Built, Not Born - critical summary review

Have you ever thought about starting your own business, but had no idea where to start, or thought it was too much of a risk? “Built, Not Born” by successful businessman Tom Golisano is a guide for would-be entrepreneurs that is based on decades of real life experience. So, get ready to learn the nuts and bolts of entrepreneurship from an expert!

The story of Tom Golisano

Tom Golisano is a successful billionaire businessman known for creating the multibillion dollar company Paychex, a payroll processing company  geared towards small and mid-sized businesses.  This success didn’t come quickly or easily, however. It took years of hard work and trial and error to figure out how to turn an initial investment of $3,000 into a successful $28-billion company. By writing this book, Golisano offers aspiring business owners the tips and lessons he wishes he had known when he was starting out. These aren’t based on theory, like many business books and courses are, but rather on practical, tried-and-true strategies that he knows very well. His goal in writing the book is “to help you do things the right way – the first time,” by using the lessons he has learned from more than fifty years of running successful businesses.

Golisano didn’t get to where he is by following convention. The idea for Paychex was born in the early 1970s when he realized that even though most American businesses had 50 or fewer employees, none of the payroll processing companies were trying to sell them their products. This was a huge opening for a new market. Once Golisano developed a way to provide payroll services to this segment of the market at an affordable price, he presented his idea to the payroll company he was working for at the time. They rejected the idea, however, because they didn’t believe it would be profitable. At the time, the belief in the payroll industry was that “outside payroll services were viable only for large companies.” Confident that his idea was not only good, but did in fact have a huge potential for profit, Golisano struck out on his own. 

A risk worth taking

The first step you’ll need to take as a new entrepreneur is understanding the risk of being one. Golisano introduces the idea of entrepreneurship by offering a different framing of risk. While becoming an entrepreneur can be seen as a risky move, the reality is that all choices in life carry risks. The key is how you manage those risks. Even having a “stable” job is not without risk, especially in today’s economy.

But if you find yourself questioning how businesses work and how to improve things even at your own job, you might have the spirit of an entrepreneur. This doesn’t mean, however, that everyone is meant to be one. It is hard work and can be very stressful, and may even make you want to quit at times. But it also has the potential to be very rewarding and give you “ultimate control over your life.” In any case, you need to know exactly why you want to be an entrepreneur, and if you have the necessary qualities to succeed, such as perseverance and a healthy sense of reality. Much can be learned, but you should first assess what you know and don’t know, and how to fill in the gaps.

The next step is to learn some of the nuts and bolts of running a business. Even with all the changes in technology over the years, running a business is still based on the same basic idea – you need a concise, straightforward profit/loss projection that shows what you must do to make a profit. This needs to be based purely on facts, not emotions. You must know every aspect of the business you want to run, so you can speak about it intelligently to investors and lenders. Even more, you have to have an idea of how you want to grow the business over time. 

Money matters – and so does hard work

Once you’ve decided you want to start a business, you will, of course, need money. Golisano’s first piece of advice here is that you should never start a business without sufficient funding, which should ideally be your own money, if possible. While it’s common for beginning entrepreneurs to seek funding from investors, this requires strategy and a solid business plan and presentation, since you will be accountable to these people. Know ahead of time exactly how much money you will need, and how you plan to use it. You must also understand that you may not be able to pay yourself for a while until the business is profitable.  Once you have a viable business, you must decide whether or not to go public. Above all, you must understand how profit margins and financial statements work, which may require you to question your assumptions, and hire a trustworthy professional to look over your statements. 

The next idea to consider is whether there is a large enough market for the product or service you want to sell, and if it can make you a good profit margin. You can have what you think is a great idea, but “you need to be able to deliver what you sell consistently and reliably.” Again, a healthy sense of reality is important here: you should never overestimate your product or service’s ability to have staying power, particularly as times and technologies change. You should always be thinking about ways to add to your product range, such as finding new uses for products.  Businesses with recurring revenues, such as monthly deliveries of items, have a better chance at sustainability than nonrecurring revenue businesses.

Like many other successful business people, Golisano does not believe in luck when it comes to business. Putting in the hard work of learning how to run a business, questioning why things are a certain way, and learning how to effectively sell will help you go a long way in becoming successful.

