Small Business Snippets

In this episode, Anna Jordan talks to Will Butler-Adams, managing director of Brompton Bikes.

We discuss taking over the company from its founder and the future of manufacturing.  

You can also visit smallbusiness.co.uk for more on business succession and international trade.

Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case.

Would you prefer to read Will Butler Adams' podcast interview instead?

Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I’m your host, Anna Jordan.

Today we have Will Butler-Adams, managing director of Brompton Bikes.

He started at Brompton in 2002 as a project manager, moved up to engineer director and decided to take on the role of MD when a rival company was going to buy the company out in 2008. After making some changes, production sped up and Brompton now sells 55,000 bikes per year, with key markets in the UK and China. A UK-based Brompton bike hire scheme was launched in 2011.

Outside of the firm, Butler-Adams is a fellow at the Institute of Mechanical Engineers and the Royal Geographical Society as well as the City and Guilds of London Institute. He’s also a member of the British Manufacturing & Consumer Trade Advisory Group, consulting on post-Brexit trade deals outside the EU.

We’ll be discussing what it’s like to take over a business from its founder and how to maintain brand loyalty.

Anna: Hi Will.

Will: Anna, good morning.

Anna: How are you?

Will: Well, very lucky. In the current climate, as we are seeing, some really, really challenging times both emotionally and also commercially, for many people globally. It's a pretty unprecedented time and we are finding ourselves as a business, one of the few sectors that has benefited from the current crisis.

Anna: I understand you're in the factory right now.

Will: Yep, I'm in the factory. We've traded non-stop throughout from the very first lockdown. And that has come with all sorts of challenges. But funnily enough, and we'll talk about a little bit more no doubt, that bicycle is a very, very useful tool in a situation like this. And there has been this sort of global enlightenment, to the value of something so humble as a bicycle. So, you know, we've contributed in our own peculiar way to try and to help people through this crisis.

Well, I will start a little bit further back from here. When you when you bought the company, way back in 2008, you made a generous valuation estimate and you bought out the founder Andrew Ritchie's controlling stake in the company. Some might see that as a bold strategy. Why did you go for it at the time?

Will: I joined the company in 2002, there were about 30 of us. Initially, I just thought I was going to muck about with a mad inventor making what looked like a fun and interesting product, not much more than that. And then [after] two or three years I'd move on. I was pretty young at 28, but the bike got under my skin and it affected my life. I wasn't naturally an urban liver. And yet, it's such fun living in London with this bike because it gave me this freedom. And I saw it had a similar, quite profound effects on our customers. That's very alluring and, in some respects, addictive. I was consumed by the company, entirely consumed by it.

And Andrew, the inventor, is an absolute flipping genius. But he's not a builder of a business because he is much more of a sort of complete megalomaniac, detail, engineering right down in the nitty gritty. We're both engineers, but I'm more of a ‘vision, empowerment and grow’ engineer. And I wanted, by the time we got to 2008 – in fact, 2006 or 2007 – I wanted to commit my life to the product he'd invented, but I couldn't do it if he still had the control.

The reality is that, even if you've made me the MD back then I wouldn't have had the control that I needed to do what I needed to do because I knew I needed to do things that he wouldn't approve of. He had to let go of control. It didn't mean I was then taking control because I never did. I just took out his controlling stake. But it then meant I had authority and autonomy to do what I knew needed to happen to the business for it to fulfil its potential.

Were there signs that he [Ritchie] may have been getting to the point where he was more willing to give over some of the control? From what I've read, he was quite reluctant to delegate when he was in charge.

Anna: Life isn't black and white. It's full of moments in time, and people, and there's a certain amount of luck. And it's whether you see the opportunity or the luck floating by and whether you jump on to it. But in this particular case, I think it was a moment in time where Andrew was getting so caught up in the detail. And when a business gets to a certain size, if you're trying to control everything, you've become the eye of the needle, and everything has to go through you.

And you think that by recruiting people that you will find that then, you have less work to do. But if you are the person who is controlling everything, everything has to come through you. And by recruiting more people, you find you're even busier.

That's what happened to Andrew: he got busier and busier and busier. It was making him unhappy. Because he was putting himself under so much pressure, there was a sort of nosedive where he was not enjoying himself because the business was becoming so successful. Also, I was being more confident. In the early days, the company was owned by him and his friends. His friends weren't Andrews. They were entrepreneurial, independent businesspeople in their own right. They could see and bring perspective and support Andrew to make the decision because they could see there was no way he could continue, because it wasn't his forte. So, they encouraged him to let go.

It's worth saying that on many occasions, since then, he's vehemently regretted it because I've done things of course, which I knew I'd have to do that he didn't agree with.

Tell me – what kind of protestations did he have?

Will: It's about detail. Andrew is an inventor – in the absolute classic sense of the word. He spent 13 years, he hand-drew 1000s of drawings – technical drawings – not just for the bike, but how to make the bike and in insane detail. It’s something straight out of A Beautiful Mind.

It's unreal that one human being could do what he did against a sort of backlog of everyone telling him, ‘What are you doing, wasting your time? You've tried, you fail, you're still at it, why are you still at it?’ He wouldn't give up. But he would worry about training and worry about tolerances, worrying about the grammar and would pick up on some problem, you know, six pages deep in our website, and ask me, ‘How would I let this happen?’ It's wrong, but in the grand scheme of things, when you're running a business and trying to do this and open up markets in Japan and an office in London developing this, he assumed that I would know everything and check every piece of written word and that I'd signed off every detail, but it doesn't happen like that.

You have to find people better than you, you need to trust them, you need to allow them to make mistakes, just not mistakes that will take out the business. But his perception is that I was running the business – when it had 100 people, 200 people, 300 people, 400 people – in the same way that he ran the business when it had 40 people. That's just not possible. So that was the friction, and in some respects, still is a friction. In most cases, everything Andrew said was technically correct. It just wasn't the priority. And the problem is, when you're running a business and you're growing at some speed, you actually have to walk past things that are wrong. You're walking straight past something that is absolutely wrong. Unacceptable, not right. But you have to leave it because there's an even bigger wrong over there. You need to deal with the biggest [wrong].

It gives me huge pleasure that there are some things that I've been walking past for eight, nine, ten years. Finally, we've got the breadth and the capacity as a business to finally address some of these things that have been bugging me. But if you get distracted by every minutiae, as you're growing a business, you won't move the business forward because you'll never get to the most important thing that then allows you to move on to the lesser things and as you build down through the priority list.

I think especially when you're starting a business, you're so used to playing all the roles, so that can be difficult to let go of.

But interestingly, in Brompton’s case, when I joined, there were fewer than 30 people. I was the person running the machines. I rolled my sleeves up, spent three weeks running machines. The business was so small that that is what I did. That role has changed significantly. We now have offices around the world and we've got lots of people and I'm really doing nothing. That's a really tough call to design yourself out of a job, because there is no operational control in my role.

