What is an entrepreneur and what does it mean to be entrepreneurial? Rebecca Spicer talks to the experts, and to international success, Napoleon Perdis, and finds there’s more to it than just running a business.
Case Study: Napoleon Perdis Cosmetics
Making It Up
His days and weeks are a whirlwind of appearances, meetings, and travel, and I have to wait until 8pm Sunday night to catch Australia’s cosmetics icon, Napoleon Perdis, at his home in New York. The rest is easy, because talking about cosmetics and the rise of his company, Napoleon Perdis Cosmetics, is something Perdis does with great enthusiasm.
Although permanently based in the US-in an apartment overlooking Central Park or his Californian mansion, just down the road from Cameron Diaz-he travels home to Australia often, most recently to the Mercedes Australian Fashion Week. And while his life might sound extravagant, it’s the result of hard work, sacrifice, and pushing boundaries over the last 11 years.With Greek heritage and a strict Baptist school upbringing, work began at 13, helping out in the family businesses-from a fish and chip shop, to cafes and restaurants. Despite dreams of a career in hair and makeup, family pressure saw Perdis complete an Arts degree in political science and business law, and a post-graduate degree in marketing management.Between jobs in advertising and as a barrister’s reader, Perdis did some makeup on the side for relatives and friends. He had little formal training in the profession and, while he did do some short courses, most of his makeup skills have been self-taught.
From 1992, he gradually built up his makeup service, hitting the streets and selling his skills to beauty and hair salons, and bridal designers who would recommend him to brides. Then he started selling consultation courses, where he would show women how to do makeovers for themselves. This was the start of the Napoleon Perdis Makeup Academy. “I used to hold little groups of two to three women, then it got to six and then 12, and now of course we’ve got more than 3,000 students across all aspects of makeup artistry at the academy.”That’s when I thought it would be good to have my own range because I used bits of everything. I never had one range I totally loved. So I worked with a chemist and manufacturer in the United States, Paris and Italy-we had three different suppliers-and started putting my concepts together. That took about two years.”The first Napoleon Perdis Cosmetics store opened on Sydney’s Oxford Street in September 1995, which was just the beginning of a number of ‘firsts’. “We became the first ever retail brand that was a makeup artist’s brand in the Australian market,” Perdis says. “It was also the first personality brand from the Australian marketplace. I chased that, I was very aggressive and assertive, and I was very positive with what I wanted.”
Napoleon Perdis Cosmetics now has more then 550 point-of-sale doors in Australia, including 52 concept stores, counters in all David Jones department stores, seven makeup academies and almost 400 independent retailers.Perdis’s biggest challenge has been in maintaining cash flow and getting finance to grow the business. “Bankers and financiers, until you get to a certain size, don’t appreciate the services industry,” he explains. “You’re constantly being very tight with your cash flow, you’re constantly tied up and your bankers don’t understand the business.” So the business had to fund its own growth for the first eight years and Perdis had to be ingenious and make sacrifices until banks took him more seriously. As the business grew he got some key partners on board to help manage the growth. “I brought in not only experts but people who would be passionate and loyal to me and my brand.” The first of which was Perdis’ brother, who now heads up the company’s Australian and New Zealand operations, and then Perdis’ wife-a former actuary and financier-who is the company’s chief financial officer. The three are on the company’s board, with Perdis the majority shareholder. “We all really believed in how we wanted things to work and tie-in, and how to systematise and bring the brand forward.”Systems are key for Perdis, and staff training and education is paramount, thanks to his parents’ earlier influence. “At 8:30 tomorrow morning, the New York staff will come to my apartment and I will train them for three hours on the newest techniques I want them showing the customer,” he explains.
International Business Plan
The goal to go global was always part of the business plan for Perdis, and taking his products to New Zealand was the obvious first choice. It’s also where the first international Napoleon Perdis Makeup Academy opened in March this year. In the US market, his products can be found in 16 Saks Fifth Avenue stores, and he’s now launching in independent stores as well as another retail outlet to be announced later this year.
By year-end, the cosmetics will also be sold across 50 counters of The Bay department stores in Canada.Despite it being a ruthlessly competitive market, Perdis attributes the business’s international success to its branding. “It’s extremely competitive, aggressive and challenging, but I do nothing but remain unique to my propositions. I am Australia’s leading makeup artist and they love that connection: I take Australia to the world. It’s not because I’m Australian that they buy me, it’s because of the way I’ve built my brand in Australia that they buy me.”It doesn’t matter whether I’m in Saks Fifth Avenue, which is one of the world’s most prestigious stores, or whether I’m in Tasmania in one of my favourite beauty salons that carry my line, they get the same value.”While Perdis prefers the title ‘interpreter and creator’ to entrepreneur, he certainly is one of Australia’s big success stories.
