I was recently asked to share my point of view in a radio show presenting two particular Start-Up businesses. Beforehand, I asked the radio station to send me the Start-Up cases to be presented. Upon reading them,however, I had to decline their invitation, for the simple reason that none of the cases to be presented showed any typical Start-Up business characteristics.
The truth is, at the time the 2009 financial crisis hit, the Start-Up idea was over-advertised, exaggerating the average Greek businessman’s acumen. “Consultants” were filling applications and submitting NSRF files, and emerging overnight as “specialized Start-Up consultants”.
The problem with the term Start-Up in Greece was blatantly obvious in all ten cases to be presented in the previously mentioned radio show, and all ten of them had the following common characteristics:
A) They had nothing new to put forward as pioneering Start-Ups. The merchandise may have possessed innovative elements, i.e. wooden glasses, a unique agricultural product etc. but as far as its business model and its contribution to the local economy, they were far from reinventing the wheel…
B) Besides the product itself, everyone’s perception of innovation was limited to applying “e-commerce”. E-expansion of a business’ commercial activity is a self-evident move and certainly not an innovation.
C) None of the business plans contained, if not ground-breaking ideas, then at least proposals regarding the following fundamental components that are necessary for a business to function:
- Financial planning methodology and cost center management
- Organizational structure and human non-human resources methodology
- Development plan and business governance
- Financing and financial return plan
- Vision and mission
In general, these Start-Ups and relevant written proposals were ultimately reports of ambitious ideas that, to my mind and experience, paved the way for disappointment.
Before a relevant proposal is submitted, and especially before we can call a new business a Start-Up, it is important to investigate the following:
- What value would, for instance, a venture capital add by financing it and for what reasons and characteristics in particular.
- What is the experience, training, academic and professional background of the “consultant” who guarantees the documentation of the Start-Up. If the consultant in question doesn’t know how to determine a cost center, then perhaps we should look elsewhere.
by Yannis Stergis, President & CEO, hyphen SA