Speaking of internationally – and you probably saw this coming – but I'd like to talk a bit about Brexit. We’re a week and a half in now. It's been ‘chaotic’, in a word, especially for exporters. I think that as somebody who has worked to advise on trade deals, and who wants to grow their market in other parts of Europe, especially for small business exporters, what do you think the forecast is for them, say the next three to five years? Will things get better?

Will: What I would say – and this is not entirely directly answering your question, but indirectly does – when you're in business, you need to focus on things that you can control. You can control who you employ, you can control the culture of your organisation, how you present yourselves and what you do to inspire your team. What you can't control is FX (foreign exchange), what you can't control is Brexit.

So, what you need to do is put in place strategies to mitigate the things that you can't control to allow you to get back to focusing on the things you can control. What happened with Brexit was, it started four years ago, we took a decision four years ago, to plan for the worst-case scenario. It took us about three months, the worst-case scenario hasn't then changed in three-and-three-quarter years, it's still the worst-case scenario. So, for the last three-and-three-quarter years, we've focused on growing our business innovating, distribution, communication – and we've doubled the size of our business.

But what I saw over Brexit was many businesses got so caught up in worrying about something that they couldn't control, that they didn't do anything, they stagnated. They were worrying about the latest rumours – ‘I've heard it's that but maybe it's this or it could be this’. And I think in business, you need to not get distracted by things you can't control, focus on your core, focus on your added value, and manage the things you can't control by putting in place strategies to minimise the risk.

Small business owners are so accustomed to planning ahead but without a lot of concrete information that's been difficult to do.

Will: I'm not sure I agree. With a small business, you're more flexible than a bigger business, you're much more nimble. You have a tremendous advantage against some of the bigger players because you can adjust and you're smaller. I think it's not straightforward. It is possible to be able to try and mitigate those risks. And there aren't that many of them. Clearly Brexit is one, FX is another, trade tariffs is a third, but there aren't that many. And there's some good advice out there to support you.

I know that Brompton has been open about being against planned obsolescence. This is where a company will manufacture a product so that it is unusable after a couple of years [or a certain period time], which is long enough where somebody can develop a connection with the product, but not so short that they get disengaged from the company and never buy from them again, there's regular income for that company. Phones are especially notorious for this practice.

My question to you is that if a customer is only going to buy one Brompton bike for life, how do you maintain brand loyalty from customers?

Will: The way you can maintain brand loyalty from customers is to give them a product that they may need to buy once in their life.

Capitalism has done some amazing things – brought people out of poverty, it’s brought health, it’s brought education, but it has come at a cost to our planet. And certainly, in the last 50 years, increasingly. So, we have to rethink how we engage with consumerism and how we buy things and how we reuse things and don't just buy and chuck away and just, we're sucking value out of our planet, which our planet can't sustain.

Apart from the fact that the customer must prefer the product they've had for a long time. If you've got some pots and pans that came from your granny or your parents or an old jacket or anything that's had longevity, you cherish it because it's given so much to and if you can keep it working for as long as possible, that makes total sense to me.

Coming back to brand loyalty, there are things we can do to engage with our customers where they're having fun. We do races all round the world, not the last 12 months, but we do activities, we do events. And we want people to have fun, and this year with a fair wind we’ll make 70,000 bikes. I mean, they're like eight and a half billion people in the world of which nearly over 50 per cent live in cities. I mean, we haven't even started, the opportunities are immense. We want to create things, then actually what we want to do is when it's finished, which we're not out yet, we should be able to take the product back, recycle it and start all over again and have a full circular economy.

Anna: Is that something that you're planning to do in future?

Wil: Definitely. We need we need to do that, because there will come a point where the bikes that we were making 20 years ago, in some cases 15 years ago, have come to the end of their life, at which point for those bikes, we should be able to bring them back, take them apart for recycling, then round we go again.

I've read that your marketing budget isn't huge, either.

Will: I think the experience that a customer has with your product, too often, businesses are obsessed with selling you something. But that's not how you build a brand. A brand isn't what you feel when you bought it, you can buy anything. And the moment you buy and you have this sort of rush of, ‘Whoopee isn't this fantastic?’ The question is, go back to that same customer in two years’ time and say, you know that £100 you spent or that £300 you spent, was it worth it? And, sadly, in most cases against you might have never been used, or yeah, it was brilliant for about six months, and then it bust or something went wrong.

There aren’t many things that that we absolutely cherish and love. I think the scope for us to be delivering a useful product, it's not just about buying, it's about looking after the customer for the life of the product. Things need looking after, which is why we have put in a lot of energy.

If you like, our marketing budget goes into looking after the customers we already have – that's the most effective marketing budget. If the customers that you have really love their product, and when things go wrong, which they do, we look after them as best we can, then that's the best marketing you can get. So, spend your money on warranty or on customer service, customer support. And then when that's all perfect, you might have a little bit left over for doing some proactive marketing. But often people they forget about are the customer, they just want to go out and do this trend or get more new customers, forgetting about the ones they’ve already got.

To round off, I'd like to talk a little bit about manufacturing in the UK. For a long time now it's dwindled, but then others have said, ‘Well, the UK is so innovative and it's still a very strong player in the manufacturing industry.’ In your view, where do you see it going in the next few years?

Will: I think there is so much potential to manufacture in the UK, simply because the barriers to entry to doing efficient lean manufacturing are so much lower than they used to be. When I was at university, which is increasingly becoming quite a long time ago –

Anna: Oh, I know the feeling!

Will: Yeah! If you wanted to design something like a car, you needed a computer that filled up a room and they cost, in today's money, millions of pounds. So, the only companies that could afford the technology to allow you to design effectively were the Fords or the massive companies in the world.

But you can buy a computer and start doing 3D design, you can get things printed in 3D in metal. If anything, manufacture’s become entrepreneurial again, because if you come up with an idea, if you can design it, you can print it, you can prove it, you can go on to social media, and then you can raise the money to get started. There's so much potential.

The real sense of pride comes from, the reason that it's so satisfying with manufacture, is you see you’re creating something. It's that sense of creation, it's like growing plants – you're seeing something happen and come alive in front of you. You're creating something tangible – that's really, really satisfying. We've been encouraged and told that everything is on a computer and it's all noughts and ones. Actually, it’s the innate sense of pride about something tangible that's going out the door. I think actually the opportunities for it, not just in the UK but globally for manufacturing. Manufacturing doesn't need to be where there's cheap labour. Manufacturing is where there are the best ideas and robotics, semi automation, 3D printing, the cost of software and the ability to design, meaning the best ideas can sprout anywhere in the world, and you can manufacture locally, where the brains are.

Anna: It would be a bit like, since the rise of social media and blogging, we've seen content creation go more into the individual’s hands, you feel like manufacturing can go from larger companies to individuals.

Will: Definitely. It's a really positive thing because of disruption. I mean, if you look at things about flying taxis, people coming up, there are like 50,60,100 different companies around the world, all coming up with their different flying taxis. It was unthinkable 25 years ago, because it just wasn't possible for small businesses or small groups of individuals to try and come up with something so revolutionary, it would only be a LES four-digit or Nissan, or something – forget it. Yet, all these start-ups are doing it, because the whole engineering and manufacturing has been broken down and it makes it much more accessible. And if your idea is strong enough, if your passion burns bright enough, you can do it.

