Zoran against the World - Entrepreneurship in Transition

Technologically, it is probably the most advanced printing facility in the Balkan. It cost almost $2.5 million. It was constructed in less than a year. And it is in dirt-poor and war-torn Macedonia.

Behind this incredible tale of entrepreneurship, uncommon in these nether-regions, stands Zoran Rosomanov. A stereotypical visionary - mane, blazing eyes, imposing physique - this man, against nightmarish odds undreamt of by his Western counterparts, constructed, single-handedly, an impressive, star-trek like, factory.

Literally single handedly: digging the muddy soil, hoisting bricks onto cranes, driving earth-removal heavy machinery. He begged, cajoled, and persevered. And he made it. His story serves a lesson to all the forlorn dreamers in the sad countries of the East.

Thirty-six year old Zoran represents a new breed of "can-do" businessmen in Eastern Europe and the Balkan. His philosophy is the outcome of first-hand exposure to Western management techniques and ideology. He does not rely on the state to provide for him or for his enterprise. He actively seeks foreign inputs - in capital, contacts, and know-how. He is well-traveled, polyglot, affluent, a consumerist. He is enamored with technology and gadgets.

Still, he likes to think of himself as a creator, or an artist - rather than a money machine. He emphasizes the design-related portions of his company. He brags of his hobbies: photography, interior design, music. His home and office serve to advertise not his wealth - but his aesthetically-informed talents. He is smartly dressed and well-mannered, indistinguishable from his colleagues in the West. Though he loves Macedonia, his homeland, he is, in essence, a citizen of the world.

Zoran started off as a TV music editor in the Macedonian state-owned channel. The highlight of this brief phase in his career was a human rights concert in Budapest. But he soon discovered his true calling: business. He joined a Belgrade-based musical instruments trading firm as a traveling salesman. At the age of 21, he was put in charge of 185 people as head of the Sales Department.

But Yugoslavia was disintegrating. Yugoslavs lost their common identity overnight and woke up as Macedonians, Croats, Serbs, or Bosnians. Zoran went back to Skopje, where he opened, with his savings, a chain of 11 stores of electronic consumer goods.

But he noticed that how you sell is at least as important as what you sell. He discovered marketing. After a stint of studies in Milan, Italy, he came back to Macedonia and, in 1992 he established "Divajn". "I noticed that everyone in Italy asked me about Macedonia. They were interested. So, I decided to connect people." The company was the first to offer a vertical, marketing campaign-orientated service: from poster ads to sales force, a turnkey solution.

He also noticed that, the paperless office notwithstanding, there was a great demand for paper products. In a typical move, Zoran bought an expensive computer and began to design such products for his contacts. "But I noticed that, following a first satisfactory order, they circumvented me and went directly to the printer".

So, he decided to become a printer as well - by merging with a print shop. He placed an ad and settled on one of the applicants. They have been inseparable ever since. Their joint company, "Bato and Divajn", owns the new facility and Zoran's partner supervises the daily work there. "Wealth is in people - not in money", says Zoran.

His secretary has been with him for 11 years. Miki, the talented head of the pre-press division and quality control, has been working with him for a decade. Zoran values loyalty. He trains his staff personally. Every single one of his 40 workers (soon to increase to 55) has gone through a 6-month period of apprenticeship. Then they are on their own. "I believe in delegating," says Zoran, "though I never lose sight of the details. And I am very demanding".

When the combined business expanded, Zoran needed new machines. He tried to find investors, both domestic and foreign, but failed. So, he approached a friend of a friend in Holland. This guy owned an envelope factory and was interested to sell one of the used machines for a mere 400 thousand DM (i.e., c. $180,000).

In typical irresistible gall, Zoran offered him $13,000 as an advance payment. "I will pay you the rest over 3 years" - he pledged earnestly. "What is your guarantee?" - asked the shocked seller. "Your trust" - responded Zoran. The stunned Dutchman accepted. Zoran paid him back in two years.

This pattern of unmitigated self-confidence, infectious optimism, and non-conformism pervades Zoran's way of doing business. He won an order for a million labels simply by waltzing in and producing samples he scanned off empty beer bottles. He is now the exclusive printer for this brewery.

