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Morning shows the day!
How a start-up survives the tricky first five years.
What makes a young enterprise successful in the long run? How do entrepreneurs have to function so that they can celebrate the fifth anniversary of their company? Fargate AG has been used as an example to illustrate the critical phases that a company has to pass though.
«Barely half of the newly established enterprises can last out
up to five years», says Ernst Wüthrich.«Others are reasonably or even pretty successful but only a few manage to make a breakthrough to long-term success.» The head of the Unternehmerschule
Schweiz [School for Entrepreneurs Switzerland] (USS) at the Fachhochschule Solothurn Nordwestschweiz in Olten is convinced that the most difficult phase in the life of a company is not the time of its establishment or the period following immediately
thereafter. «The course is set after two or three years which is when the structures of the company have to be set up in such a way that they are able to endure in the long-term»
Is the product unique? The company managed by Heinz Zürcher and Daniel Isler has cleared the five-year hurdle. The two of them founded the pilot enterprise called the Tozai Group AG in 1996 which in the year 1998 then went on to become what is now known as Fargate AG. What is required in order to be successful both as a company and as an
entrepreneur? «A unique product or an extraordinary service», says Daniel Isler. In the case of Fargate, the business concept was to build bridges to the foreign and overseas markets for the small and medium-sized enterprises of Switzerland. Starting out with its original base in Japan, Fargate today has over 100 satellites in 38 countries across all continents of the world working for it. «Our local partners explore the market potential of the products in the respective country and at the same time take over the responsibility of actually developing the market on their own initiative, right up to the point of conclusion of the contract with the respective partner in the foreign market », says Isler.
Are the benefits evident? Merely having a niche product alone is not enough. Isler feels that a business concept can work only if its basic principle is simple and its benefits are evident to all those involved. In Fargate's case, this is reflected in its simple remuneration system as well. «Only when our clients earn, do we and our satellites earn», states Isler. Their system of remuneration is quite transparent: All the partners concerned have a clear idea about who is entitled to how much sales commission and in which phase.
Does the management team complement one another? A great business idea is only one part of the success story. The other is the entrepreneur. «We literally started from scratch out of a garage and drew practically no salary for over a year», narrates Isler. This means that it often requires an extraordinarily strong willpower in order to succeed. The fact that both the partners have very dissimilar personalities helped in their case: While Isler is the solid engineer, Zürcher is the crafty salesman. They have a high degree of mutual trust and are thus able to withstand a considerable amount of constructive tension. «We do not always have the same point of view», he says. «After a fair amount of struggle to arrive at the best solution, each one of us knows that he could ultimately include those aspects which were important to him and that an optimal solution could be reached.»
Are investors really desirable? Being able to retain a hold on reality could be termed as being one of the most crucial factors for success in the case of a young enterprise. Isler recollects: «Suddenly there were investors at our doorstep -they seemed to have
materialized out of the blue .At that time we felt: «Now things are really beginning to take off !» The money was supposed to be used to set up a global network of agents. But it was just around this time that many potential customers applied the brakes on investments. Thus, instead of
utilizing the money for extensive marketing, the two chose to aim for gradual growth even in the face of moderate client pace: Out of a share capital that had increased to five million Swiss francs, they paid back four to their investors, thereby demonstrating that they were more interested in sustained development of their company rather than making a fast buck. The company is flourishing thanks to the
specialized skills and expertise of its employees. The structures of a company have to evolve on the strength of the people who work for it whether it is at the Swiss head-office or in the satellites; the Swiss head-office currently has ten employees on its payroll.
The experiences that the two young entrepreneurs and graduates of the USS have managed to gather in the meanwhile have now assumed textbook proportions.
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Original version (German)
