A new career...perhaps
07/01/2001
By Mark Diorio
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The past few months have been a disaster for most in the packaging world. Factory run rates are way down, and sales forecasts are dismal. Headcount reduction plans are in place at many companies, and all segments of the industry - from the IDM to the foundry to subcontractors and all of the suppliers in between - have experienced some sort of downturn.
Don't think it's all that bad? Well, I personally don't recall a worse downturn than this, and I'm not sure we've hit rock-bottom yet.
So, what's a person to do? Well, this may be the time to go off and start a business of your own - you know, the one that you've had in the back of your mind for quite some time. After all, a downturn is as good a time as any to start a new company and position it properly for the up-turn. Perhaps your existing employer will even give you an incentive package to leave your current position, and this just might help bankroll your new venture. (I know for a fact that you didn't make any money on those stock options they gave you, so you might as well take what you can and move on with your life!) Now may be the best time for you to take that giant leap of faith. If you have the gumption, go for it. Become your own boss! Become the CEO of a young and dynamic start-up!
Just Beware...
If you think that you can make ends meet within six months, you should really think in terms of 12 months. If you think it will take a year, then give it two years. In essence, double how long you think it's going to take for you to see profitability. Usually a company doesn't really turn the corner and become solid until its third year, so it's important to truly prepare yourself. While you may have some early successes, the real test will be whether you can maintain them.
Don't Count on Your Friends
If you think your colleagues, friends and "good buddy" business associates will give you orders and business opportunities, think again. While some may go out of their way to support your efforts because they have confidence in your professional abilities, most will not. Who knows the reasons why this happens. But, understanding this will help you recognize those individuals who value you and your skillset and with whom you can ultimately build a long-term business relationship.
CEO or CTO or COO or CIO or CFO...Does It Make a Difference?
Be prepared to be everyone and everything for your company. You will need to set up your information/computing systems, manage your costs, control the finances, handle HR, pay rent, take the mail to FedEx and then straighten up the conference room at the end of the day. You'll be doing all of this while trying to conduct business that includes customer sales and marketing, engineering, business development, answering the phone, making presentations, and (because you'll really need it) making coffee. This is where most people who start their own companies struggle. Most executives have had it so good for so long that they forget how to hustle and they take their supporting staffs for granted. Trying to multitask physically and mentally is not for the faint of heart.
Do It Right the First Time
When launching a new company, you need to do it right from the very beginning. It's important to decide what type of company you will have, whether a C corporation, an S corporation, an LLC or an LLP. To do this, you should get yourself a good CPA and an attorney experienced in forming companies. If you are self-funded, you don't need a big, well-known, expensive law firm or CPA group; there are many individuals who are just as capable at a fraction of the price. Interview a number of people and see who are the best match for you. And while a significant amount of your focus will be spent controlling your new company's costs, don't be too frugal here because this can lead to problems in some areas later.
Control Costs
Unlike our dot-com brethren, most of us in the packaging community have been brought up and educated by IDM companies that are largely recognized as experts in exercising severe and rigid cost controls. In fact, if you look at one semiconductor company that has been repeatedly voted to be the best managed company, you will find that many of its purchase orders are reviewed and signed off by the CEO. Don't forget this tactic when you have your own company. A good and simple rule is don't spend more that what is coming in - wait until your invoice is paid and in the bank before writing a check to buy something (you'd be surprised how many people forget this).
Come in Early, Stay Late
Hey, it's your business now - if you aren't working, who is? Sure, you booked an order, but you better make sure you have a reasonable backlog. And don't forget you can't bill if you don't ship. It's better to spend four hours developing your next project or an extra sales order than hitting the links. There are no easy means to be successful. Except for some very rare instances of success, most small companies that thrive are driven by people who work incredibly hard. If you're the boss, many times you'll find yourself working alone.
Want to Grow Your Company?
Perhaps you already have a young company, and it's doing well. You have a good cash flow, and you could do more if you had more financial resources. Provided your company has demonstrated a good track record of performance, additional funding to help you grow to a higher level is available. Dot-com visionaries haven't wrecked the funding markets completely, as there still exist many forms of financing by which you can grow your company. There are funds that specialize in small investments of $200K to $300K, and accelerator funds that work in the $2 to 8-million range. Large venture and capital funds can provide up to $100 million, and there are still some traditional equity financing and term/leasing facilities. If you need some help here, contact me and I'd be glad to assist you or guide you to some appropriate contacts.
Taking the Plunge?
Well, are you ready to make that break and go off on your own? Are you ready to do what needs to be done to create a successful company? Maybe you want to take a partner or two to help you, and that's a good idea. Just be prepared...except for some very rare instances, your company's success or failure ultimately depends on you - your character, your smarts and, most important, your commitment. AP
Mark DiOrio, chief executive officer, can be contacted at MTBSolutions Inc., 1630 Oakland Road, Suite A102, San Jose, CA 95131-2450; 408-441-2173; Fax: 408-441-9761; E-mail: [email protected].