Anna: Well, on that rather inspirational note, I'll leave it there. Thank you ever so much for coming on the podcast, Will.

Will: Anna, it's my pleasure. Thank you for asking me.

You can find out more about Brompton Bikes at brompton.com. You can also visit smallbusiness.co.uk for articles on business succession and international trade. Remember to like us on Facebook at SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lowercase. Until next time, thank you for listening.

In this episode, Tim Adler talks to Gerald Ratner, author, motivational speaker and businessman.

Discussion topics include the decline of the high street and how Gerald reinvented himself after one of the biggest setbacks of his career.   

You can also visit smallbusiness.co.uk for more on retail and business strategy.

Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case.

Would you prefer to read Gerald Ratner's podcast interview instead?

Hello and welcome to Small Business Snippets, the podcast from smallbusiness.co.uk. I'm your host, Tim Adler.

Today we have as our guest author, motivational speaker and businessman, Gerald Ratner. Gerald inherited his father's jewellery business in 1984. Within six years, he turned a small retailer into a multi-million-pound empire. Every British high street seemed to have a Ratners in the ‘80s. I myself remember buying a snazzy gilt tie clip from Ratners as a teenager.

Gerald made Ratners so successful that it seemed that every British high street had one of his stores, or one of the associated companies he had bought up, H Samuel or Ernest Jones. Ratner seemed the quintessential ‘80s British success story, which saw Gerald mixing with Margaret Thatcher, until one fateful day in April 1991. When he was guest speaker at the Institute of Directors, he addressed 6,000 businesspeople and journalists at the Royal Albert Hall. In a moment of what can only be described as hubris, Gerald managed to undo not only his entire life, but his empire, in less than ten seconds.

Gerald was describing how his company sold a cut-glass sherry decanter for just £4.95. ‘People say to me, “How can you sell this for such a low price? I say because it's total crap.”’ Ignoring the maxim that if you're in a hole, stop digging, Gerald went on to say that his company sold a pair of gold earrings for less than £1. ‘Some people say that's even cheaper than a prawn sandwich from Marks and Spencer. I have to say that the sandwich will probably last longer.’

Now, this got an enormous laugh in the Royal Albert Hall that afternoon, but the next day, the tabloids eviscerated him. Now I have to disclose some tiny sliver of connection to this moment, as my wife worked on Gerald's PR account, and I remember the panic which went on in her office the next day, how Gerald was pushed onto TV for a mea culpa interview with Terry Wogan, but the damage had been done.

Shares in Ratners lost £500m within a few days, 2,500 shops had to shut and Gerald was left both clinically depressed and ousted from his own family business. But in a lesson to us all in resilience and reinvention, Gerald bounced back as a health club owner, which has sold for nearly £4m in 2001, before launching an online jewellery business.

Gerald has reinvented himself multiple times throughout his life, from jeweller to gym owner to online retailer, and now to public speaker and author.

Oh, I should mention that last month, Gerald had a new book out: Reinvent Yourself: A Brand New Guide for Reinventing Your Life. How to Be Successful, Achieve Your Potential, and Create Lasting Opportunity for Business Success.

Tim: Hi Gerald, welcome to the podcast.

Gerald: Hi, Tim. Thanks for inviting me.

So, you've obviously had a lot of time to think about this. In hindsight, what were the lessons that you learned from that moment?

Gerald: Yeah, I’ve had 30 years to think about it and as they say, sit in haste and repent at your leisure. What I've thought about it is that I should have been a bit more careful when I was invited to make that speech at the Albert Hall.

I tried to put in a couple of jokes, to get people to laugh, because somehow when you're doing a speech, it breaks the ice. It was before I was doing speeches, really, so I was a bit nervous to do it in front of all those people. And once you've made a joke, when people laugh, they're on your side. So you know, you feel more relaxed, the nerves go away a bit more, you’re more confident. That's how you getting feedback from the audience, approval from the audience. But then, I suppose in hindsight, why try and take that option? You don't need to do it. I was, as you said, I was very successful businessman at the time, I didn't need to feel so insecure. But there you go – I was quite young at the time, about 40. It was just a mistake. What can I say?

Well, it's interesting. It may because I mean, obviously, you've very successfully reinvented yourself since. And it does make me think that we British have a strange attitude towards business failure.

I was reading an interview with a Dutch boss – this American tech company, snowflake. He said recently that in the US failure is seen as a badge of honour. While in Europe, there's a huge social stigma about it. He said that you go bust in Europe, you end up in economic slavery until the end of time. Do you think that Britain's got to change the way that that we think about business failure?

Gerald: Well, I do think that failure is part of success, that you're quite right. In the States, if you look at all the successful – including Amazon – all these successful businessmen. Amazon lost 90 per cent of its value, after the .com boom, but it didn't really bother Jeff Bezos, because he had faith in the business.

Nobody's going to sail through life without making any mistakes or failures. And certainly, I've learned a lot from my failures. And you are a better business. I'd rather be richer and not as good, but the fact is that you do learn lessons and you're better for it. I don't think it's right that there's such a stigma attached to failure that you're written off. And, you know, the first mistake you make I think that it's a shame, and it's a bit of a British disease.

No, I agree. I think you talk to Americans and they have a completely different attitude towards business failure. Now, obviously, we've been all stuck in this dreadful pandemic. One of the things that we've seen is conscious support from shoppers, for small businesses and independent retailers. Do you think that's going to be a permanent change? That there's going to be a permanent change away from the big retailers? Or is this just a flash in the pan?

Gerald: Well, we're all creatures of habit. And once we get into a certain way of doing things, we like to repeat them. I don't think in any way, anything will go back to normal. Having said that, it's not going to stay the same – there will be a shift back to the way we live before. But I don't think a complete shift back.

My business of doing speeches in front of audiences, I don't think that they'll be as many and a lot of them will be done online, retail is exactly the same. I think that the share that the online businesses have gained through this, they won't lose completely on day one of the recovery.

Hmm, I know. I mean, before the pandemic, you said that the high street was pretty much dead. And the out of town shopping centres would survive, and out of those, John Lewis would probably be last man standing. Is that you still your view that the high street’s dead?

Gerald: Well, I wrote that article – it was a page in the Mail on Sunday – this year, believe it or not, just seems a long time ago, but it was before the pandemic. Yeah. And I said that the high street is dead. Turn it into homes. And I think that that's even more relevant now since the pandemic. I think the high street is dead and it won't recover. And it's just the weakest of all the ways that we can shop.

I mean, there's the shopping malls. There's the internet, there's the out of town shopping. And then finally, there's the high street and the high street offers the least. It's the least convenient in terms of parking. It's the least convenient in terms of walking around in the pouring rain. And it's the least convenient in terms of the fact that it's tired. A lot of the high street stores comprise of charity shops, which the government made a mistake allowing them in with no rates and reduced rent, because they didn't do anybody any favours, because they're not an attraction.

