Friday, 20 July 2012

How to increase your entrepreneurial reflexes

Aristotle was a great philosopher, but the one thing that he never managed to understand was entrepreneurship. In the "Nicomachean Ethics," his essay on justice and morality, he saw society as a market where human desires are stable and each product possesses a fair price.

One does not need to look long at the world to realize that Aristotle's view of work and commerce was highly unrealistic. The truth is that prices vary incessantly and new products appear daily on the market. Jobs are created by growing ventures and lost by dying industries. Things change, markets move, and money circulates.

Start-up entrepreneurs are deeply conscious of the fact that the driving factor of business success is not money, but time. Any financial advisor will tell you that, for a solid undertaking, money can always be raised or borrowed. Bankers rarely refuse a loan to a company that produces positive cash-flow.

What entrepreneurs do, essentially, is to shift resources through time. They borrow from the slow at 6% interest in order to invest with the fast at a 10% rate. If you learn how to do that repeatedly, with growing sums of money, chances are that you will become very wealthy.

Since Aristotle never grasped the impact of time on resources, he was never able to explain why people pay interest when they borrow money. The different personal needs are what, already a thousand years ago, prompted farmers to exchange cheese for meat and wool for wheat.

Entrepreneurs trade present resources, which are used slowly or not at all, for future results, which are to be produced as fast and efficiently as possible. A company should encounter few obstacles to issue bonds at 7% interest if it can achieve a 20% profit margin in its operations.

A flow of money is, fundamentally, a flow of time. The essence of business activity is to shift resources from slowness to velocity. At school or during their apprenticeship, entrepreneurial minds can be spotted by their extreme impatience and disdain for slow motion. Speed is seen as a synonym of efficiency, progress as a continuous forward movement.

How can one acquire entrepreneurial reflexes? Is it wise to let our irritation run free when we face slowness? Does annoyance automatically make us more alert to opportunity? Here is some practical advice:

1. THE WORLD IS ASYMMETRIC. Commit to seeing the world as a playing ground of time and resources that can be shifted by personal initiative.

2. TARGETS MOVE. Realize that opportunities are continuously created and destroyed by markets.

3. PERSPECTIVE CHANGES PERCEPTION. Your decision to enter a market or profession will immediately affect your attitude towards that field.

4. ENTREPRENEURSHIP IS WIDER THAN BUSINESS. As soon as you start to shift time and resources, you have already become an entrepreneur. In this sense, a medical student is one. The same goes for someone who takes up a modest job in order to learn a trade that will allow him later to set up his own company.

The ability to link present slowness to future speed can be cultivated like any other skill. Taking notes and asking questions are excellent methods to focus your thoughts on what can be done, changed, or contested. At some point, when your impatience begins to drive your imagination, you will be on your way


[Image by Paul Stevenson under Creative Commons Attribution License. See the license terms under]

Free e-book for downloading

A free e-book presentation of my work “The 10 Principles of Rational Living” can be downloaded in this link

Free e-book for downloading

A free e-book presentation of my work “The 10 Principles of Rational Living” can be downloaded in this link