Help to create a new business

In the year 2020 we had a lot of time to think. With the quarantine and social distancing that governments around the world imposed on us, locking us in our homes for many days, we had a lot of time to think about what we want for our lives. For many people, the answer to that question came in the way of creating or growing their own business. Even more so because, due to these confinement measures, many people lost their jobs and many others had to change their function to continue working.

The project of creating your own business often comes from the intense desire to no longer depend on a job that may not be there tomorrow. Many times it comes from the idea of ​​a better, innovative and creative product. It can also come from the vision that one can offer nothing new but do better than those that are already established.

Whatever the reason for the project, it always starts with dreams, hope and a lot of work from the beginning. There are many difficulties to overcome in the implementation and start-up of the project, even if it is a digital business that does not require physical facilities.

In addition to the risks of each business, the complications that entrepreneurs must face are always present such as the statute, books, employees, balance sheet, business plan, marketing plan, projections, tax documents, in Finally, all the concepts that, due to not knowing them well, cause nightmares to new entrepreneurs and also to those who are not new but never had the time to learn about those things in an organized way but on the fly.

The natural tendency is to put all those things in the same folder that refers to the bureaucracy of the company and, therefore, try to delegate as much as possible of them to professionals such as accountants, lawyers and consultants. And that is a mistake. The best solution is to learn the concepts to be able to demystify them, to stop being afraid of them. In addition, all these issues are not less important than the “business” but they are the business. Without proper formalization, the business is no more than just an idea.

For example, many entrepreneurs think that the balance sheet is something the accountant prepares because it is required by law and only serves to determine the amounts of taxes to be paid. However, the balance sheet is the form used worldwide to evaluate how a company is doing and also to evaluate the performance of those who manage it.

To help make new business creation easier and more accessible to more people, I am uploading one topic per week to this YouTube address: It is a channel that has just been created and, for the moment, the videos are only in Spanish.

The idea is to show in a simple way the concepts that entrepreneurs need to know to manage their projects with more security. The goal is not to teach entrepreneurship. The videos aim to give an entrepreneur the basic knowledge of running a business.

Hope it helps everyone! Questions, criticisms or any other type of comment are welcome both in this blog and directly in each video.

Artificial Intelligence – Some applications

There has been much talk about Artificial Intelligence and how it will have consequences in our lives. Under the influence of science fiction films, we begin to imagine that computers, robots and machines in general will take over power and enslave us, the humans. But it is not like that.

AI is defined as the ability of a processor to perform cognitive functions that we associate with the ability we have to think. Those are functions such as recognising a face, understanding when someone is pointing at something with gestures and perceiving trends from the examination of available data. Technological advances in electronic circuits resulted in computers capable of processing huge amounts of data at very high speed. And it keeps moving forward. That is why there have been developed algorithms that are capable of performing increasingly complex functions, such as cognitive functions. But, no matter how complex the task, it is still a computer processing data through a program written by human people.

For example, the computer driving an autonomous vehicle must have the ability to recognise in the image taken by its camera that there is a policeman on the street. From the image processing, you have to recognise if it is a policeman who is signalling something so that the car advances, deflects or stops, or is not pointing at anything, or even if it is a policeman who is nothing more than crossing the street going to work somewhere else. And all that recognition process has to take fractions of seconds, as our brain does. We do it intuitively, based on our ability to recognise and reason. A machine has to do it based on a program it has loaded. Image recognition has many applications, and it is not necessary to wait for cars to drive alone to check them. Quality control in a production line, internal security in companies, recognition of documents such as invoices and remittances, control of absences and employee performance, improvements in logistics, the list seems endless. Think about how a computer can optimise the load of a truck based on the recognition of the available space, the travel plan and the knowledge of the dimensions of the packages that have to be distributed.

Another example but that has nothing to do with image recognition is in the processing of large volumes of data. In the classes on how to make a Business Plan, we have a chapter on projections, which we use to estimate the market and therefore the potential for future sales. Very important to make projections is to understand the correlations between the variables of a business. For example, participants are asked if there can be any correlation between economic growth and wine consumption, to which they answer, intuitively, that it is very likely that there is a positive correlation, that is, that people consume more wines as the economic results of the business are good. The same intuition is not so direct when participants are asked about the correlation between economic growth and salt consumption. Intuition is difficult because the answer has to do with more variables, which would be customs, types of food, products that can replace salt and others. Well, a computer can process a huge amount of historical data on the subject and weave the correlations between the variables much more efficiently and quickly than our brain in order to help us with the answer. It is the Artificial Intelligence used to improve business decisions. The result is that our market and potential sales projections will be more accurate by taking into account more variables and more correlations. Artificial Intelligence helps to improve business plans when you have historical data on which estimates can be made.

In the area of ​​human resources, AI can help a lot in the selection of personnel to be hired in addition to the choice of which employees should be assigned to a project based on their knowledge, education, results, preferences and availability. And, in addition, accompany their performance in each of their tasks. In Marketing, the applications are many. The portable computer, that is, the smartphone, may suggest that its owner should go to eat something in a certain restaurant based on its location, agenda for the rest of the day, means of locomotion, food preferences and comments from previous customers. The smartphone also notifies its owner when he must finish his meal and leave for the next commitment as well as the route he must take based on traffic, streets cut by maintenance.

From notes on a napkin to the Business Plan

There are people who are very creative! There are people who have an enormous capacity to, just by looking at something, identify an opportunity to do business. People who can draw on a sheet of paper a new process or who can make notes on a napkin while discussing a new idea when they are having a coffee. However, there are still many people who have difficulty moving from notes and inspiration to a business plan with economic viability.