Last April, as he was visiting another client - his firm supplies all the Macedonian blue-chips - he overheard a discussion about problems with a Slovenian supplier. "If I were to establish my own factory here, will you buy from me?" - he enquired. They said yes - and so did many others. "It was my market research" - he grins. Why import from Slovenia if there is a qualitative alternative in one's backyard? Zoran is a great believer in import substitution and buying local. It is not only patriotic - but it makes economic sense.

He proceeded forthwith to find land. His firm designed the construction project. All he lacked was the printing presses. He had less than $100,000 in cash. He needed another $2.4 million. Others would have regarded this deficiency as insurmountable. Not Zoran.

He decided to get the best equipment money could buy - and that meant "Heidelberg". So, he picked up the phone and called Alexander Hufnagel, Heidelberg's director of East Europe. When he asked to buy on credit, they naturally demanded a bank guarantee. Zoran prepared a business plan and went to Komercijalna Banka, Macedonia's second largest retail bank. He asked for $1 million, partly from IFC funds dedicated to small and medium enterprises.

Macedonia's economy has been in dire straits long before its independence in 1992. Nearly one third of the workforce are unemployed. The heavily-politicized and under-capitalized banking system is largely dysfunctional. Lending to business is almost at a standstill. Zoran's was an unprecedented application.

When Zoran dug the first foundations in an industrial park at the outskirts of Skopje, a civil war between Macedonians and Albanians has erupted. Fighter planes and helicopters buzzed above head and police and army streamed to the Aracinovo, a besieged village, not far from the site. There was palpable panic in the air.

Komercijalna Banka asked for a collateral and Zoran offered the new equipment. "Title will revert to me only when I finish paying you", he explained. Unbeknownst to him he has invented leasing. He then turned around and offered Komercijalna's money to Heidelberg as his equity. After a grueling few days of due diligence, Heidelberg agreed to give him supplier's credit amounting to the rest. They asked to him to guarantee the credit personally. He willingly accepted.

Zoran then proceeded to convince them to establish a maintenance center, replete with spare parts, in his new factory. "I don't charge them rent" - he discloses impishly - "My machines must work 24 hours a day, 7 days a week. It is useful to have a maintenance crew and spare parts handy." The next logical step is to become their representative in Macedonia. "I am working on it. But I want them to provide me with revolving credit to be able to offer financing together with the equipment".

But this financial wizardry has depleted Zoran's resources. He resorted to an old communist stratagem: the barter ("compensation" in East European argot). He traded print jobs for building materials. It was one of the worst arctic winters in memory with temperatures often dropping to way below the freezing point. But construction continued, the shivering workers spurred on by Zoran's personal example.

When the equipment finally arrived, Zoran was presented with a $450,000 bill - for the newly imposed Value Added Tax. In a complex financial somersault, Zoran borrowed against future VAT refunds and overcame this obstacle as well. The NASA-like control panel, the printers, cutters, templates for different cigarette brands - all were finally installed in the half completed structure.

"This is my country" - Zoran toggles an unlit smoke - "It is beautiful. We just need help. I could never have done it without the help extended to me by Heidelberg, Komercijalna, the IFC, my clients. My wife stood behind me. This network of support is indispensable. There can be no entrepreneurship and initiative without it!"

"Aren't you afraid to fail?"

"I have no fear. With all our problems - we still must exist. We must survive. Many say I am crazy - but time will tell who will succeed. You must persevere. If the bank would have said no - I would have gone elsewhere. There is always a solution. My advice: get your suppliers involved. Heidelberg now has a stake and they will refer clients to me. I said to them: you want me as a client? Then give me credit!"

"Operating in Macedonia is not easy..."

"A country should  be run like a business and politicians should act like CEO's. Macedonia has the potential to be this region's Switzerland, though it must concentrate on exploiting its natural endowments: climate and soil. Agri-business is its future. All we have to do is encourage foreign investments by safeguarding property rights and overhauling the court system and law enforcement. We have to learn from foreign investors and emulate them."

