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EA-TOKYO SEMINAR SUMMARIES
With Panache
Mr. Paul Goldsmith
(Profile)
October 2003
With an eye on an IPO launch in early '05 and hands firmly on the helm, Panache Corporation President Paul Goldsmith is today running a business very similar to what it was when he founded it 10 years ago - IT staffing, network support and an interactive agency including web design and production. - except that instead of the four members he originally started with, Panache now employs 70 payroll staff and about 130 temporary and contract staff. With 40% non-Japanese and 60% Japanese, there is an even split in the company between male and female with an average age in the early 30's.

Great value in employing people smarter than yourself
Paul was originally inspired to launch himself into business when he received a piece of advice from his next door neighbor in the early 80' in London. The lady was running a pharmaceutical company but was not a pharmacist herself - she was only employing pharmacists. This led Paul to realize the value in employing people smarter than yourself, "but make sure you are the best president. Over the past few years I have made the point of employing some very clever people to work for me who have skills that I don't have and never will have. I give them the skills, tools and motivation to help them do things that I can't do."

Highlighting two simple ways to start your business - either very small 'off the kitchen table', or to start in a larger way with much more money, Paul says that the original model was to provide IT professionals. "We had to have credibility so I decided I couldn't start it in my apartment - I needed an office." Starting a business in a foreign country is rarely easy, and Paul suggests some points to note - and key aspects to help get it right from the start.

* Raising money can be very difficult; Japanese banks are very risk averse.

* Having a Japanese partner is very important. The Japanese partner just needs to guarantee the line of credit. "Providing they don't go bust, the money is fairly secure."

* Choose a board of Directors who can bring value to your business. "Having a board who has some prestige or who can bring in business is very important."

* Cash flow. It will kill your company if you are not careful. "We literally ran out of money in the early stages. It taught me a lesson to never take your eye off the cash flow. It's really important to have money coming into the business on a regular basis. At the beginning, we only accepted cash and direct transfers, never promissory notes. We have always insisted on getting cash so that we have good cash flow."

* It's very important not to burn bridges with old acquaintances since you never know when you are going to need them.

* In running a company, you have to decide on what it is you want - do you want an exit strategy, are you in it for the long term or do you want a source of income?

Entrepreneur Spirit Flicker not a Flame
One thing that Paul has learnt from being an entrepreneur is that most people are typically not interested to go it alone in Japan. "Of course it makes sense to work for a company. In Japan, entrepreneurism has not been encouraged until very recently, so working in a large company where risk is low and return is high makes a lot of sense. But there is a sense of challenge and freedom and I certainly like the pioneering spirit about starting your own business." he says enthusiastically. "I guess that I was so optimistic that Panache would succeed when I started that I just didn't think about failure, which I think is just absolutely essential if you are going to start something on your own."

Back to zero
One of the many authors who has inspired Paul was Tom Wolfe, who wrote "From Bowhouse to Our House." A concept expressed in this book was about taking everything 'back to zero'. To be prepared to do away with the superfluous and just go back to basics. "I think that the reason many people don't want to take the risk of starting their own business is the risk of going back to zero and losing everything. So in the back of my mind was the idea that if Panache didn't work, I would be back to zero, but I also kept thinking that we could move onward and upwards from where we were." Paul has a lot of foreign friends in Tokyo who have started their own businesses in many different styles and it seems that everyone has a very different style. "There doesn't seem to be a particular trait for success." he says.

"The only similarity might be that everyone works extremely hard and everyone is very committed and seems to work longer hours than the average person. I have also seen some people succeed by sticking rigidly to one business concept, and others just keep throwing ideas out there and hope that one or two of them stick. Maybe two out of 10 ideas will work, but those two will make up for the eight that didn't."

"I think that Japan is no different from anywhere except that most people are quite negative and risk averse and tend to look at the negative side of things first - but I have seen among my entrepreneurial friends that maybe another common trait is the everyone seems to see the glass half full rather than half empty and takes an optimistic approach to things."

Remember that trust is an accumulation of positive experiences

About networking

Paul suggests that it is good to be seen in the same places regularly. By doing this you build up trust and credibility, he says. "Remember that trust is an accumulation of positive experiences and I think that if people meet you it's a lot easier to approach those people whether on a social basis or business, which may lead to securing future business or friendships."

For more information: http://www.panache.co.jp

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