For you to go to the high street, you need quite a lot of things to attract you – maybe the banks, but they've gone. But a charity shop is not something that you make a special journey for, as are betting shops, and they’re now closing, as are the loan shops that opened up lending you money, pawn brokers and stuff like that.

There's just nothing there. I think with the strength of the internet, it just can't be sustained. I mean, I definitely feel the high street is gone. And I don't think that'll be the first member of the four ways we shop to go. You know, I think it's when you look at Next results today, they've made up for all their lost sales from the high street online. You wonder why they bother with all those expensive shops and all the staff and all the costs that go with it.

But do you think do you think there are any retail sectors that that will survive as in-store experiences? And I'm thinking there are certain things that you have to physically touch or try on, like shoes, I would have thought it's difficult to do that online, or perfume?

Gerald: Yeah, I mean, strangely enough, when I had my hair cut, my barber was saying that he's very lucky that his is the only business that is not affected by the internet. He's not a competitor. Now, he's one of the few people that cannot substitute his business with online. So sometimes, you know, be careful what you wish for.

But yeah, I just think there will be obviously something out there for people to buy. But it'll just be it'll be just like when we started with online and online was about five or ten per cent, and bricks and mortar was 90 per cent. I think that could well reverse. We could get sort of 80-90 per cent online, five or 10 per cent bricks and mortar. I know that sounds absolutely extreme. But everything is pointing [that way] as technology is getting better and better.

And then we've got this green issue about travelling in the whole time. I think people will want to travel less. I just think that's, I can't put a time on it, but I just think it's inevitable, though. That is the trend.

Okay, so I'm guessing that if you were starting again, now, as a young man, as an entrepreneur, entrepreneurial young man, you probably wouldn't go into retail.

Gerald: No, not in retail.

Tim: If you were starting now, which business would you go into today if you are starting again?

Gerald: Well, I think that you've got to do something. And the timing is very important. Because I was in the jewellery business in the ‘80s. Now, we became the world's largest jewellery business, and we were very successful. But it's not all down to what we did. We were lucky in terms of the fact that the ‘80s was a great time to be in selling jewellery in retail. There's never been a time like it.

Basically, because young people, the demographics in the sections of 16-24, had a lot of disposable income, and we catered for them which the other jewellers didn't. But nevertheless, we couldn't have done that so successfully today. Then went into the health club business in the ‘90s. That was the right time because there wasn't a lot of competition and it was just building, you know, people just becoming health conscious. Not like they are today – a lot of people were not health conscious. There was a growing market there, not much competition

Then I went into online business at the turn the century, long before it became fashionable. And it became very cheap to get your product online, pay per clicks (PPC). We were selling an eternity ring. Because there were only about 50 jewellers out there, it only used to cost us about £3 to buy pay per clicks for that. Today, that same eternity ring cost us £250, instead of £3, because there's so much competition, so I'm not interested in that.

The business I would go in is somewhere where there isn't a lot of competition. In the growing market, where I think the market is going to grow, but there's not a lot of people that have cottoned on to it yet.

And you're not going to share which business you've identified?

Gerald: Well, it might not be anything to do with the internet, believe it or not, even after what I've said. A friend of mine is just sold his business who supplies hangers to Marks and Spencer. He just sold his business for £60m. There's nothing particularly high tech or disruptive about hangers. I think the key is if you do something differently, and you do it well, that's all you need to do. You need to be an expert in your field.

I mean, I like to think that I know a bit about jewellery, whereas other competitors at the time didn't. We basically displayed all our diamond rings at 42 inches from the ground because the average woman was 5”4, and the trajectory of our eye would fall perfectly at 42 inches. Other jewellers wouldn't bother with niceties like that. It’s the silly little things like that that are important in business.

Oh, yeah. It's the details that are important. And in a similar vein, if you could go back in time to yourself as a young man, what advice would you say? What would you say to a young Gerald Ratner about how to behave in business, or if you have a maxim in business?

Gerald: Well, what I did was right up until the speech, what I did was take risks, which you need to do. I mean, we're not schoolteachers or policemen or hospital workers, however wonderful they are. We’re people who can get make a lot of money very quickly or lose a lot of money very quickly, we’re born in a risk business.

So I was prepared to risk everything. I went to America, was told that America was a graveyard for British retailers. And my shareholders said, ‘If you fail, we'll turn on you with venom.’ I didn't really need to go to America, because I had 1,000 shops here that were making a lot of money at 50 per cent of the jewellery market, but I wanted to go to America. I like taking risks.

I think that, as my co-author in my new book says that, if you don't risk anything, you risk everything. And your business is about risks, calculated risks. I don't smoke – I'd like to, but it's a risk. If it was only a slight risk, I would smoke. But as a businessman, because it's a quite a big risk, the odds are not in my favour. So that's something I can't do. I look at the odds. But then you can back a horse that's three to one on and it can lose, but it's unlikely to.

That's the way I look at it, as a young Gerald going into business is, don't try and think about your pension. Don't try and think about safety. Go out, if you feel you're confident that you've got the right formula, go for it, and do whatever it takes.

Tim: Well, that's a very good note to end on, Gerald, and thank you for your thoughts and advice. Thank you very much for coming on the podcast. And you can get in touch with Gerald at geraldratner.co.uk. You can also visit small business co.uk for more insights on the future of retail and business strategy. And thank you for listening.

In this episode I talk to Trinny Woodall, TV presenter, author and founder of makeup brand, Trinny London.

We discuss influencer marketing and augmented reality within the beauty industry.  

You can also visit smallbusiness.co.uk for more on SEIS and the importance of communities.

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Would you prefer to read Trinny Woodall's podcast interview instead?

Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I’m your host, Anna Jordan.

Today we have Trinny Woodall, fashion and beauty guru, TV presenter, author, entrepreneur and new entrant in the Telegraph’s Top 100 Tech Entrepreneurs 2020.

Formerly one half of Trinny and Susannah earlier in the 2000s, she now runs Trinny London, an online make-up company providing personalised stackable products. It includes the Match2Me service which matches Trinny London make-up to a person’s skin tone, hair and eye colour. The business is worth £46m.

We’ll be looking at influencer marketing and the changing habits of beauty consumers.    

Anna: Hello Trinny.

Trinny: Hello, Anna. How are you?

Anna: Yeah, I'm doing all right. Thank you. How are you?

Trinny: Very well, thank you.

Anna: Great. First, I’d like to talk about your business background. Trinny London is pretty on the pulse when it comes to emerging business trends – personalisation, building social media communities, the founder being an extension of the brand. Of course, you will have a team behind you, but it looks like there is some knowhow there already. Is this your first foray into business particularly in the pre-Trinny-and-Susannah days?

Trinny: Even pre-Trinny-and-Susannah days, I had gone into finance. So, I started my career in commodities, selling commodity funds, which I detested. I would go down from Earls Court to Tower Hill and I would have the FT on the outside and inside, I'd be reading the Daily Mail. But there was an obligation in my mind, because my dad was a good businessman, an entrepreneur. I was the youngest of six kids and I think I didn't feel smart enough for university.