"But foreign investors are potentially your competitors..."

He tilts his head back and laughs uproariously:

"The Slovenians tried to arm-twist my clients, slander me, and spy on my operations. I can now easily compete with them in the Serb market. My transport costs are much lower. My machinery is so advanced that I can work for the strictest multinational anywhere from Switzerland to Turkey. We are getting the ISO quality certificate shortly. So, they are scared. What has been my response? I bought more land for future expansion..."

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How Playing Poker Teaches Business Skills

I have fun playing Texas Hold 'Em with friends. But did you know that playing the game or watching shows like World Tour Of Poker can help you succeed in business? I didn't realize that while I was learning to play, I was also gaining valuable business skills that have translated into money in my pocket.  No, not by gambling money away.  :)  Let me show you what I mean. I learned four things from playing poker.

First, I learned how to make the best of the cards I was dealt. I learned when to play a hand, when to take risks, and when to throw the cards away and wait to act with better ones. This kind of discernment helps a business owner make sound decisions about working with assets and when to cut a project loose if it's not producing good results. I found that when starting your own business, you will invest two assets—, your time and your money.  Depending on where you start, you'll use one of these assets more than the other.  A realistic understanding of which asset you're working from can help you make the most of what you've got.

The second lesson I learned from poker is that you've got to use a strategy to win. Good players spend years learning from each other and developing a strategy that's right for them. Their strategy is reliable and flexible enough to adapt to new situations. They learn something new from each game, and they actively look for the lessons when they lose a hand. They know how much they're willing to bet in an evening, and they aren't pushed off course by setbacks because their strategy takes the slow time into account. 

The third lesson I learned is that while I must understand the cards I've got, I must watch my competition and adjust what I'm doing accordingly. If I have a solid straight in my hand, I still need to watch my fellow players because one of them might have a straight flush. If you only focus on your hand, you may end up broke in no time flat.  Even if you've got an awesome product, don't fool yourself into thinking you've beaten your competition.  In business, there are always going to be people who want to move into your market.  People are actively creating new products and services, and yours could be left in the dust if you aren't paying attention.  The difference  here is that you may find that good strategies include partnering with your competitors and funding joint ventures. Unlike poker, you both can win.

The last and most important lesson I learned from playing poker is that risk isn't the four-letter word!  Risk is a good thing if you have studied your competition and know you have a good hand. The reality of business is that you will have to do some things you've never done before or that make you feel nervous. This is a good thing because you become a better person once you push through your fear of taking a risk.  I used to worry about what would happen if I lost a bet. I played to prevent losing instead of playing to win. There's a big difference between those things. Playing to win means putting yourself out there, letting people know you've got a good product or service. Playing so you won't lose usually results in you losing or barely breaking even because you can't do the very things that cause your business to sky rocket to the top.

In summary, I learned to use my assets well, implement a winning strategy, to respond to my competition, and to push past the fear of losing. 

Think about other activities you've done over the years.  What skills did you learn?  How can you use them to build your successful business?

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Going For The Win-Win Joint Ventures

There is not much difference between a big time and an unheard company or business when it comes to joint ventures. 

You have probably heard of rags to riches stories of how some people are making millions by getting into joint ventures. What makes their stories amazing is that before they got into the alliance, they were unknown entities making a decent income. 

Joint ventures made the sudden boosts in their businesses.

This strategic alliance, or joint ventures, is a concept or strategy where businesses work together to share knowledge, profits and markets. Joint ventures can take on a variety of structures. 

Small companies can combine to take on the big sharks in their industry. While big companies form alliances with faster and small businesses with the right potential. 

It is also possible for smaller companies to form an alliance with companies that have big name to be able to expand their geographic reach.

It is estimated that 25% of all revenues for the year 2005 alone, which total to 40 trillion dollars, is all because of businesses going into joint ventures with other businesses. This is enough reason for small businesses not to ignore the benefits that joint ventures can give them.

What are some of the valuable opportunities you can get from joint ventures?

