During the vacation break, I watched the Netflix K drama “Start-Up”, among other things.
Aside from entertaining its viewers with the love story of its three main characters – Seo Dal-mi, Nam Do-san, and Han Ji-pyeong – there are also plenty of lessons that are helpful for young entrepreneurs starting a business.
It is difficult to be successful in business. Many people start businesses thinking this is the easiest way to get rich. After all, most billionaires are business people who own successful companies.
However, in reality, it is very difficult to be successful in business. According to the US Bureau of Labor Statistics (BLS), about 20 percent of new businesses fail in the first two years of opening and 45 percent in the first five years. Only 25 percent of new companies make it for 15 years or more. And when a business fails, most of the capital invested cannot be reclaimed.
In the start-up, Nam Do-san’s company, Samsan Tech, had problems for several years, even though the company had a technically superior product. The company also had to constantly compete with other companies looking for potential investors to raise funds. Aside from a technically superior product, Samsan Tech needed to demonstrate to potential investors that there was strong demand for its product and that there was a strategy to monetize the demand. And it only took a few minutes to do this at a time.
Be ready to lose money. Almost all companies lose money at the beginning. While a company may have a great product that is in demand, it will take time to build awareness of the product and bring sales to a critical mass so that there is enough revenue to cover expenses.
In the start-up, Samsan Tech had a great mobile app for the visually impaired called NoonGil. However, as NoonGil became very popular, the cost of maintaining the app or the burn rate also increased. Since NoonGil was a free app for the blind, it couldn’t rely on advertising revenue to make a profit.
Eventually, a global foundation bought NoonGil. Before that, however, San Sam Tech had been under significant pressure to raise funds. Otherwise, NoonGil would only have to be closed after a few months of operation.
Therefore, when starting a business, make sure that you set aside enough cash to cover expenses for several months while the business is not yet profitable.
Teamwork is important. Being smart or talented doesn’t automatically guarantee success in business as there are some skills you need but not have. This is why it is important to recognize your shortcomings and rely on others on your team to be successful.
At the start-up, Han Ji-pyeong told Sam San Tech to hire a CEO if he wanted to be successful because Nam Do-san was not good enough. While this advice was intended as an insult, it was actually good advice as the addition of Seo Dal-mi to the team as the company’s CEO contributed to the company’s success.
Hire people who share your values. This way, your employees feel committed to the company and do their best to provide the best products and services to your customers. In contrast, people who are good but motivated by money will only do what is necessary to deliver what is needed. They are also not loyal and will easily switch to another company that is willing to pay higher compensation.
In the start-up, the main programmers from Cheong Myeong were very good, but motivated by the money. When Cheong Myeong’s competitor made them a better offer, they left. They even orchestrated a ransomware attack on Won In-Jae computers to make the company fail and gave them a good excuse to leave. Working for someone can be more lucrative than starting a business. Many people insist on starting a business, especially if they are smart or talented because they want the prestige of being the CEO of a company. Additionally, they find it frustrating to work with people who are not as good as them.
However, as mentioned earlier, being smart or talented does not automatically guarantee success in business. Starting a business also involves many tasks that you may not want to undertake. Sometimes it might be better to work for a large company that already has the infrastructure in place to allow you to maximize the value of your skills and bear the costs of growing the business.
When one of the start-up’s programmers, Kim Yong-san, asked Han Ji-pyeong if his team should accept an offer to work for Cheong Myeong instead of starting their own company, Mr. Han said, “If you are excited Write programs and see how they run. Work for a company that pays you well. If you are excited about starting and running a business then run your own business. “INQ
April Lee-Tan, CFA, is the chief equity strategist at COL Financial, the Philippines’ leading online stock broker. She has over 20 years of experience in the Philippine stock market. She leads the COL research team. Follow @AprilLeeTan and @colfinancial on Twitter for insights into the market. Send an email for comments and suggestions [email protected]
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