I started as a secretary in a physical trading house. I was surrounded by business conversations at the dining room table because my father, brother and brother-in-law were involved in the same business. And then, when I was doing my foray into the City, I realised how much I disliked it and I wanted to do something else.

But there was a part of me that wanted to have a business. I think I always had that from a very young age. I fell into television and before I even did TV, Susannah and I had a column and the internet started emerging as a as a platform that econ was just starting in ‘98. I really thought it was so interesting that you could do some form of personalisation online.

And with all the traction we had with our followers on Trinny London, I remember I spent a weekend and I was doing a fast, I had very bad skin, so I was doing this fast, very weird thing. But my brain became very clear. I thought, ‘What can one do that could bring together what the internet's beginning to offer and refine choice?’ I think the idea of refinement of choice was a really big one for me. And that came about in Ready 2, which was something that we started in 1998. By 2001, it had closed. The idea for it was a portal for women with fashion and clothing and beauty. We just couldn't get to the profitability, because there wasn't enough traction online of being able to do a transaction so you could take a commission, so it didn't happen, but I loved it. Susannah didn't love it, because for her, she loves more the creative side of things.

We then did television and spent ten years doing TV shows around the world. And during that time, we had an agent. I also was more of the kind of driver of the business side of what we would do next. I’ve got lots of beeps by the way going in this podcast because as much as I love tech, I cannot for the life of me get my notifications to turn off on this laptop. I will apologise for the beeps. I'm trying to get Slack to quieten down, but it's not going to happen.

So, there was that moment, after about 10-15 years working with Susannah where we both felt a fatigue with what we were doing. I think I will never stop loving the concept of making over a woman. And by that I don't mean make somebody who looks bad look good, but just moving their sense of how they see themselves.

Then I had this idea for Trinny London at the back of my mind, and I didn't realise until I look back at certain things, and people remind me how early on I had that idea.

And in those last few years of making over women in every different country, I would be in Poland using Inglot makeup, and then I'd be in Israel using MAC and then somewhere else, I noticed the team of makeup girls would always do the same look on everyone and I felt that I kept saying to them, ‘Look, they have all have a different skin, hair, and you must look at colour palettes and look at how you can put them differently on women.’ And I felt that was something that really didn't exist, that level of personalisation. And I also felt that it's something that really didn't happen in store.

I thought, okay, it's going to be online. And by the time I made that decision, I'd started developing with an SEIS scheme, I'd gone and I thought, ‘How can I raise some money?’ I was really coming to the end of my royalties from the different shows I'd done. Probably I was the most broke I had been in 15 years. But sometimes that's when you got to do stuff. With the SEIS scheme, you can raise up to £150,000 and it's 50 per cent tax back. Two people who were kind of committed to me as a businesswoman, they knew I had a good work ethic, a friend of mine’s mother and well, one of my daughter's friends. The mother who I didn't know that well, but was in beauty. She runs beauty at Mintel research, and my daughter's Godfather, both believed in my work ethic. So I asked them, and they put in £150,000 between them.

I then had the opportunity to explore. I think if you look at all different entrepreneurs, they either start tiny, and every time they get a tiny bit of revenue, they invest in something else. And I think the younger you are, the easier that is to do. But I was 50 when I started this, so I knew I needed to really accelerate to get that proposition out there. I raised that money – probably the most expensive money I raised in terms of the percentage of revenue I gave away, the percentage of the value of the business I gave away for that. But I wouldn't have got it got off the ground. And one thing I've learned in life is you must never ever regret any decision you make.

I got to that point and I think then I knew from what I'd learnt in the past with Ready 2 is I had felt an inexperienced businesswoman so I had hired what I deemed to be really experienced people in their field. The CMO I paid at that time £100,000 to because I'd raised £7m for Ready 2. I hired a CEO who came from Barclays, because I thought she'd be a good – CFO, CEO background – and a lot of other women who were in quite high-powered tech. There was a huge amount going out in salaries and a really high burn rate per month.  

I knew that with that £150,000 I've got to do a really good business plan, I've got to show a prototype, I've got to show where I'm going to get it made, I've got to show how I'm going to make the money. And I was building up a little social media following. I'd started on it – I realised I just wanted to do video because I come from television. And it was gaining traction. By this stage, I had a very nice guy called Mark who became my COO, and he had a CFO background.

When we were doing those spreadsheets, which any small business, you spend days doing those projections, months doing those projections. People can do crazy projections. And I kind of knew, I wanted projections that, when I went into an investor meeting, I could say, ‘This is really why I believe I'll get to that revenue in 2020,2021 and 2022.’ We did it as a percentage of a conversion of my social media following. And as that social media following grew, we felt that between two and two and a half per cent of those people would buy from the brand.

And now, three years later, the valuations are actually probably double what you said, because we've had huge growth in the last six months. But it's been based on that, there hasn't been a huge amount that's changed. I hired that middle management, that C-suite, a year and a half into the business. I hired a CMO. I hired a strategic CTO, I have a very nice CTO who started with us early, but he was more he's now head of development. And I hired an MPD. And I was at the stage where I got enough revenue in and I thought I can sustain those salaries. Because otherwise all you're doing is earning money to pay the salaries, and I wanted to earn the money for growth.

Absolutely. As you there are a few different things in there that I'd like to pick up on. First of all, women investors, especially when they're pitching, they have a harder time because they’re often all-male panels or a majority male panels. What kind of unique challenges did you face, being a woman but also being a woman in her 50s?

Trinny: I think the challenges I face were those two plus somebody who was known, but known in a different industry. That might have got me the meeting, but it was oddly prejudicing in other ways. People put you in a box. And we think in the press, they make assumptions. They don't know what you're like as a businesswoman, they've just seen you on television, which might seem to investors a light-hearted industry.

There's a sort of double importance to make them appreciate and understand that you will know how to run a business and get the right people at the right time to support you in running that business. I probably went to see 22 VCs before I had somebody say. ‘Actually, I get it.’

I always thought I want to be more than a makeup brand owner. I want this to be a community for women to feel good. It was about having every age represented, every skin tone represented, every type of woman could feel that she could identify with what we were offering. So convincing investors of that, instead of our target market is 18 to 34. Because many investors said to me, ‘Love it, but can you just skew the whole thing and do it for the Millennials?’ And I was like, ‘No, to me, the gap in the market is 35 to 55.’ It's for everyone, but this is a huge gap. So I want to definitely have over 50 per cent of my customers from 30 to 60. So I just felt that there was this real untapped market in a very, very crowded area. Yeah. And you've got to stick to that vision

I think if I look at the difference between what Trinny London represents and what Trinny Woodall represents, they're not all the same customer, but a lot of people from Trinny will convert to become a Trinny London customer. And there's a lot of people on Trinny London who don't even follow me, so I love that.  