It’s usually a sales problem

Once you are at the point where you are hiring salespeople and running your own company, you will need to develop certain leadership skills - just as you had to develop business ones. 

To start, you should learn about sales and managing salespeople. Having cash flow problems is usually a sign of a problem with sales. Even the best product ideas don’t go anywhere if they aren’t sold well, no matter how much confidence you have in your ability to sell. In managing your business, you must always be aware of the status of your sales in relation to the forecasts you’ve made, which are based on how much you need to be able to run and stay profitable. Expanding and diversifying your customer base is key, as it is dangerous to rely on one major client for most of your revenue. 

Being a salesperson also requires some important people skills: learn how to listen to potential customers’ objections when looking to close a sale, and recognize when someone is ready to buy. Finally, know your competition and how you are superior to them, but never speak ill of them. Once you are ready to hire more salespeople, you should provide thorough training on your product or service. Develop a well-run system of activity reports, sales quotas, compensation plans, and expense reporting. Most important of all to maintaining cash flow is to “close early and close often.”

Managing people: hiring and leading

Next is hiring, interviewing, and training employees, as well as issues like benefits. The best scenario is to create an environment that works for everyone, where everyone wants to cooperate and respect each other. You should aim to treat people “with integrity, fairness, and compassion.” You can create any type of office culture you want, as long as it’s based on your own values. Whatever your preference, you should aim to have a culture that’s positive and well thought out, but not one that leads to people behaving politically. Training is important, but even more so is having people who are “motivated” and “committed” and have a positive energy – nothing is worse than unproductive behavior. Put more simply, “hire for attitude, train for skill.”

Learning how to become a good leader and manager is crucial. As stated before, you need to have a realistic idea of the market share your business can have, and you must act from a place of integrity, patience, and persistence. You must believe in your capabilities, demonstrate that belief to others, and build a vision based on that belief that guides the company forward. When thinking about how you want to lead, “ask yourself how you want to be remembered after you retire from your business.” This should help guide you in what you value most and how you want it reflected in your company.

You should always aim to make a deal that’s good for everyone, and do all you can to understand where the other side is coming from. Business, unlike politics, doesn’t have to be a zero-sum game – there is a way to make sure everyone “wins.” When dealing with lawyers who may be working with you on these deals, be wary of their fees and the number of hours they work – and always read the fine print. Don’t involve lawyers in the negotiation process. They should only be brought on during the contracting phase. Most importantly, be gracious in your interactions and never underestimate the value of humor and having fun when dealing with people.

Building a positive public image

Once your company reaches a certain level of success, its public image will become increasingly important. Your company’s image will be directly influenced by the culture, philosophy, and values discussed earlier. Things as simple as choosing a good name are crucial, as well as making sure your business practices are treating everyone - employees and customers alike -  fairly. Equally important are having a well-run website and strong presence on social media. All of this contributes to how people will see and judge your company. Once you have happy customers, they will do a lot of your advertising work for you. It takes work to build a public image, but it’s better to build one for yourself than to have other people’s assumptions and judgments create one for you.

At a certain point you may be ready to move on from your business, either by selling it, giving control to a family member, or running it passively. Having “a realistic understanding of your current level of success” is important in deciding how and when to move on, which you should think through well ahead of time. You should also have a good idea of the stability of your industry and your company’s place in it, and if that can realistically continue. 

Like anyone, you will likely have some regrets or things you wish you had done differently by the end of your career. You can often learn more from mistakes than successes. But if you plan well and listen to your gut, you will be well set up for success. Most importantly, remember what’s most important in your life, such as family, and don’t forget – have fun!

Final notes

Small businesses are the “growth engine” of America. Unfortunately, there is not a lot of education in schools on how to be an entrepreneur. In many cases, this leaves would-be business owners on their own. While this book provides a fair amount of simplistic, common-sense ideas, they are a good foundation for learning more about entrepreneurship and if it’s the right risk for you.

12min tip

Becoming and being an entrepreneur is not easy, but it can be very rewarding if you are willing to put the work in. You don’t have to know everything about running a business before you start out, but you do need a healthy sense of reality, the ability to question norms, along with a lot of patience and persistence.