That ability that people have to generate business ideas is much more pronounced in today’s world because the internet has facilitated and encouraged innovation. That happens because creating a new business has never been so easy and the cost has never been so low. The entrepreneur has never been in such a high demand as he is today. Every day we meet new examples of people who, even at very early age and without experience, became millionaires from a new idea or a new way of implementing a business. Every day we also see new business models, we see online companies where it is not clear to us what they are selling, or whom they are invoicing, that is, it is not clear to us how they make money. There are innovative business models in which users receive a free service because they are not customers. Facebook is a good example of that, since its users receive a free communication service with their friends, relatives and clients, through which they can share data, photos, videos, experiences and do not have to pay anything for that.

Innovative business models, the ease of creating new ventures and reaching markets without borders that we have today, encourage new ideas. So do Collaborative economy (shared economy) and work spaces in groups and in cooperation (coworking) that, through free exchange, help to create new ideas and innovative ways of doing things. When we fall in love for those new tools, they lead us to think about providing products or services to the community without thinking about the result. And, often, we see people with many ideas in their heads but without a business plan, without a way to monetize their ideas. They are people who surely need help from someone who can understand their ideas, interpret their goals and translate them into the equation of revenue minus costs equals results. You have to know how to question and evaluate the possible sources of income because, as has already been said, there are business models that are not clear to us. Technology today allows us to provide a service at no cost to a community of users while obtaining income from other sources, such as traffic on the page. You also have to know how to clearly identify the costs and that comes from the exact identification of the processes that are needed to sell a product or provide a service. In the process part, we must bear in mind that people have different and growing needs and that the enterprise has to move forward to satisfy them.

From the correct identification of those natural components, so necessary in any business, we can then evaluate the economic result of the idea. Here the ability to write with simple but exact words what is the potential business of an idea is absolutely key. The act of writing the idea from the point of view of who wants to create a business clarifies the thoughts and provides a path to the creation of a venture. Knowing how to download an idea to paper is key. Of course, the paper here is just an expression because technology also provides us with editors of texts and forms of storage that do not require the physical form of paper. Writing well is the key. It is the written word that transforms inspiration into a possible business because it is from its writing that an idea is communicated to collaborators, investors, partners, users and customers.

Based on the good formulation of the idea, an experienced consultant can make the sales and results projections, create a plan so that the idea becomes known and demanded by its users or clients, evaluate the capital needs for the investment and the return that capital will have over time and, in short, present a good business plan from the inspiration overturned in some notes or drawings on a napkin.

A Threatening Driverless Future to Financial Services Companies

What will happen to the automotive-captive financial services companies when vehicles drive by themselves and owning a vehicle is no longer interesting? 

For many years by now, automobile manufacturers have invested zillions of Dollars developing and operating their own financial services companies in order to make their vehicles affordable for their customers. Leasing and financing conditions have been, very often, more important than the price of the vehicle. The manufacturing company, the dealers, and the financial services company have mastered how to bundle together the price of the vehicle and the interest rate of the financing so that the purchase operation would be more appealing to the customers.  

Thanks to financial services, many customers could have access to own cars, trucks and buses. And access in this case means ownership. Leasing and financing are, in fact, means to facilitate the ownership of a good, in this case, a vehicle. 

Now we are talking about a different future in this market. All manufacturers are developing their systems to get their vehicles fully automated. Vehicles that can go from origin to destination without a human being sitting on the driver seat. This development has already been there for a long time. It started, long ago, with the cruise control. Later the intelligent cruise control has come, allowing cars to reduce speed according to traffic. Automated parking systems are also a component of the development. Cars that can park by themselves are not novelty any more. Neither are the cars that keep more attention to the traffic than their drivers do. Those cars can brake in case of necessity and can keep in the lane even if the driver is not paying attention to the way. Now comes the “eyes off” level of autonomy. That means the driver will not have to pay attention to the road nor the traffic. The vehicle will automatically take care of those “details”. Then comes the “mind off” level of autonomy. It will not be necessary to even think about the journey as it develops. We will simply program the destination, sit down and read a book or play a video game. 

It will not be long until we see on the streets the cars moving without people inside. It is fair to imagine that cars are going to be widely available as a mean of transportation and, basically, a commodity. Nowadays, people have the need to buy a car and, in addition, to the need there is a wish. One wants to buy a certain model because it is appealing, it is fun to drive. Customers fulfill the need to have a car using leasing and financing plans to make their purchase affordable. But, what if people do not have the need to buy a car anymore? Moreover, what if the car is no longer fun to drive because it drives by itself? What will happen to automotive financial services companies when the customers neither have the need to have a car nor want a car that is “fun to drive”. What kind to financial services will be necessary in the future when cars drive by themselves, are widely available as a mean of transportation and people will not need to own them?

Probably the large financial services companies owned by the automobile manufacturers will have to be converted in large rental companies that will own the vehicles, have them available to customers and charge by the use of them. Imagine a future when you signal to a car, just like you signal to a taxi nowadays, specify the desired destination and the car takes you there. At the end of the journey, the car will automatically charge to your credit card the owed amount. Probably the price will be per minute or according to the distance. We can also think of mileage programs to increase loyalty to a certain fleet of driverless cars. Well, someone will have to own those cars, maintain them, optimize their routes to make them immediately available when an ordinary customer needs them. 

Just like a taxi company but without drivers. Well, perhaps Uber can do it better.

Driverless regards, 

Fernando Mascarenhas