Chapter 22 8 Reflections of Chinese Entrepreneurs

1996 was the first year of the "Ninth Five-Year Plan"; 10 years later, the "Eleventh Five-Year Plan" started again.For Chinese enterprises, this is a 10-year period from a seller's market to a buyer's market, and a 10-year period in which a company develops from "hard work will win" to "details determine success or failure" such as cost and service.These 10 years are exactly the 10 years since the reform and opening up, the first group reengineering and the first large-scale metabolism of Chinese enterprises.In the past 10 years, countless enterprises in China that have been prosperous for a while have fallen tragically or tragically for one reason or another, or even disappeared.Their failures provide us with samples for studying contemporary Chinese enterprise problems.This article is Qiao Ying, the founder of "Red Sorghum" fast food, 8 reflections on the common failure genes of "business stars" after the failure of the company.

This is the most profound question I have experienced since I entered the business world.Maybe some readers will disagree and think "this has nothing to do with me".Sorry, you are wrong, this is the same as my original thought.Since I started my business, I don’t know how many business reports or feasibility analyzes I have written. Almost every time I write about risk analysis, I have briefly mentioned the policy and legal risks faced by the company. I believe I am "Genzhengmiaohong": 12 years old.He began to read Marx's books; after the age of 13, the person he admired most in his heart was Marx; he joined the army at the age of 15, and at the age of 19, he studied at the PLA Tank Command Academy and became a military commander; after that, he obtained a bachelor's degree in philosophy from the Nanjing Political Science Institute, and Having been an instructor at the Information Engineering College of the PLA for 4 years... it is impossible to have legal problems.But in the end, it was precisely at this place that something went wrong—the place that I thought was the most reassuring place became "Achilles' heel."I never dreamed that I would sit in the dock of the court and accept the judge's verdict.

Later, I gradually understood, and I also had a very noble feeling: I am happy that our country is moving towards legalization.A market economy is a legal economy.Why not attach great importance to legal issues?After I figured it out, not only did I not feel wronged, but I also consciously studied the laws of our country.I read "Criminal Law", "Criminal Procedure Law", "Civil Law", "Civil Procedure Law", "International Commercial Law", "Administrative Punishment Law", "Marriage Law" and so on.Really, I hope that all business owners and entrepreneurs will study more laws no matter how busy they are.You can't just learn some knowledge of civil law and company law, but also some knowledge of criminal law, especially our country's new criminal law.Even if you do not intend to commit a crime, there is still the possibility of negligent crime.If you do not carefully grasp the relevant provisions of the criminal law, you may sit in court at any time.

After my country's accession to the WTO, many enterprises began to attach importance to the study of international commercial law.That's right, if you don't understand business law, it will be difficult to do business internationally, and it will be difficult to bring your products to the world, let alone create an internationally renowned enterprise.I remember a former chief financial officer of the Holiday Inn in the United States once gave me a vivid analogy to the rules of doing business internationally.He said that international trade rules are like a "hole" in the wall, the shape is "circle", everyone wants to pass through this "hole", you pass because you follow this rule: "circle"; you fail , since you are "square".

When I came into contact with some well-known international companies, I found that they not only have a strong sense of the legal system, but also have a series of effective systems to ensure "safe operation". ".For example, whether to invest in a project, they must go through a strict inspection by a lawyer's firm. If the lawyer's firm does not sign, the company will not invest in the best project.This concept is the content of the legal economy, and it is also an internationally accepted practice. It has become an effective means for enterprises to protect their own safety by law.

There are countless cases of enterprise bankruptcy due to inadvertent investment or investment failure. "Red Sorghum" also failed due to investment problems. In fact, the opening of the first "Red Sorghum" was very successful from the perspective of investment.At that time, I borrowed 400,000 yuan, including a deposit of 200,000 yuan, and the actual investment in the store was 200,000 yuan. As a result, the investment was recovered in the fourth month of opening, and the after-tax profit of the year was 1.89 million yuan.This incident gave me an inspiration: don't wait until you have money to start a business, as long as the project is good, you don't have to worry about having no money.You can still conquer the world with empty hands!

