Friends, we will start by creating an A-FDR rating - AODRS FINDIR REITING. Recently, Mikhail Shmelev from Novosibirsk was assigned an AAB + rating of the AODRS platform according to our qualifications. We can not get around this event and decided to talk with Mikhail.
And yet, if you do not know where to find a financial director or adviser, then I will not give you better advice. Meet - Mikhail Shmelev - one of the best financial directors in our rating in Eastern Russia. If you are from Ekaterinburg to Vladivostok right now, look for his facebook and discuss the possibility of his participation in the project. Dear Mikhail, first of all, thank you for agreeing to answer the questions of our AODRS platform. Congratulations on your rating. Today we have simple questions that are likely to be of interest to entrepreneurs. First of all, how do you survive the virus. Do you work remotely too? Yes, I work at home about the spread of the virus I learn from the Internet. Of the people I know, no one is infected. How long have you been in your current business? This is a consulting business. I have been conducting my private practice since September 2019, and I have 22 years of experience in consulting. How do you think the current situation with the virus will affect the business? I observe the problems of my former employer, an international exhibition company, and I understand how seriously the impact of the pandemic on the offline business in general and on the exhibition in particular. For example, in Moscow, large projects were transferred to the fall of this year or the spring of the next, bringing earlier up to 60% of annual revenues. At the same time, the company has already paid an advance payment for the rent for the year ahead and no one has canceled the current obligations to employees and suppliers. We have to solve a very complex set of problems, agree on deferrals and attract loans. The Central Bank of the Russian Federation predicts a fall in GDP in the range of 4-6%, I think that there is a possibility of a reduction to 8-10%. Thousands of small businesses will be closed. And in addition to direct damage, there will be indirect damage in the form of a decrease in entrepreneurial activity, which was recorded in Russia in 2018-2019. Why is business in Russia in particular? The clients are really Russian, but I am looking for ideas and technologies around the world. There are potential partners and vendors from other countries. Is it possible for an entrepreneur to easily join in a similar business? The financial threshold for entering the consulting business is small, the qualification threshold is more significant. It is necessary to accumulate a certain managerial experience and get a professional education in management and consulting.
How did you create your system and why is it stable in your opinion? Sustainability will test the time. In my understanding, concentration and discipline are necessary for success. Are there any tips that you could give to people who are just starting their business and it does not matter where they run it? Thinking globally and long term. I learned this while working for a British company. Foreign corporations think horizons of 10-15 years and are considering investment options around the world. For small Russian enterprises, this model of thinking is difficult to accept because daily problems distract and because long-term strategic analysis requires resources that are often inaccessible. But if a small company wants to become big, then it has no other option but to think of itself as a global player. Analyze macroeconomics, technological trends, global supply chains, global movement of resources. There is always an alternative - to obtain high profitability due to the opening opportunities here and now, to use “asymmetry of information”, but, in my opinion, this is a speculative approach, which means that it contains significant risks. You need to learn how to build “long stories”. What do you think should be done to start a business and how to start working with investors? The question is related to the previous one, in the part that the investor needs a forecast of return on capital and revenue on the horizon from three to seven years. Without this forecast, it is difficult to start a dialogue and it is difficult to understand which categories of investors will be useful to the business. There are conditionally two categories. “Investors in growth” and “investors in value”. The former prefer to invest in a growing business and they analyze, first of all, the revenue growth potential. If a business has a growth potential of more than 30% per year for ten years, then this business needs to communicate with the first category. Investors in value consider a smoother revenue growth curve with more manageable risks. If a business stably brings 20% return on capital in the long term, this is what interests “value investors”. Therefore, the recommendations roadmap is as follows:
Prepare a strategic plan and its corresponding financial model. Determine the need for capital and type of investment (debt or equity financing). Allocate resources to raise capital. You can create a unit within the enterprise or attract an investment consultant. Develop and implement an asset consolidation and disclosure plan. Choose the optimal set of financial instruments. Proceed with the engagement plan. Do you do business with Russian entrepreneurs? Yes, 100% of customers are from Russia. Did your thinking change after you started working with partners and investors? Absolutely changed. Investors have a gigantic database of offers and they can choose by comparing thousands of companies among themselves in terms of “risk-return”. Therefore, it is difficult to surprise and show a truly unique business model or unique product on a global scale. It is more important not to surprise, but to demonstrate the ability to manage income and risks, as well as a long-term vision. Is there something to say to Russian entrepreneurs and other entrepreneurs who want to start a business? Universal advice is difficult to give. I think the 2020s are a period of specialization. Be focused on a specific industry and the likelihood of success will be higher. In the US, these trends have already begun. For example, in the field of IT technologies for voice recognition, companies with turnover of hundreds of millions of dollars were formed there, each of which serves one, maximum, two industries. In Russia, these technologies are now on the rise, but IT companies offer “everything for everyone” solutions, which is incorrect strategically, since resources are being dissipated and expertise is not being developed. Think about which industries are more likely to succeed in the long run and what resources will be required. Special comment - read Slav Luginin Subscribe to my facebook and instagram and telegramm https://www.facebook.com/slav.luginin.3
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