Focus on the Fundamentals
It’s 1908. You’re the dominant buggy whip manufacturer and business is strong. You’ve got committed customers, a great team, and more knowledge about your line of manufacturing than any of your competitors.
There’s just one problem…
The Ford Model T is about to be released, ushering in the automobile age, and drastically changing the landscape your business is operating in. The market for your product is going to shrink drastically and the revenues from your existing product lines will plunge.
This story has played out again and again, for example: the typewriter, the cassette tape, and the CRT monitor. The constant creative destruction that is part of our economy requires business owners to cope with tremendous amounts of upheaval. Since you don’t have a crystal ball, how do you make sure you don’t end up getting buggy whipped?
Focus on the Fundamentals
At Setaris we use the following principal: focus on the fundamentals. Building a business requires a tremendous amount of learning, but it’s essential to think about how durable the knowledge you’re acquiring is. Knowing the ins and outs of a particular manufacturing process or social network may be valuable today, but what happens when things change? In contrast, there are skills, like the ability to read basic accounting statements or keep teams working together productively, that have stood the test of time. If you focus on learning the fundamentals of business, you will be in the best position to adapt when the world changes.
A few of the fundamentals that we focus on at Setaris:
- Managing people and teams
- Executing projects on schedule and on budget
- Scheduling resources to optimally handle a large number of projects in parallel
- Designing sales processes and refining them based on experience
- Managing marketing campaigns
- Using CRM systems to track data relating to our sales and marketing departments
- Optimally managing finances to minimize capital requirements
- Making strategic decisions by rigorously analyzing each business opportunity quantitatively and in a probabilistic framework
If Setaris was running its own business school these would be the required classes. We attempt to focus on the things closest to being the “laws of physics” that there are in the business world, i.e. mental frameworks that will be useful in future years regardless of how things play out. So we view building Setaris as similar to studying calculus, differential equations, probability, etc. In contrast, we try to avoid investing time in learning about topics that we view as potential trends or fads. We see many business opportunities as “electives”: material that may be interesting but quite plausibly won’t be of any use five years down the line.
Reducing Risk, Adding Appeal
One side benefit of this approach is that it reduces the risk of starting a business. When you’re just getting started there are any number of chance events that might derail your business: another recession, a competitor with deep pockets, the list goes on and on. But if you’ve developed several of the abilities outlined above then your prospects for successfully starting another business (or gasp! even getting a day job!) are much better. If you’ve got a couple of years of hands-on experience getting the word out about a product, negotiating with vendors, and keeping your team happy, then you’re going to be appealing to a lot of potential business partners and employers.