I think there is nothing wrong with this experience, and it also has a sense of the times-in the era of knowledge economy, innovation, information and knowledge are the greatest wealth.But Lenin had a famous saying: "Truth may become a fallacy if it takes half a step forward." Because I firmly believe in my investment philosophy - "Don't wait until you have money to start acting", and continue to make this idea absolute in investment practice, thus deducing the tragedy of "riding a tiger is hard to get off". In the second half of 1996, because I credulously believed in the agreement of 20 million yuan to be invested in three months by my partners, I invested all the money I earned from "Red Sorghum" in the rental deposits of 10 branches when the funds were seriously insufficient. , The average payment for a store is more than 400,000 yuan, and the lease period is three months.However, when the start-up period of the lease came, the partner breached the contract, and the 20 million yuan was not paid within three months, which put "Red Sorghum" in a dangerous dilemma.To advance, 10 million yuan is needed; to withdraw, the social impact is too bad.

Reflecting on this situation now, one of the most important reasons is that it is deeply influenced by the previous "investment philosophy".Originally, such a large investment project not only needs to be strictly demonstrated, but also must be foolproof. In the absence of funds, this chain project must not be easily launched with only an investment agreement.In fact, I started this project and a series of tragedies ensued: don't do it, and "red sorghum" will be exposed and get a bad name for not keeping promises.In order to support their own national fast food, some "proprietors" have already signed a contract with the world-famous western fast food. Knowing that "Red Sorghum" is coming, they would rather pay liquidated damages and rent the shop to "Red Sorghum"... ...After our analysis, we believe that "Red Sorghum" has no way out.

In this matter, I made three mistakes: first, I trusted the partner; second, I believed too much in my past investment "experience"; The law, not only did not make the "red sorghum" out of the predicament, but went to the "abyss". In the past, there was a very popular view in Chinese business circles, called "zero profit management", which means that when running a business, do not put profit first, but must expand rapidly, increase the scale, build momentum, build a brand, and then sell equity To be a listed company. In 1997, I not only accepted this view, but also began to practice this "strategy" without hesitation.

Practice is the criterion for testing truth. The lessons of "Red Sorghum" fully prove that the concept of "zero profit management" is not suitable for many Chinese enterprises, and even harmful.Because Chinese companies do not have the ability to resist risks, they treat small companies as big companies, attack across the board, and cast a big net to catch small fish, often in vain, and even lead to failure.Through several years of hydroxy operation practice, I realized that: companies must act according to their own capabilities, and should aim at "profit" and identify their own "profit zone" instead of pursuing "scale".