Napoleon Perdis Cosmetics has a projected turnover for the 2005/06 financial year of $45 million, with big plans for the next few years. “I want to have 1,500 doors across the world.” This includes opening academies in Hollywood, New York and Toronto, plus getting into South America, Europe, and eventually the Asian market. “I also just want to keep creating fabulous products, keep meeting amazing people, and keep connecting with my everyday customer
When the title ‘entrepreneur’ is thrown around it can cover anyone from the business owner to giants such as Bill Gates or Sir Richard Branson. The Macquarie Dictionary defines an entrepreneur as “one who organises and manages any enterprise, especially one involving considerable risk”.But according to Kevin Hindle, professor of entrepreneurial research at Swinburne University of Technology, this is the broadest and least useful definition. “Entrepreneurship has to be a lot more than mere business ownership,” he says. “You’ve got to have a high level of innovation and growth, in my view, to qualify as an entrepreneur.”Instead he defines entrepreneurship as “the process by which new knowledge is converted to sustainable value, and that usually involves the creation of a business to do it”. And he warns against gifting all small business owners with entrepreneurship. “Because if entrepreneurship is about anything, it’s about not being small for long.”
Nevertheless, Bill Delves, partner and national leader of entrepreneurial growth markets at Ernst and Young, argues that many entrepreneurs do run small businesses but they grow fast and aren’t afraid to take on the big end of town. “They’re not scared of the David and Goliath theory. They have enormous confidence in their ability to beat someone just because they’re big. So that confidence and belief in what they’re doing catapults them past someone who has a big business but isn’t sure what to do with it next.”But what makes an entrepreneur? Querying Hindle about whether entrepreneurs are ‘born’ or ‘made’ elicits a fiery response. “That question just drives me absolutely wild, it’s such a stupid question!” he exclaims. “You can be tall, short, ugly, black, domineering, whatever-it’s not who you are, it’s what you do!” All entrepreneurs are made, not born, Hindle believes, and while he recognises entrepreneurship isn’t for everyone, “most people have the potential to be an entrepreneur at some stage in their career if they wish to be”.Ernst and Young’s Entrepreneur of the Year awards recognise successful entrepreneurs in 40 countries around the world each year. The awards have been running for six years in Australia, and Delves says in that time feedback from participants on what it takes to be an entrepreneur has revealed no clear answer. “We’ve asked all the entrepreneurs every year, what does it take? Can you be born an entrepreneur, can you learn how to be one, are you just struck by a bolt of lightning-what is it that gets you to be an entrepreneur? The most exciting thing is, it can be all or none or a mixture of those things. Entrepreneurs define themselves by their diversity. They are so different. You put 40 of them in a room, they all understand each other but you couldn’t put two the same, side-by-side.”
Hindle will concede, however, that certain cognitive processes feature strongly in entrepreneurs. “Entrepreneurs tend to be more overly optimistic or they may tend to overrate their own ability,” he explains. “They’re able to make decisions fairly quickly and they’re able to short-circuit information rightly or wrongly. They have a cognitive ability to perceive and implement new combinations, and that’s really important because a lot of people can’t do that.
“It all adds up to having the ability to think in ways that don’t impede action. Entrepreneurs are not synonymous with gamblers. They’re attracted to challenge, not risk, but they are not afraid to take a risk if it seems a reasonable one.””Entrepreneurs tend to be curious, creative, innovative, and they’re willing to take the biggest risks. The difference is, they manage those risks,” Delves agrees. “They’re not people who do things flippantly, they’re not people who take wild punts or guesses. These people understand their market, their people, and the risk that’s in front of them. The key is, they move very quickly and they know which risks to take.”Hindle explains that, historically, only around 4.5 to 5.5 percent of the small business sector are going to be gazelles. “That is, those businesses that do grow enormously are tremendously innovative and dynamic, and will create the jobs of the future.””Entrepreneurs are about what [Austrian economist] Schumpeter called creative destruction-they actually destroy old ways of doing things and old industries, old mindsets, old everything. They’re the ones who create the jobs, wealth, and the high value-added of tomorrow.”
While Australia has produced many successful entrepreneurs-one only has to read this magazine to digest their stories-we’re not an ‘entrepreneurial nation’, according to the 2005 GEM (Global Entrepreneur Monitor) Australia findings, and analysis of the results by Hindle, who heads the Australian research team.The most significant indicator of this is Australian business owners’ lack of innovation. “Nearly every survey that has ever been done on innovation with the general Australian population, comes up with the fact that the majority of people think innovation is just the newness-doing something new,” Hindle explains. “But we’ve got to get some understanding and respect that innovation involves the implementation of invention, not just the invention.” This means, Hindle adds, that most Australian business owners are managers, not entrepreneurs. “Their businesses aren’t innovative and they’re not growth-oriented,” he says.That’s not to say being a good manager is without merit, it just isn’t being entrepreneurial. “All I would say is, we could do with a bit more entrepreneurship,” Hindle says.So, how do we foster more entrepreneurship in Australia? “We’ve got to get better at commercialisation,” says Hindle. “In our national policies and everywhere, we do all kinds of research that’s capable of creating newness (new knowledge) but we do very little research on understanding the commercialisation, the entrepreneurship process.”Then, we have to introduce into schools a cultural acceptance that it’s an exciting, responsible and wonderful thing to start your own business, particularly if it’s an innovative one. We train our young people to become employees, not to create new ventures. We need to get entrepreneurship into the high school curriculum and that will affect the cultural change.”
Delves agrees. “Imagine, if when children left school many more of them thought about becoming an entrepreneur rather than just getting a job, what type of country would we have in 10 years time?”
For a complete outline and analysis of entrepreneurial activity in Australia and the Global Entrepreneur Monitor Australia findings-past and present-check out the GEM Australia website, http://www.gemaustralia.com.au