We have these Trinny tribes that have stopped around the world and about 70,000 women around the world who are part of our Facebook tribe, which is in their area. And that, to me, is that other part of the business when I say that Trinny London isn't just a makeup brand.

I think that the word ‘community’ has been very overused in brand building, because it might have been started by some men in dark suits in a room of a very commercial business. I think community has to start organically. And then you have to feel how can you harness what is in fact, a sort of fan base, a passion? People are the most passionate about your brand, how can you harness them? It's not going to become a multi-level marketing business. That's not what we are. But how can we make them feel good about the fact that they, for free, love to chat about Trinny London?   

Yeah, you were saying as well, one of the problems you had earlier on was of personalisation and reaching enough women and even on What Not to Wear, in a series you can only do maybe six people at a time. Whereas with social media that's completely revolutionised that and you can have a much broader reach now.

That has brought about the Trinny Tribes on Facebook. I'd quite like to know, was that part of your plan originally? Or did that come about organically?

Trinny: I think that the very original Trinny Tribe were people who follow me on my Instagram. And some of those were like, ‘Are you the person who used to be Trinny of Trinny and Susannah? Yeah, I used to be that person. Now I just do my own thing. And they follow that.

There was a woman called Kelly in north west England and she just started a Facebook fan page. And she took a bit of our logo and called it Trinny Tribe and said if there’s anyone else who’d like to know what she's doing at the moment and follow her. This is, as we launched the brand, I mean, literally, maybe a tiny bit before. These people started joining. And then somebody said, ‘Well, I'm in London, I might start a London one.’ And so we saw our logo on Facebook, or a picture of me or a bit of yellow, really random little things that you put on Facebook.

And so we thought, ‘Okay, well, what we can't have this very fragmented interpretation of our brand, because it sort of dilutes what we are and, and in a way there is an association there with the word ‘Trinny’.

We approached the admins, and we said, ‘Look, we just love what you're doing, would you like to be more connected to us, and we can give you a nice logo for your area and think of ways that we could… you could come in for a drink occasionally and it’d be lovely to meet some of you.’ They were very excited. And so that's in a way how it began.

And then we assigned a woman who did a lot of stuff on social media called Paris, to be the contact for those people. We then said, ‘Look, we think admins a horrible word, let's call you ambassadors, or ambassadresses.’ So they love that too. We have some of them in unit for a little brainstorm, what they liked about things and what they'd like more of, just so there was that feeling that they are a part of the growth of what Trinny London represents.

Yeah, exactly. I know I can imagine that over COVID the habits of beauty consumers has changed because Trinny London has quite a soft, radiant glow-y type of makeup which people are actually saying is quite good for Zoom calls rather than something that's very heavy that you'd see more on a night out. How would you say that your customer base has changed over COVID? Is it more people who would be going to the makeup counter who are now looking online?

Trinny: For sure.

And as you were saying there is a certain advantage to having the social media videos because you bring in the people who are less seasoned when it comes to makeup, maybe want to try and explore it a bit. They have tutorials on how to layer different pots.

There are a couple of things I would like to talk about before we wrap up. First off, within the beauty industry, we see a lot of influencer marketing but with your Ambassadresses is there as much a need for that? What kind of role does [influencer marketing] play?

Trinny: it's interesting, in a way, because I have across Instagram and Facebook, about 2m followers, I am to an extent an influencer. And because Trinny London is my revenue stream and my brand building, I've never done any deal with anyone. I talk about Zara a lot on my own channel, because I think it's the most internationally available. And I talk about what I love.

I was very reticent [about influencer marketing]. When we tried very early on, we worked with rewardStyle. And we paid – what for us then – was a fortune to get them to select the people they thought were good influencers, and I found incredibly low conversion. I think our strategy has been far more that when we look at for Facebook advertising, for example. Facebook advertising has changed their algorithms, so that instead you can still designate an audit audience. But they can also say, ‘Okay, we'll take control of that earlier stage.’ And we will find the algorithm of the people who are buying from you already and match it and do their weird magic, which… it's a computer teaching another computer to teach another computer, it's like a dark hole.

Any brand that's going down that route, and deciding to do it, and I do think it's a far more successful route for the influencer route and for our brand, is the importance that these shouldn't really always look like ads. And because people are engaged by something that grabs them that they think is something they're going to learn from. So sometimes you and I would look on our feed and would see an ad, it will grab us, because it's a really clean ad, it's like this will clean your teeth better than any other toothbrush. And you're like, ‘Okay,’ but some other things need a story to be told. And sometimes you think you've got 30 seconds to tell that story, or you've got five minutes to tell that story.

But some of our most successful ads on Facebook are just actually women saying, ‘I'm trying this’ and they're telling their story. We have a lot of content, we have at any one time about 200 ads running on Facebook. And that is a strategy that was implemented when our CMO joined us, Shira. Because she said, ‘Look, we really want to put in the marketplace a lot.’ And everyone is going to be attracted by a different bit of content. I think there are some good influencers. But generally, an influencer is a business. And we must respect and appreciate that as a business. But I think to be a really successful influencer, you have to have a proportion of your feed being, ‘This is what I really love, and there's no ad or whatever involved.’ And when you see an influencer, where it's basically ad or affiliation, ad or affiliation, that’s it, there's no objective, ‘This is what I really think about the product.’  

The other problem we've got as consumers is magazines are drying up and magazines are going online. The concept of the war between advertising and editorial, which used to be quite strict in a magazine, is very blurred online. Because magazines need to make a revenue, and the revenue is they write an article and the user clicks through and they have an affiliation to that product. And that happens whenever I'm on any magazine. That's a revenue stream. We know that if we read an article in a magazine, and these are the top 10 there'll be a click through to all of them and the magazine is making money because that's the only way they can make money. They are an influencer on a grand scale, but they are still getting the cut like the small influencer is getting a cut, so I'm not sure.

But to answer your question in a very long-winded way, for our business, the influencer model is not the right model. There are beauty businesses in Germany, there's a young beauty brand called Bananas or something I can't remember, it's quite often young brand, like a Glossier but younger. And their model is a purely influencers. They put all their revenue that I might put into Facebook into 200, 300, 400 key influencers and it's very successful with them. Is that an age thing or an attitude thing? I'm not sure.

Anna: I guess knowing your business as well. I mean, it's going to be different. You're going to have different target audiences, you'll find them in different places. So I definitely think that you do what's right for you.

Okay, last thing I'd like to talk about is the the future of Trinny London, and where it's going. Match2Me is a huge part of the overall brand. Do you see yourself moving it on a bit? Say, with augmented reality. We were seeing it with L'Oreal, having apps that you can put makeup on your face virtually, things like that. Do you ever see Trinny London going that way?

Trinny: I think that's the fundamental difference between what a lot of brands did during COVID is they did virtual trial, because they knew all their customers wanted to try. Virtual try-on to me, to date, is still gamification. The majority of them come with filters. And it's kind of, for some women, it's like, ‘I know, I'm not going to look like that, because they've made my face perfect.’ Is it just a fun way to play? And would it make me buy the lipstick?