Speaking of the term profit zone, I would like to talk to readers about the book "Discovering the Profit Zone". I read this book in 2000. After reading it, I said with great emotion that if I could have read it three years earlier, I might not be as passive as I am today.The biggest inspiration to me from this book is that it changed my business values.The author believes that there are many failures of enterprises because of the pursuit of enterprise scale.The misconception that a large scale will necessarily lead to large profits is especially harmful to enterprises. The correct goal of an enterprise must be the pursuit of profit, not scale.To measure whether a company's development strategy is correct or not is to see whether your profits have increased or decreased.The author also tells us that with the changes of the times and the market, the profit zone is also constantly moving. If the business leaders cannot discover the new profit zone in time, the bigger the company is, the bigger the crisis will be.The author particularly emphasizes the establishment of a profit management system, and the effective and coordinated use of various resources, otherwise, it will fall into failure or difficulty. Whether you are running a fast food restaurant or a large enterprise group, it is not whether you should understand some financial management issues, but you must be proficient in financial management. In a sense, half-knowledge and half-understanding are more harmful than ignorance.Why do you say that?Because when you don't understand at all, you will listen carefully to the opinions of the financial staff.And once you think you know a little bit, you can make the financial people obey your decision-making.As a result, the financial staff had to listen to you, even if it was the wrong opinion. I've had a hard time with financial management.For example, there is a "golden rule" in financial management: short-term borrowings cannot be used for long-term investment in enterprises.However, after 1997, most of the fixed assets of "Red Sorghum" came from current liabilities and short-term loans.Coupled with four-sided investment, financial management cannot keep up, the cash flow of the headquarters (that is, working capital) is reduced, and the interest burden is increased, which eventually leads to the failure of the company's operation. Owners of private enterprises must set up a reasonable accounting structure and establish a strict accounting system.Financial management should be placed at the core of the enterprise, and the enterprise must not be run in violation of financial laws. The more popular point of view now is to have a successful store, then model and brand it, and then start to copy this model.Generally, there are two forms: one is self-operated, and the other is franchised.This point of view also believes that the larger the scale of the chain, the better the operation, and the bigger the better the management.How attractive is the chain operation!As a result, many operators dreamed of building a "chain empire". The first company succeeded, so they immediately established a chain model and took the road of chains, and the second company also succeeded; perhaps luckily, the third, fourth and even fifth companies also succeeded; so they thought it was a success The chain model began to develop rapidly and began to pursue the scale of the chain. After a few years, you will suddenly find that there are more stores, but the profits have not increased but decreased.At the beginning, you may think that this is an accidental phenomenon or a temporary phenomenon. When the profit continues to decline, you may not understand it, and ask such a question: Why are there 50 stores with so much profit when they opened 10 stores? Not only have profits been reduced, but debts have also increased substantially? This situation has not only been verified by me, but I have also heard and seen too many failure cases in this regard.This situation is very different from the chain theory. Is there a problem with the operation, or is there a problem with the theory itself?I practiced and reflected on this question in an attempt to find the answer. I remember that in 1998, I met an architectural designer. During the chat with him, I asked him: What principles must you follow when you engage in architectural design?He said that a basic formula must be followed: A≥N/S.That is to say, the foundation determines the height of the storey.His words inspired me, isn't it like building a house if I want to start a chain business?So, what is the foundation of our chain business?Isn't it the "structure" of the chain system?Generally speaking, there are four major structures: capital structure, technical structure, management structure and marketing structure, and it is the structure that determines the scale and speed of the chain.If this principle is violated, the chain buildings will collapse, the gold industry will fail, and it will lose money. In my opinion, the structure of the chain (management, capital, technology and marketing) determines the size and speed of the chain.This principle should become the first law of the chain industry.At present, most of the large and small chain enterprises in our country do not understand this "first rule", and they are most likely to make two mistakes: one is small structure, large scale, and fast speed. As a result, the situation I described above appears, and the number of branches increases. , the profit dropped instead, and even failed: the other is that a huge structure was built at the beginning, and the investment was large, but the scale was relatively small.Not many people make this chain error, but I have seen failure cases. Remember: If you want to succeed in the chain business, you must understand the basic common sense of building a house. "It is ideal to build eight floors on ten floors of foundations."What if you want to build a taller building?The answer is: first solve the "foundation" problem. Several years of practice has made me understand such a truth: the popularity of a company can be improved rapidly, but a famous brand cannot be achieved overnight.Confuse corporate popularity with the concept of famous brand.It will lead to abnormal development of enterprises. So, what is a famous brand? Famous brand is the symbol of quality, management and efficiency.What is condensed in the famous brand is advanced cultural concepts, management skills, extremely high benefits, and extremely strong competitiveness.Without these, it is impossible to become a famous brand enterprise. In fact, behind the