What Industries to avoid? Lessons from Canadian billionaire Seymour Schulich

Last night I went to hear Canadian billionaire Seymour Schulich speak about his new book called Get Smarter-Life & Business Lessons at the Indigo Entrepreneur Series.

I read through about half of the book in one sitting last night (296 pages with 49 chapters) ( BTW,each chapter is only 3-4 pages of condensed wisdom).

In chapter 4 --"Jobs to seek and those to avoid", Schulich suggests that entrepreneurs work for someone before venturing into business themselves to get that much-needed experience.

He suggests finding work in industries with high profit margins and says to avoid the following (....but without providing any relevant comparative data):

• airlines
• auto parts
• retailing
• biotechnology ( I would disagree here...the industry has a 22-23% profit margin on average .....wd... see chart & story on Biotech below)
• grocery stores
• wholesaling
• machinery manufacturing
• paper and forest products
• auto manufacturing
• restaurants
• appliance manufacturing
• trucking
• any manufacturing competing with China ( ..and India I assume too)
• telecom services

Well that seems to be more then 95% of all Canadian business...I'm assuming that he would give the same advise to entrepreneurs wishing to enter these business sectors too.

He did advise to stay out of any field that India and China is likely to dominate. In the resource sector he recommended diamonds, oil, coal and platinum, all resources that Chindia (China & India) lack or need to buy.

He adds in the book:

"Don't misunderstand me. You may be able to find fulfillment and a rewarding career in the above...[..]...but you are more likely to find satisfaction and superior financial rewards in industries with superior economics."

He didn't mention anything about Nanotechnology in his book or his talk, which could easily become Canada's new resource sector. I'd be interested in what he has to say to Rotman business students and what advise he gives to researchers at MaRS dd at the University of Toronto when he speaks to these groups this term.

Here's an recent industry profit margin chart for several US Industries.

The issue of asymmetrical growth in Specialised Biotechnology Firms in the USA and the UK - UQAM

"There are over 5,000 Specialised Biotechnology Firms (SBFs) in the world, out of which at least 1500 are in the USA, 400 in Canada, and a similar number in the UK.

Within this group of SBFs rapid growth is concentrated in some 10 per cent of the firms. This paper compares the growth patterns of SBFs in the USA and the UK, and with the previous results for Canada. These three countries represent nearly 50 per cent of SBFs in the world. By combining several different databases, the paper reveals the determining factors of SBF growth in the two leading countries. Using correlation and logistic regressions for each country, we found that five factors (patents, the targeting of human health products and processes, the support of venture capital, R&D and marketing corporate alliances, and the search for world markets) explain most of the growth of these firms. "

Source: Int. J. Biotechnology, Vol. 9, No. 1, 2007

Get full paper here >>[...]

© 2005-2007

Walter Derzko -"Changing the world, one idea at a time"©

Walter Derzko teaches at the Certificate Program on Innovation and Entrepreneurship at the University of Toronto, School of Continuing Studies, which starts in the Fall of 2007

Expert, Consultant and Keynote Speaker on Emerging Smart Technologies, Innovation, Entrepreneurship, Strategic Foresight, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy "

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

• ".....Strategy without action is a day-dream; action without strategy is a nightmare"-old Japanese proverb
• ".......Ours is the age that is proud of machines that think and suspicious of men who try to." -- H. Mumford Jones
• ".......Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought."  --A. Einstein
• ".......Change is difficult, but complacency and stagnation are surefire showstoppers..." --Walter Derzko"
• .......Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has."  -- Margaret Mead
• ".......Small minds discuss people; Average minds discuss events; Great minds discuss ideas; --Anon

P. S. if this is your first visit to my blog, please go to our Welcome page

Last night I went to hear Canadian billionaire Seymour Schulich speak about his new book called Get Smarter-Life & Business Lessons at the Indigo Entrepreneur Series.

I read through about half of the book in one sitting last night (296 pages with 49 chapters) ( BTW,each chapter is only 3-4 pages of condensed wisdom).

In chapter 4 --"Jobs to seek and those to avoid", Schulich suggests that entrepreneurs work for someone before venturing into business themselves to get that much-needed experience.

He suggests finding work in industries with high profit margins and says to avoid the following (....but without providing any relevant comparative data):

• airlines
• auto parts
• retailing
• biotechnology ( I would disagree here...the industry has a 22-23% profit margin on average .....wd... see chart & story on Biotech below)
• grocery stores
• wholesaling
• machinery manufacturing
• paper and forest products
• auto manufacturing
• restaurants
• appliance manufacturing
• trucking
• any manufacturing competing with China ( ..and India I assume too)
• telecom services

Well that seems to be more then 95% of all Canadian business...I'm assuming that he would give the same advise to entrepreneurs wishing to enter these business sectors too.

