The unknown cost of enterprise

Pino Bethencourt. Professor. IE Business School

27 October 2006

Starting up your own company is always fraught with uncertainties, but nothing ever prepares you for just how difficult it is to get basic services from multinational companies.

They say that the entrepreneur is a complex animal who, at some point in his life, decides to risk everything--or almost everything--for one project.

Those who dream of enterprise often imagine luxurious offices, big cars and looks of respect from neighbours when they walk down the street.

Except for film entrepreneurs, and a handful of fortunate people, most begin in a far from glamorous way. Esther is a perfect example. She often laughs at herself as she makes her way to work on the outskirts of Madrid. Every morning, while speaking simultaneously on her mobile phone and checking her PDA (Personal Digital Assistant), she boards the green bus of public transportation, surrounded by crowds of other commuters.

Esther left her job in a multinational to offer financial consultancy services to other small-business owners. Her basic work tool is her head, which means that optimal and efficient use of her time is essential for the viability of her business. Travelling to visit a client on public transportation, while she calls her other clients, is only one of the small decisions that are moving her into the coveted lands of higher profitability.

An entrepreneur deploys his talent intuitively, trying to save as much as possible so as not to die from hunger or debt. He spends his time thinking about his business, finding new clients, improving his products, making his employees more profitable and, at night, dreaming about the problems he was unable to solve during the day.

Although he is aware of the thousands of bureaucratic, economic and human obstacles he has to overcome, it is hard for him to believe that the most desperate part of being a small-business owner is to hurdle the stone wall that large companies can erect in his path.

No study exists that analyses the barrier that a start-up company encounters when trying to work with multinational service providers. These are the same multinational service providers that announce thousands or even millions of euros in profits every year.

It all begins with something as simple as a telephone line. The entrepreneur who wants to call his clients to offer them his product will end up unwittingly humming the on-hold melodies he listens to several times a day while he waits for an answer on the other end.

When he does finally get through to a human voice it is located in some remote corner of the world and speaks in heavily accented Spanish, using words that have not been used in everyday conversation for several decades. He is then taken through a series of plodding questions about his problem.

After listening to him speak for 10 minutes, the accented voice will say, "just a moment, please" and play him a few more minutes of the jolly melody that the entrepreneur is now beginning to know by heart. Then another voice comes on the line and takes him, yet again, through a series of questions about his problem, many of which are the same as those already answered, for this speaker knows nothing of the earlier 10-minute conversation.

At best, the successive intervals of music and pleasant foreign attention will provide a satisfactory solution. Unfortunately, though, many of these problems end up with a person at the other end of the line who does not have a name, cannot name his boss and is unable to help the solve the problem at hand.

Alex bought a real-estate franchise and signed up for a telephone connection, humming with happiness and enthusiasm, expecting, just like the TV advert said, to have his line the next day. Three weeks later, he continued to send faxes every day, but for some mysterious reason, his faxes seemed to disappear in the office of the supposedly faster-than-fast supplier before anyone could read them.

Mireia opened a company that manufactured and sold industrial machinery. She found European suppliers and American clients, sealed all the agreements and bought an office next to an industrial estate. She decorated it with stylish office furniture and put some plants at the door. Later, she was told she had set up her office in a mysterious telephonic Bermuda Triangle in which it was absolutely impossible for her to get a telephone line.

´Later´ of course, does not mean the next day. It means quite a few stressful-months later filled with many calls to nameless boss-less telemarketing phone operators, punctuated by waits with jolly melodies. At the same time, our heroine tries to serve clients and suppliers from any number of improvised places, none of which are actually the real office.

Finally, she ended up contracting a very expensive satellite connection, convinced that it was an important investment for her business. This gave her a little legroom for a few months.

Until one morning she woke up to find that she had no connection at all and when she called her provider she discovered that it had declared bankruptcy, suspending client services without notice.

These stories might seem like science fiction to anyone employed by a large multinational. But they happen every day, and not only with telephones, but also with a large number of services such as electricity suppliers, insurers, security companies and fixed and mobile telephone operators etc. and all of these companies are full to the brim with executives in large offices and designer suits. But all seem to turn a deaf ear to the problems of small-business owners who do not account for a sizable percentage of their income.

This gratuitous work load marks the beginning for any entrepreneur. And even if they are able to hire an assistant, they soon become frustrated by seeing how much of their time is spent listening to music on the telephone instead of adding value to their business.

Spain is lacking not only entrepreneurial spirit, but also the support, or at least a little professionalism, of large enterprises that have forgotten what it is to launch a new business.


#IECampus, the Campus of the Future

See video
Follow us
IE Agenda
Most read
IE Business School | María de Molina 11, 28006 Madrid | Tel. +34 91 568 96 00 | e-mail:


IE Business School

María de Molina, 11. 28006 Madrid

Tel. +34 915 689 600