famous brand is countless failures.Behind the famous brand is kung fu, which is the kung fu of standing up from countless failures.It needs to break through one "bottleneck" after another and overcome one difficulty after another.After numerous tests in the market, in the end, whether it is products, services, management, technology, benefits, popularity, or reputation, it has satisfied consumers.Coca-Cola is a famous brand, and McDonald's is a famous brand because they have cultural content. For example, some people regard Coca-Cola and McDonald's as the left and right faces of Americans, and regard them as representatives of modern American industrial culture.Not only that, they have world-class management, first-class benefits, first-class product quality and first-class service, and they have won the favor of consumers all over the world.However, they have all gone through a long period of time, they have experienced failures again and again, but they stand up again and again, and finally, they have obtained the most precious thing - kung fu! Therefore, without Kung Fu, there is no famous brand.Kungfu is the wisdom condensed after long-term practice, countless failures and setbacks, and it cannot be achieved quickly. Reflection 7: Modern enterprises need "four sets of carriages" Modern enterprises need the "combined forces" of the four carriages to work together if they want to be successful.What are these "four sets of carriages"?They are: Entrepreneur (enterprise designer, information explorer, brand builder); financier (capital operator: financing, investment, capital trading, IPO); professional manager (enterprise management, operation, market marketer, creator of profits); technical director.If any one of these four people is lacking, it will be difficult to succeed. Yes, you just want to be a small shop, a small store, a small restaurant, or a small business. Of course, you don’t need these people. As long as you work hard, you should have no problem reaching a well-off society within a year.But if you want to build a big company, a business, and create a brand, without the successful combination of these four people, it will be difficult for you to succeed.Our era is no longer the era of "heroes" fighting alone.This is the era of integration, the era of cooperation. Psychology tells us that there are great differences in personality, temperament and ability between people due to different acquired influences.For example, people who are good at starting a business are active in thinking, have a lot of information, are sensitive to the times, have the courage to face all difficulties, are more tolerant, and considerate... However, such people are often not good at fine management, financial management, and extravagant "glitch".Professional managers not only have scientific management methods, but also have scientific management concepts. They are not only good at managing people, but also good at financial management... However, they also have their own limitations, so only entrepreneurs and professional managers can work closely together to double their power. When it comes to financiers, their role is too great in the operation of modern enterprises.Once an enterprise has a financial line, what you get is not only funds, but also the "multiplier effect" of credit and assets.Only when an enterprise has a financial mechanism and this "financial line" can you be considered as a real business.In today's world of globalization, this financial line is also international and professional investment institutions. It is hard for me to imagine that a company that wants to grow bigger does not rely on this "financial line" for support and does not introduce financial mechanisms as a backing.If this is the case, this enterprise must be a short-lived enterprise, even if it is famous, it will be fleeting. Of course, with this financial line, your professional managers and your technical team will grow stronger and have cohesion and combat effectiveness.In short, when you really want to start a business, please weigh it. If you only have one or two carriages, choose a small business instead of being greedy for big things. Reflection 8: Most failed bosses suffer from "hyperactivity disorder" When I was reading Chinese chess records, what I experienced the most was that moving the "veteran" is a taboo, and it is generally not necessary to move the "veteran" unless it is absolutely necessary.This principle also has implications for running a business. A philosophical category is involved here: the relationship between static and dynamic. In my opinion, as a corporate boss, we must handle the relationship between static and dynamic.Of course, you can’t stay in the office all the time, don’t understand the grassroots, and don’t do research and research; but you can’t go out often, from east to west, from south to north, in Beijing today, and Shenzhen tomorrow, always moving, without Time to sit down and think hard.Don't forget a saying from a Chinese philosopher: Quietness can produce wisdom.In fact, there are many benefits of being quiet. Being quiet is to let your spirit relax, think and reflect seriously.Psychologists believe that people's thinking ability is greatly improved in a relaxed and quiet state.We can analyze the existing problems and study the future development and strategy.Besides, now is the Internet age, as the boss of Lens, he is relatively stable, and even in the office, there will be no shortage of information. In the management of "Red Sorghum", I did not handle the relationship between static and dynamic.There was a time when I was on the plane almost every day, which made a lot of contributions to civil aviation, but it was extremely detrimental to the operation and management of the enterprise.I found that the company's boss often goes out and "exercises" will cause a vicious circle, which will greatly increase the company's problems.Please observe this law in the business world: any boss who can't calm down will not do very well in business. It's like playing chess. Once the "veteran" moves, his weaknesses may be exposed, which will affect the overall layout.Of course it’s not not moving. If you want to move, you must move forcefully, rationally, and with weight. Once you move, you can turn passivity into initiative.However, a "veteran" also moves frequently, that is, people "force" you to move, and you can't do it without moving. This is forced movement. My experience is: most of the bosses with "ADHD" suffer from the problem of "unknown situation and great determination", which is a precursor to failure.