On some brands, the conversion is great, because it's catering to an audience that already is building and doing filters on Instagram and Snapchat and TikTok and therefore, they love it. And it kind of makes sense.

I think Match2Me is unique, because there is no other beauty brand that is actually saying, ‘Let's look at your skin, hair and eye. And let's look at the refinement of choice of colour that suits you.’ I think that can't be replicated. I mean, I haven't seen anyone do it. And I've been working with four or five different augmented reality and virtual trial brands and have come to the conclusion that, in fact, we are going to develop something internally. Because what I see is very set out of the box plug-ins, and I want to do something which is a step ahead of what these people are currently offering.

There is a huge, very interesting opportunity for brands to really personalise and personalise to their customers. But I think there's going to be cleverer ways than just what is still a little bit of gamification.

Anna: So, something that perhaps isn't on the market yet?

Trinny: Not on the market yet.

Anna: Well, that sounds like a good place to wrap up. Thank you for coming on the podcast, Trinny. It was great to have you on.

Trinny: It was lovely to talk to you.             

You can find out more about Trinny London at trinnylondon.com. You can also visit smallbusiness.co.uk for articles on starting a business of your own and building social media communities. Remember to like us on Facebook at SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lowercase. Until next time, thank you for listening.

In this episode I talk to Merlin Griffiths, pub owner, mixologist and bartender on Channel 4's First Dates.

We discuss current difficulties in the hospitality industry and how you can cut your costs. 

You can also visit smallbusiness.co.uk for more on running a hospitality business and the latest COVID-19 measures.

Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case.

We've paired up with Smart Energy GB to bring you this episode. 

Would you prefer to read Merlin Griffith's podcast interview instead?

Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I’m your host, Anna Jordan.

Today we have Merlin Griffiths, pub owner, mixologist and bartender on Channel 4’s First Dates.

Merlin grew up in Cheltenham, Gloucestershire. He used to own the Priory Tavern in north west London, with his wife, Lucille. These days he runs Maltsters Country Inn, located in Badby.

Cocktails are a staple speciality on Merlin’s menus as he’s been a bartender and mixologist for 20 years.

He first appeared as the bartender on First Dates in 2013 and the show is currently on its 14th series.

We’ll be finding out a bit more about him as well as the challenges facing the hospitality industry.  

Anna: Hi Merlin.

Merlin: Hi Anna, thank you for having me. How are you doing?

Anna: Of course – I'm doing very well, thank you. How about you?

Merlin: Yeah, yeah, all things considered, well, I think, yeah.

Now, many of our listeners would recognise you as the man behind the bar on First Dates. Tell us more about how you got into the hospitality industry and then onto the show.

Merlin: Hospitality – what a trade to be in! It's one of those things, isn't it? Do you plan to go into hospitality? Some people do they really do? I don't think I did.

I was quite young, when I first started working as what we call a barback, up in the West End of London. I think I lucked out by getting into the right bar at the right time. This was just as that cocktail renaissance was starting to happen in the mid-90s. Yeah, for me, I mean, it was one of my first jobs in London. I was just happy to have a job really, to work all hours all days or, yeah, do just about anything necessary. You know, it wasn't probably until about five or six years in and you start going, ‘I'm still doing this?’ This is more than just a stopgap of a job, isn't it? Yeah, I think this is now officially a career. And yeah, that's where it's led to now via corporate money.

I had a good stint working for five-star hotels out in India for Taj hotels. I was living in Bangalore for a good while. From there, I was headhunted into Bacardi Global, as one of their global ambassadors for Bombay Sapphire gin and Oxley gin at the time. That was a great experience – almost four years bouncing around the world teaching people how to make martinis and from there into pub ownership. It was at that point where we suddenly thought, my partner and I, we’ve been looking at this, and especially on my travels – I've been in America loads – I have this idea that a good American neighbourhood bar, you can still get a really well-made Cosmo or Margarita as well as decent draft beer. And I had this idea that why can't you do the same in a sort of a British pub setting, you know, the cocktail side of things, the drink side of things shouldn't really be mutually exclusive. Cocktails and cask ales, quite literally. So that's sort of where we started cocktails and cask ales and no screens and no machines, because I decided there were enough TVs in pubs at the time as well. Pubs should be sociable. And so that's what it led to that.

And it was while doing that, there was a job advertisement for Channel Four. They were looking for a bartender. That's it, it was literally advertised as a job and I was like, ‘Okay, I think I could pull out a small amount of time to have a go at that too’. And I was lucky enough to land it – it’s a fantastic role which I've really, really enjoyed.

Just out of curiosity, how do you get headhunted as a barman? What kind of things are they looking for and who approaches you?

It’s an odd one, you see, because the social media side. You go online these days and you can find loads of really good bartenders up and down the country and all around the world. There's a really developed network nowadays. But we're going back ten years and it wasn't as developed as we know it now.

For me, moving into the job of First Dates, for instance, I was very lucky thanks to the Bacardi Global support. I've done a whole bunch of videos of online training and bits and bobs for them at the time. If you if you literally just search ‘find me as a cocktail bartender’, there were about three pages of me making nice and dry martinis, and Tom Collins [cocktails] and so on and so forth. So really, I think, you know, a certain amount of luck, but at the time. These days, you really have to work hard for it.

Anna: I imagine it's not just the showy, throwing bottles over your shoulder and setting things on fire, either.

Merlin: No, but that's also fun. Obviously, I was never much of a flair bartender. For me, it always has been about customers and customer service. That's the real key for me as a people business. And I've always said that. The clues in the name hospitality: we’re hospitable. And that's genuinely what we get up to here. It's not about how well can you can mix a martini or how well you can keep your cask ale, all of that. At the same time though, what's really important is how you deal with people, I don't like to use the word customers – ‘guests’ is better. You know, how you deal with your guests, who become friends as well, your local community, especially in the pub game.

There is loads to think about when it comes to running a pub. When you took on Maltsters, it was in pretty bad shape when you took it on. How did you turn it around without blowing your budget?

Merlin: Slowly but surely, evenly divide the task up piecemeal, otherwise these places can become. Anyone who's taken an old pub or an old, an old tumble-down pub. Why call nil-premium size, anyone who's done that journey knows what I'm talking about, when you have to divide up the task because otherwise it can become overwhelming. Unless you've got unlimited budgets and contracts as to throw it all in one big hit, which let's face it, most of us don’t. I know that at small business level we tend to sort of bootstrap our way up.

First things first, yes, I'm going right what obviously, I need to get the kitchen, clean, comfortable, hygienic. Once you do that, we need a basic bar and trade area. So they're the first two things you look at, then we start looking at upgrading the function room, then we start looking at doing the gardens, then we can start looking at doing any of the letting rooms that are available here and things like that.

Slowly but surely, now we're only just over three years into our journey here. There's still lots more to do. But you just take it one chunk at a time and make it manageable.