He did advise to stay out of any field that India and China is likely to dominate. In the resource sector he recommended diamonds, oil, coal and platinum, all resources that Chindia (China & India) lack or need to buy.

He adds in the book:

"Don't misunderstand me. You may be able to find fulfillment and a rewarding career in the above...[..]...but you are more likely to find satisfaction and superior financial rewards in industries with superior economics."

He didn't mention anything about Nanotechnology in his book or his talk, which could easily become Canada's new resource sector. I'd be interested in what he has to say to Rotman business students and what advise he gives to researchers at MaRS dd at the University of Toronto when he speaks to these groups this term.

Here's an recent industry profit margin chart for several US Industries.

The issue of asymmetrical growth in Specialised Biotechnology Firms in the USA and the UK - UQAM

"There are over 5,000 Specialised Biotechnology Firms (SBFs) in the world, out of which at least 1500 are in the USA, 400 in Canada, and a similar number in the UK.

Within this group of SBFs rapid growth is concentrated in some 10 per cent of the firms. This paper compares the growth patterns of SBFs in the USA and the UK, and with the previous results for Canada. These three countries represent nearly 50 per cent of SBFs in the world. By combining several different databases, the paper reveals the determining factors of SBF growth in the two leading countries. Using correlation and logistic regressions for each country, we found that five factors (patents, the targeting of human health products and processes, the support of venture capital, R&D and marketing corporate alliances, and the search for world markets) explain most of the growth of these firms. "

Source: Int. J. Biotechnology, Vol. 9, No. 1, 2007

Get full paper here >>[...]

© 2005-2007

Walter Derzko -"Changing the world, one idea at a time"©

Walter Derzko teaches at the Certificate Program on Innovation and Entrepreneurship at the University of Toronto, School of Continuing Studies, which starts in the Fall of 2007

Expert, Consultant and Keynote Speaker on Emerging Smart Technologies, Innovation, Entrepreneurship, Strategic Foresight, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy "

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

• ".....Strategy without action is a day-dream; action without strategy is a nightmare"-old Japanese proverb
• ".......Ours is the age that is proud of machines that think and suspicious of men who try to." -- H. Mumford Jones
• ".......Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought."  --A. Einstein
• ".......Change is difficult, but complacency and stagnation are surefire showstoppers..." --Walter Derzko"
• .......Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has."  -- Margaret Mead
• ".......Small minds discuss people; Average minds discuss events; Great minds discuss ideas; --Anon

P. S. if this is your first visit to my blog, please go to our Welcome page

Comments

[Andrew Opala]

I'd have to agree with Seymour Schulich on some of these - but of course I have a different point of view. Any industry that has a large component on the Cash Flow statement from fuel costs will have spiraling costs for any new business entry. So I agree whole-heartedly with transportation and transportation related manufacturing as being no-nos. (But this gives entrepreneurs the opportunity to find efficiencies in these industries to beat competitors.)

Secondly, I don't quite understand his telecomm warning, but I assume he means the hardware and infrastructure stuff and not the content that feeds through it, and the software that enables it. Software has the best ratio of thought to converted cash flow of any industry. It is the only "engineering/construction" industry that only requires energy in the form of electrons in a wire but produces tangible goods.

Finally, as a defenisve measure, North American entrepreneurs should look in the areas that will cause economic pain - specifically the cost of energy. If new sources of fuel could be invented - then airlines, trucking, automotive, and most transportation would be good industries for other entrepreneurs. Canada will always need transportation to keep it's pieces connected. Energy is the only way this can be achieved.

There are opportunities everywhere. You just need to sit and think about it.

[Rick Sandhu]

I (being under 30) especially enjoyed Mr. Schulich's advice to young people. To paraphrase him: "If your under 30, don't sweat the small stuff...go out there and do what you do without fear of consequence or failure". Any thing to add to that?

Also, did anyone pick up the book that Seymour cited as being one of Warren Buffet's favorites?

[Radovan Danilovsky]

Hello.
Small comment about Chindia and Nanotechnology. During a recent visit to China (Beijing) one of my friends, employed by Slumberger, was invited to Nanotech labs associated with Tsing-Hua University (the top Uni in China). They had a "modest" number of 20000 researchers on the topic of Nanotech!!! Unless Canada sabotages nanotech research in China, it should be very affraid. Very affraid!!!
Cheers
Rado

[Radovan Danilovsky]

I cannot recall book that was Warren Buffet's favorite, but there are numerous books on Buffetology. Check out books written by Buffet himself, there is also a book written by his wife, and plenty books by unrelated people on Buffet. Have you read Hemingway's "Old man and the sea"???

[Travel Guy]

Good insight, where would airlines show up on that graph I wonder. Also, smaller discount airlines that use regional airports have higher margins and may be in a different class than some of the major ones.

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