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Wednesday, June 28, 2006

Business/Make Money Feature: Is Finance All That Hinders You From Going Into Business For Yourself?

Recently I got an opportunity to make a brief presentation to a small group that is in the process of launching a business project. My presentation focused on the Toyota Motor Corporation's JIT (just in time manufacturing). There was also an emphasis on how letting your customers raise the capital to lift your business enterprise to success (which started with Ford founder and the inventor of the Assembly line, Henry Ford) can be used to dramatically cut down on the risks of financial losses in any enterprise.

I quickly realized how naïve I really was to have thought that I would go in there and change mind sets with one small inspiring presentation. One man even told me right in my face that I was lying and that there was no way that Toyota would manufacture vehicles in the way I "dared to suggest". I quietly referred them to the company web site and also asked them to do a little research using a search engine and the key words "just in time manufacturing." That whole episode really shook me. Just in time manufacturing is the revolutionary production process used by the most efficient manufacturing company in the world to manufacture cars only according to demand and with virtually no waste of resources or raw materials.

Another gentleman at the presentation who is a senior accountant with a large multi-national stuck to his mantra, no doubt written on stone in his heart after years of service to his employer – "nothing moves without a budget," he kept saying in many different ways.

I realized that one of the biggest problems facing would-be entrepreneurs in Kenya and indeed Africa today is not capital but a mindset that won't change. Many Kenyans today would give an arm and a leg (and a spouse – as many have already done) to get an opportunity to go to the United States. Even with the rapidly changing situation in that country, the vast majority of Kenyans strongly believe that all they have to do to become millionaires is get to America (the end justifying any means used).

Yet in that great nation I wonder if the founding fathers (all immigrants) sat down to create a budget before they went in. Where did they get the capital to build this great enterprise called The USA Inc.?

The best-documented example of this old argument, of whether it is acceptable to launch a business without capital or financing, being played out involved Henry Ford himself. The founder of the Ford Motor company just couldn't stand bankers. His belief was that to start a business, you created a product and if it could get customers, you then used the proceeds to build another unit so that it was the customers who "financed" the business. The huge advantage, old man Ford said, was that if the business was not viable, one would not need to waste a ton of capital to find out. It would simply never take off and the person would then be free to try something else, without the burden of debt hanging over their necks and following them to their next enterprise.

Many people ridiculed Henry Ford for these "radical" ideas. No doubt it did not help that he had very limited formal education. However that did not stop Ford from proving practically just how viable his ideas were.

(to be continued… Next Week: How You Can Launch A Part Time Business using this principle.)

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