Coming aboard the “Law & Business” Podcast is Polina Chtchelok. Polina is an Australian lawyer and engineer. She started her career in the energy sector, where after having lived in 5 different countries and working on various investments and projects, she saw a business opportunity due to lack of specific legal services and she moved from working in-house to creating her own niche market law firm in a controversial and challenging business environment of Bolivia in South America. After completing Executive MBA from HEC Paris with specialization in finance end entrepreneurship her focus now is on development of financial and operational strategies for business growth.

This episode on how to define a business vs. how to define a startup was fun to record and we hope you enjoy it, also.

Anthony Verna: (00:02 )
All right. Welcome to the Law and Business podcast, the most blandly named podcast out there. With me today is Polina Chtchelok. Polina, how you doing?
Polina Chtchelok:
I’m good, and you?

Anthony Verna:
I’m well. How badly did I butcher your last name?
Polina Chtchelok:
It was actually quite well.

Anthony Verrna:
All right. Oh, good. Okay. That’s because your last name is Polish in nature.

Polina Chtchelok:
Russian.

Anthony Verna:
Russian, I’m sorry, I keep making that mistake. I grew up near our Lady of Czestochowa, which is I believe a Ukrainian saint. So anyway, I’ve learned a little bit about trying to figure out some of the Eastern Europe…

Polina Chtchelok: (00:53 )
The region of my last name is Ukrainian Cossacks.

Anthony Verrna: (00:58 )
Okay. Okay. So, all right. Thank you for the diversion. Uh, Paulina is an Australian lawyer and engineer. Speaking of a diversion. You started your career in the energy sector after having lived in five different countries, working on various investment and projects. Polina, you saw business opportunity due to lack of specific legal services. And you moved from working with in-house to creating your own niche market law firm in a controversial and challenging business environment in Bolivia, in South America. And then after completing your executive MBA from HEC Paris, with specialization in finance and entrepreneurship, your focus is now on development of financial and operational strategies for business growth. So welcome because law and business is exactly where you and I collide and intersect and thanks for being on today.

Polina Chtchelok:
Oh, thank you for having me here.

Anthony Verna:
Hey, so we’re going to talk a little bit about what you think of as an ongoing concern for a business versus a startup. And hopefully our listeners can take away some ideas for thinking about if you’re a startup out there thinking about taking your startup, what do I need to do to be an ongoing business concern?

Polina Chtchelok: (02:14 )
It’s a very complex subject, and it’s a very current subject because as you know, with COVID-19, there’s a lot of businesses being impacted. You have to shut down, but at the same time, COVID-19 accelerated in entrepreneurship. It’s accelerated creation of startups. Its accelerated people being innovative and creative because of their restrictions they’ve been under. They had to think of new ways of doing a business, implement changes to keep the business afloat and, and even the current customers, they change their habits. And you had to adjust to these changes in the habits of your customers.

Anthony Verna: (03:06 )
I completely agree. And we see that as well. We’re seeing a lot more trademark applications come through the door. We’re seeing a lot of patent application inquiries, and a lot of people trying to figure out if their invention is something that they want to invest the time and the money to get a patent application. And, that really begins one of the thoughts, like how much have you invested of your own money in your business?

Polina Chtchelok: (03:35 )
Well, before we get into this point in terms of how much we invest, I want to highlight two things. And the two trends you see in the news is the first one, as I said before, a lot of businesses got impacted, and there is a discussion in terms of, okay, how you get economy going, et cetera. And people just go up private equity, they have lots of money. They have lots of dry powder.

Anthony Verna: (04:01 )
It’s just because of Shark Tank and Dragon’s Den the GB franchise. I mean, that’s really why private equity is very popular.

