takes a whole slide – and, frankly, it’s something you should never do in a powerpoint presentation… put a huge amount of text on one slide … people cannot read it and it’s distracting … you’ll loose them. So, why was I doing it … because I was giving them a copy – fortunately I did have the printouts with me.
Also, the first three paragraphs are just background material, putting it into context … and the next slide was going to present the all important final paragraph:
“While the hotelkeeper does not actually do all this detail buying, he must have a working knowledge of these things, be available for consultation and decisions, and invent ways and means of getting the dough to pay for them when the bills come in.”
What does the quote tell us?
The first thing it tells us (in those first three paragraphs) is that there is an awful lot of detail – much more detail than most people think of. As we say in English: “The devil is in the detail.”
He then goes on to mention in the final paragraph:
- Knowledge – although he admits that it may just be background knowledge
- Consultation – which implies delegation – you can’t be everywhere at once … you can’t do everything – so you need to have people that you can “trust” to carry out those tasks that you cannot do.
- Decisions – which implies taking responsibility … considered, but sometimes quick (instant) decisions – me, personally, I hate taking instant decisions, and much prefer to sit back and consider the implications, precedents and so on, but sometimes it is necessary
- Inventiveness – implies flexibility and thinking “out of the box”
- Income raising – keeping an eye on opportunities … diversification … client relationships and satisfaction
- Paying bills – keeping an eye on expenses … and the accounts …
There is a lot that he doesn’t implies but doesn’t mention explicitly, for example:
- Risk – the possibility of failure – I had intended to point out that One survey suggests that 80% of new businesses fail within their first five years ! That figure changes, in different surveys … sometimes it’s within three years … sometimes within one ! (see: http://www.moyak.com/papers/small-business-statistics.html) but oddly enough, this was one thing the class had clearly understood from their course. I asked them, however, what was it that they were risking … their investment – to be sure, but what else? There are risks involved for others as well – because the decisions taken by management can place at risk the livelihoods of others.
- Commitment – “nothing is for nothing” or to put it in another cliché – “there’s no such thing as a free lunch”.
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Flexibility – the idea of evolution implies that you need to “adapt to survive”,
- Responsive – “expect the unexpected” – as the world is constantly changing. Remember that “the best laid plans of mice and Men gang aft agley” and it is necessary to learn from experience – both your own and that of others. But, you also need to be
- Innovative and resourceful – “think out of the box” – looking for new opportunities and how to make the best of what you have, and also need to be able to anticipate possible changes in the situation
- Responsibility – “no man is an island” – our decisions and actions have an impact on others …
But this quote simply concentrates on one side of the business, purchasing supplies. He doesn’t consider for example:
- Personnel management
- Client relationships
- Marketing
- Regulations
- Accounting
- Law
- Planning
- Hey, there’s a lot more … you name it …
As I said, it’s a multi faceted topic and many people don’t see beyond the basic visible elements such as buying and selling prices.
Throughout I tried to quote examples … of things that had happened to me over the last fifteen years, but unfortunately, at that point, I had run out of time … and so didn’t have time to explicitly address the third question that had been set: “What are the main problems in your business?”
But, then again, maybe I had … but not in the format the lecturer had anticipated.
Bishkek