1. You can cut down on the time-consuming business development. If you have a small business, getting into joint ventures will minimize the need to create new products and the knowledge to be able to expand your market. These things do not happen instantly, they take time. 

With joint ventures, you get more leads, advance expertise and accumulate fewer costs.

2. You get to improve your business credibility. This is the most common problems encountered by new businesses. They struggle to gain credibility within their target market and customer base. 

An alliance with already known and trusted company will significantly advance your credibility with your customers. 

3. You can have new sources of revenues. Normally, small companies do not have enough capital and resources needed for growth. 

By getting into a joint venture with a sound and stable partner, your sales can be improve at a much lower cost.

4. You can be shielded from your competitors. With the many existing competitors out there, there is a big probability that they will try to infiltrate through your business.

A partnership with major key companies will help you to stay strong. You get to build solid walls to keep your competitors out while retaining high profit boundaries.

With all these benefits up for grabs, you are probably too eager to start thinking of going into joint ventures. But then, do not start rushing to get into the first ones that you see. A badly executed and poorly planned joint venture is likely to be doomed early on. 

What are the secrets of a successful joint ventures?

1. A clear objective. You have to know what you want to achieve from the start. The partner you chose may not have the same goals but at least they should be complimentary to yours. 

2. The right partner. The best partnership should put you both in a win-win situation. Take some time to find the company that has an interest in joint ventures and has similar objectives set. If what you want is not in line with what they want, your ideas will probably clash sooner or later.

3. Plan the venture. Work out a plan on how you will go about negotiating and the tactics you can use. You have to understand the different aspects of the deal you are getting into. What is primary on your mind is to enter into a win-win venture. 

4. Manage the alliance well. It is said that a joint venture relationship is like a marriage. Its foundation should be built on understanding and trust. The real work takes place once an effective alliance is formed. If you find yourself in one, treasure it as something that is valuable to you.

Joint ventures can work effectively for all the parties concerned. You just have to understand the processes involved to make the relationship smooth-sailing. 

But first, create a well strategize plan of how you can utilize Joint Ventures to achieve your business goals. Need help? Email me. 

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The financial physician

Siegmund Warburg was born into a talented banking family. Its members included Paul Warburg, who played a leading role in establishing the United States’ Federal Reserve System; and Eric Warburg, whose firm Warburg Pincus is one of today’s leading private equity firms. He himself played a prominent role in the development of merchant banking.

Warburg formed a view that what companies really required was financial expertise and advice – what he called Vermittlung or ‘mediation’. “Highly qualified mediation activity” was Warburg’s description of the business model he had in mind. To Warburg, a merchant banker (entrepreneur, dealmaker, joint venture strategist) was similar to a physician. He makes this point explicitly in an interview in 1970:

“The motives of a doctor are a mixture of altruism – the wish to help others – and of the ambition to do a good job. He hopes to obtain both the inner satisfaction arising from well-accomplished achievements as well as material recognition. On this basis a good doctor should in the first place listen with great attention to the problems and complaints of his patient and try to gain a comprehensive picture of his strong and weak points, looking not only at the patient’s specific ailments but observing the state of the patient as a whole with its physical and psychological ramifications.

A doctor must neither neglect smaller impairments of the health of his patient nor must he despair over the patient’s most critical afflictions nor desert him even on his deathbed. Moreover a good doctor must have the courage to tell the patient unpleasant facts and to oppose the patient when the patient wants to do things which appear to the doctor to be unwise.

Finally, the doctor when looking after his patient should think only how he can give the best care to his patient and should not give any thought to the bill which he will send to the patient afterwards. However, once the doctor has performed a good service, he should not be shy about sending proper bills to those who can afford to pay them. The primary point seems to me always to be the quality of the service and the courage to persist in giving well-considered advice, no matter how unpopular that might be at times.”

To Warburg, good bankers (entrepreneur, dealmaker, joint venture strategist), like good doctors, have the courage to tell clients unpleasant facts and to oppose clients when they want to act unwisely. Courage to give “well-considered advice, no matter how unpopular that might be at times” was at the heart of Warburg’s business model.

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Amazing Inspirational Video

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