On Entrepreneurship

(From Aidan Directors Blog, 9 February 2009)

Selling bedsheets and pillowcases to your colleagues in office does not count as “entrepreneurship”.

You start being an entrepreneur when you start a real company. Not when you have a “great business idea” while daydreaming. Not when you bounce ideas off your friends during dinner and think that you have the most awesome “business idea” in the world. Not when you do side jobs to supplement your meager salary.

You are an entrepreneur when you take the plunge, which means to quit whatever your day job is and start a real company.

In Malaysia, starting a company means four things:

1) getting an office;

2) starting a payroll;

3) registering your company; and

4) making cold calls.

Anything less than this and you haven’t started a business.

1) Getting an office

I have friends who started their business by renting a RM4,000 per month office in a premier address in the fashionable part of the city, and furnishing the office with new furnitures and carpets thick enough for a dog to shag. Not to mention top of the line air-conditioning system to make Eskimos shiver.

This is utter stupidity. Nobody brings in revenue that much in their first year to justify the cost of decorating a new office like that. You’ll be better off using the money to hire cheap labor to do work that generate revenue. This is simple, common horse sense many new entrepreneurs are guilty of not having.

True entrepreneurs are proud of their rugged office, with peeled paints on the wall and moldy carpets on the floor. “Ah Long” stickers on the office front door are badges of honor among true entrepreneurs who are more concerned about making money than about how their office looks like.

The only plan worth thinking about is how to make cash. Pardon the cliché, but cash is really king in Entrepreneurland. You don’t have cash, you are just peddling bull.

Spending more than you earn, especially to decorate workspace, cannot be justified by such excuses as “building my brand” or “impressing my clients”. This has no basis in reality. This is just bleeding your investor’s money away – a highly irresponsible behaviour.

When Aidan first started, we had to squeeze five people in a small and stuffy room, about the size of my bedroom. We used folded chairs so there would be more space when someone was absent. Needless to say, this room rents for cheap. Our current office is not much better, but is more spacey. Our staff area still don’t have air-conditioning; they have to live with it.

2) Starting a payroll

There are two things you have to decide regarding payroll: staff and wage.

There are two types of staff: partners and employees. Partners get paid if the company makes money. Employees get paid at a regular schedule. Partners may draw a modest salary.

If you need a partner, get a trusted, old friend that you have known for more than five years. Anything less is gambling.

If you need an employee, get someone you don’t know, conduct a probing interview, and negotiate a low salary. Don’t get too friendly with your employee so you can bark orders and fire them anytime they screw up. Being their boss is enough, you don’t have to be their buddy or counselor. Too much personal problems brought into the office, show them the last paycheck and the door. You are running a business.

There are three rules you should follow regarding wage:

First, partners must draw a low salary before the company makes money. Blessed are partners who do not take any money before the company sees a profit, for they are indeed rare.

Second, pay your employees on time come rain or sunshine. On time. If you can’t pay on time, don’t give them pep talk about “being a team player” or “we’re in this together”. If you can’t pay your employees, let them go. They are making ends meet and the last thing they need is cheerleading. If you close your business, use whatever remaining cash you have to pay all back salary to your employees. God have something special in store for people who honor their word.

Three, set the wage in writing.

Also, in Malaysia, you are bound by law to contribute to your employee’s EPF. If you don’t do this, you are robbing them.

3) Registering your company

If this is your first venture, start by forming a partnership. This is the easiest form of business to run. First you have to register with the Company Commission, and then if you like, with the Ministry of Finance. MOF registration is handy when you want to do business with the government. Government contracts are there to keep the fat cats fat, and to help struggling entrepreneurs get on their feet.

4) Cold calling

Business without cold calling is like marriage without sex.

Cold-calling can be in the form of unsolicited phone calls, unsolicited mails, unsolicited emails or unsolicited faxes (although I am not a big fan of unsolicited faxes because they use up ink). If you say you don’t want to spam, then you have a lot to learn.

Most effective is cold-calling in person. That’s how the best salespeople are born: by meeting people who don’t want to meet you. The best entrepreneurs have thick skin. It should be expected to be snubbed often; I snub unit trust salesmen all the time.

True entrepreneurs put in ungodly hours in a simple office to make cold calls, while others philosophize about abstract matters like “brand-building” and “business development plan”.

Get a cheap (preferably used) phone / fax machine on day one and go to work immediately. Sales call is the lifeline of a business. Bud Fox started off by cold-calling Gordon Gekko.

Many things have been said about marketing by people more experienced than I. But I know this, though: you don’t start a business by making “short-, medium- and long-term plans for business development and sustainability”, like people do in corporate settings. In entrepreneurship, you cut through the bullshit and go right to the core. And the core is making cash. When you have enough cash to go around, then you can talk all day long about “branding”, “business development” and “strategy”. Until then, it’s all just idle talk.

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