Eccentric Co, (Anonymous ), originally started as a company dealing with pachinko, Japanese slot machine business, during the inbound boom late 2010s’, started hotel business. Their hotel chain called Ecc hotel had developed in a short term to the nation wide hotel chain. Since the COVID-19 pandemic, Ecc had been underperforming as their main target had been inbound tourists.
On the other hand, KDDI, which is now one of the top telecommunication companies and was started by Kyocera in late 80’s, even though their start up environments were unfavorable to them, well survived and has grown to several trillion JPY sales company in Japan.
Comparing those two companies, I would like to highlight the following three as the crucial reason why the new business fails.
1 How supreme and sheer the founder’s motivation is
2 Where does the fund come from? Not debt but equity
3 HR training associated with business growth
1 How supreme and sheer the founder’s motivation is
Mr. Inamori said “KDDI, which had many disadvantages and almost no advantages, achieved the best performance among the three companies that had started new telecommunication business and now the other two competitors disappeared. “ How was it possible to overcome disadvantages?” Many people still ask me that question and I have responded as follows: It’s simply our mindset. We succeeded because we worked on this business with supreme and pure motivation. Since the start-up of KDDI, I had struggled to reduce long-distance telephone charges for the Japanese people. I devoted most of my energies to share that motivation with our staffs and encouraged them to work hard to achieve such a goal for everyone. Therefore, all KDDI employees shared the pure motivation for the people, in a sense ultimate altruism. Our staffs committed themselves to make efforts for all Japanese people. Pure, supreme and sheer motivation has unenforceable great power. “
On the other hand, Ecc Hotel, started most of their hotel business with debts and quite a little equity they put into, I may have to conclude the following.
1) Ecc hotel is to fulfill top management as well as a part of its shareholders.
If they pursue the subprime mission, they could have reserved some portion as backup for contingency conditions.
2) Ecc hotel owner/ management had a strong concern in holding cash under current asset accounts.
This can be found as a management mindset of expansion and growth driven.
2 Start with your own funds that may not impact on your main business
When Mr. Inamori started KDDI, Kyocera had 150 mil USD internal reserves, and Mr. Inamori said that he would like to use one-third of that. Even if KDDI should fail, he thought this may not affect that much on main business.
Ecc hotel, on the other hand, borrowed most of its hotel business initial investment as well as running cost. In the hotel industry, how much cash reserve do we have? It has been said about two to three months, and six months as maximum.
From this point of view, if you make a new investment with finance and have only a few months of cash, it will be quite difficult to manage cash flow in case an unexpected condition occurs.
the reason No3 will be explained into the next Blog.
Further queries or doubts, please email to ytomizuka@abrilsjp.com
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