Polina Chtchelok: (04:10 )
I will get back to the Shark Tank and the Dragon Den, because it’s important point for the discussion in terms of what startups and businesses need to do in how’s it prepared to sort of launch themselves and to grow and to get funds for the growth. But just to let us get back to what I was saying before, the second trend you see is the it’s banks. That basically, because a lot of businesses had a bank loan, the bank day defaulting on the loans because they’re going bankrupt, et cetera, et cetera. And the second trend is saying that banks is Christmas guarantee when they’re giving out new loans and that’s coming back again. So, the people were think, okay, the bank increasing security, private equity has money, lots of money. It will be easy for us to get.

Anthony Verna: (05:02 )
Bank loan. What’s a bank loan? I mean, until COVID 19, nobody wanted to give Verna Law a bank loan.

Polina Chtchelok: (05:11 )
I mean, when you start preparing your business, you’re analyzing what you have to do depending, what is your idea? What is your business? Actually, the bank loan might be the way to go because in Europe, we can get personal loans with very low interest, like 1%.

Anthony Verna: (05:30 )
Color me jealous.

Polina Chtchelok: (05:33 )
Like, I’m in France. So, our current loan market is very low interest rates. That’s why I’m mentioning the bank loans. Maybe it’s different in United States, but for me, bank loan in Europe would be one of them quite solid options to consider.

Anthony Verna: (05:52 )
Okay. Yeah. I would say here in the United States, that’s actually not a very easy avenue to take just because it’s personal guarantee. The rate is definitely not going to be that low. And it’s basically based upon an idea that the bank has to take a leap of faith on you.

Polina Chtchelok: (06:12 )
But as we probably have like a very diverse audience, I feel like we need to cover different options because which something might work in Europe might not work in the United States, but something that works really well in the United States really might not work in Europe. So, basically, we now have this perception that, okay, we might get easy money from private equity, but what do you need to think about it is how many people’s thinking it. It’s quite a lot of people thinking about this. So the guys who run the different funds, they get a lot of applications. And because they are not in a charitable business, they give money, they invest money, but they want to make return on their money. They’re not there to just give it out.

Anthony Verna:
No, they’re not charity.

Polina Chtchelok: (07:08 )
And the thing is, is that because we do have the Covid-19 situation, we have the more risk there will be also employing higher scrutiny when they’re analyzing the business. And that comes down, is that okay? You have the business or startup, you want to develop it. You want to grow it. You need to prepare it for it. And you need to have money to do this. And when you go into the bank or the private equity fund, et cetera, you need to show that you have something workable in terms of what is your idea? Are you having a product or are you developing some sort of digital business or you’re developing a platform or you developing an application to meet some need that there is nothing existed in the market that can make that need?

Anthony Verna: (08:05 )
I mean, that sounds like what is your business plan?

Polina Chtchelok: (08:08 )
Well, yeah. And what is a business plan? And before we even get to the business plan, we need to differentiate what is the business and what is the start up? Because that’s become really popular. There is a fundamental difference between a business and start up. And I feel like a lot of people actually using a startup to kind of sound cool, but in reality, they just have a business. The fundamental difference between a business and startup is business is you have the fixed product, and you have the fixed model to sell the product. You’re not testing anything. And the way to illustrate it is the, I don’t know, you live in countryside, you have a of different farmers around you and you open a shop to sell the local farming products. This is a business because you have defined products behind way to sell.

But if you’re open the same store with this products, but you will be selling it as a say, subscription. You have the basic subscription where every week you can pick up like the basics that you need. You have the big levels, you get some additional items, and you have the sort of a luxury thing where you have items. Then you are start up because you’re not selling it in a normal way. You’re testing it to see how many people will subscribe. What’s going to be popular? Are they’re going to be happy with the basket you’re proposing, or you need to do some adjustments?

Anthony Verna: (09:49 )
You need some extra yolk for your oxen, not a problem. You’re a subscriber. You can come and upgrade once a year.

Polina Chtchelok: (10:00 )
So that’s the fundamental differences. You need to look and say, I have this brand idea for the product. You need to make this product because you cannot just turn up to the bank or the P