The book “Brain vs Capital” by Günter Faltin (German original title: “Kopf schlägt Kapital”) taught me to build companies from components. After the book, I understood that you don’t have to build everything yourself and that it can even be better to use specialized service providers.
Because I value the book enormously and it has just given me some important insights, I have summarized the most important for you here, so that you can also benefit from it.
- Entrepreneurship should no longer be equated with business administration
- You should work on the initial idea until you have an idea concept that is much more convincing than the conventions you find (most difficult step)
- Start up with already existing components instead of building everything yourself in your own company
2. Idea concept using the example of tea campaign
- tea store, good location
- large assortment (often several hundred kinds of tea)
- small packages
- several intermediate trade levels necessary (retail, wholesale, importer, exporter)
- large selection
- high fixed and variable costs (high capital required)
- therefore necessarily high prices
- limited to only one type of tea (directly from India)
- no intermediate trade
- only bulk packages
- sale by mailorder and internet
Result is much lower costs and thus price and quality leadership is possible (little capital required).
What is decisive is the good basic idea and the well thought-out concept according to the motto
“Function instead of convention”
Other examples/possibilities to implement the basic idea:
- Olive oil campaign (https://www.artefakten.net/)
- eBüro (rethinking the office; telephone service/office on demand)
- Direct to Chancellor
- Heating oil
3. Helpful questions for the development of an idea concept
- “What annoys me about some products?”
- “What do I or my friends miss?”
- “Couldn’t certain things be made easier, better, cheaper?”
- “What would I like to do together with others?”
- “How much capital do I have at my disposal and how can I use it wisely?”
4. Term entrepreneur
- Ownership function (who owns the business)
- Management function (how the business is run)
- innovative function (with which concept the enterprise is founded and developed)
Success factors of enterprises are people, ideas and resources.
5. entrepreneurial design
- elaborate clear market advantages
- secure an advantage over imitators
- protect against technological obsolescence
- protect against economic obsolescence
- minimize financing costs
- marketing must become an integral part of Entrepeneurial Design
Every butcher claims that his pork belly is the best and cheapest => customer must be able to perceive advantage and assess its extent
Beware of technological start-ups (example Cortologic – speech recognition). These can be at the top for a short time, but for how long? Can’t be the day after tomorrow, Taiwan, Singapore, Silicon Valley have worked out a slightly improved technology => highly risky, even hopeless, to want to keep the top position in the technological field in the long run.
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6. principles of high potential entrepreneurial design
- Minimize risks
7. entrepreneur as composer
- Purchasing via standardized markets, exchanges or contract production
- Use office service providers
- Hand over administration, accounting
- Use logistics service providers (transport, storage, packing, shipping, e.g. HapagLloyd).
Founder as lead entrepreneur must be able to concentrate fully on the idea concept and its further development. Management is responsible for day-to-day operations.
Management problems are systematically underestimated by founders. Therefore, a formal organization, cost accounting system and budget controls must be established.
Start with a single product and diversify/expand later (if experience is available).
8. three steps to approach business creation differently
- Realize that good concepts are now more important than capital
- More radical division of labor than before in the field of entrepreneurship
- Compose companies from components (division of labor + specialization).
I hope these suggestions help you as much as they did me and wish you productive and successful ideas!
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