One of the things I noticed when I was looking around was that the TripAdvisor reviews before you took [the Maltster] on were also not great, they tended to be one star. How do you recover from these kind of bad TripAdvisor reviews (or other platforms that are similar)?

Merlin: I don't know in all honesty. I don't really keep an eye on that side of it. I'd rather keep my eyes on the people that are coming in and the customers that I do have. I think it is as a small business, it's a whole other job managing online and especially getting involved in managing reviews. Some people do very well at it, my hat goes off to them. I decided that my efforts are better placed elsewhere in the business, in looking after those people that I can see in front of me and those people that phone me here to make bookings.

Anna: Do you think it was worth would be worth hiring a separate person altogether to deal with that side of things?  

Merlin: If you can afford it. I don't know if I can! I mean, that's what sort of segways neatly to the work I've been doing with Smart Energy GB as well with this guide advice. I mean budgets are tighter than ever at the moment. Crikey. 

You’ve been vocal on Twitter about how the government has been handling measures affecting the hospitality industry during the coronavirus pandemic. What do you think of the action being taken and what measures would you like to see?

Merlin: Honestly, I don't think it's my place to say yay or nay. It's too easy to bash any point of view that people might have at the moment or any approaches that have been taken, realistically, as a small business owner from talking, honestly, so much of it's out of our control. And so much of it is out of my control, at the end of the day, whether I agree with things or not.

And in all honesty, what I've really spent since March and up till now doing is looking at what I can control, because it's so easy to feel helpless in these situations. It really is, you know, when you're faced with ever higher hurdles to jump, ever more onerous bits of legislation to go through. But with the help of peers as well, I stay in touch with a large network of publicans these days. One of our groups, we've got about 250 of us chatting away. And it's lovely to be able to bounce ideas off each other and get advice about ways of doing things. This helps you feel more in control, honestly. That's really useful. Because otherwise, it's very easy to get quite down about the whole thing, angry and shouty, or just generally depressed and withdrawn. And, yeah, it's tough. I'm not going to say it's easy. But nonetheless, by approaching this with the idea of what can I control, it certainly makes you feel a little bit better.

Ordinarily, I’d be asking about what small improvements hospitality businesses can make to improve and grow, but unfortunately the situation is different right now. What advice do you have for these business owners to get through this time, both professionally and personally?

Merlin: I'll start with the personal one. You know, honestly, for me, do one non-work activity that brings you joy, at least once a week. Honestly, it really does feel like we're hardwired to work 24/7, but it is important to try and do that one thing that's just for you, however much you convince yourself that there isn’t time. I cycle – that's my thing. I'll take a couple of hours each week and go for a long ride. I'll get, you know, I'm really sorry. I'm one of those weirdos who dresses up in Lycra.

Anna: Oh no, I’m a keen cyclist myself – no judgement here at all!

Merlin: I don’t know what age you turn into, what do they call it, a MAMIL (Middle-aged Man in Lycra)?

Anna: You’ve got time yet!

Merlin: Good, thank you. But honestly, seriously, what I say just do this one thing that brings you joy, even really, if that's something as simple as pulling yourself down to the local park, right, sitting on a bench in some peace and quiet with a cup of tea or coffee and reading a book or doing the crossword, whatever it takes just to try and remove yourself for a moment. It's incredibly important.

I think whether people realise it or not, there's this underlying bubbling stress and tension, and especially more so as a small business operator these days. In the survey work that we've done here, as well as 69 per cent of changes in their financial situation has led to negative impacts on their mental health.

So, all of that needs to be dealt with, somehow, it really does, before it bubbles over. You can't hold it in. Talk to people as well, you know, utilise your peer networks, really. Friends are really wonderful if you've got a good friend and will listen. But sometimes there are sector-specific things and business owner-specific things. It does help to talk to other people in the same situation in the same boat. Try and get involved in some of the groups that are out there, you know, maybe just to vent a little bit and get it off your chest.

Anna: Yeah, I think as a business owner, sometimes you're inclined to put other people, namely your employees, first.

Merlin: Always employees. They're like a little family. Honestly, they're extended family. Any small business person knows that, they're the biggest asset you have in your business, your team, your staff, your people. You’ve got to look after them.

I mean, in March that was that was the first thing was stressed us – what are we going to do, that stuff we need to make sure they looked after? Like many of us, we looked at our cash flow and thought, ‘Oh, crikey’. Well, it's going to be a while before we get the furlough payments into pay them. So how do we go about this without also bankrupting the business? The true way to look after my staff is to make sure that they've got jobs to come back to as well. You know, and so yeah, we had some very frank and honest discussions with our staff, and they were absolutely brilliant. They worked with us and completely understood. I think we were incredibly lucky to have the team that we do, we really are. I love them all to bits.

We've seen on the website that with the increased rate of redundancies, more and more people are interested in starting their own business. What would you say to somebody who wants to start a hospitality business?

Merlin: It's hard work but go for it. Honestly. Put in the hours and you get the rewards, quite frankly. It's a great trade to be in. I think it's an absolutely great trade. I've been there – 25 years now behind bars and involved in hospitality in one way shape or form. And ten of those as a landlord. It is absolutely tremendous. I'd say that's awesome. Do it. You know, ONS stats say that 99.6 per cent of British businesses are classed as small to medium businesses.

Anna: Most are micro businesses too.

Merlin: Yeah, most of those are micro businesses usually. So, best part of six million. It was Napoleon quote who said Britain is a nation of shopkeepers, wasn’t it? Yeah, that hasn’t changed. You know, the small business is what makes this country tick. It absolutely does. It's so incredibly important. Absolutely important. And it's not just that, and it's not just the standards we hear about, you know, jobs in the economy and so on. This is families, livelihoods, children, the socio-economic impact here at a macro level is really far-reaching is incredibly important. It's really easy to sort of get the view these days that Britain's dominated by big business, but of course, they've got marketing budgets, and that's why you hear about them. But really, as you can see from those statistics, 99 per cent it's small to medium – all hail the little guys.

I'm going to head back – we started this or with advice as well for small business owners. Let's have a look. What else have we been recommending to people? Controlling controllables is what I wanted to touch on, really. Rent, this is a really big one, but you've got to open conversations with the landlord, haven't you at the moment. Trust me, it's tough to keep calm, but you have to keep calm and do that with a level head.

Yeah, again, staff you need to control. This is looking after them in the best ways possible. And now if you're doing this alongside changing your business as well, hopefully, maybe you could find other ways to pick up some hours for staff if you're been exploring the possibilities to go.

Normally I serve a bit of food or a bit of drink, but suddenly, well, now you start looking at your site going, ‘I got a licensed A3 space, it's a commercial site. What else can I do with it?’ This hopefully brings out new work, new workflows, new ways of operating, whether that's local groceries, setting yourself up as a sub postmaster, you might do local deliveries, hot takeaway, cold takeaway, there are so many different bits and bobs going on here. There are operators even doing full meals to cook at home from their kitchens, bathrooms being sent out, that there are so many different things.

But these are good ways to assure your business so you can provide the hours for your staff. And then you start looking at utilities, get a handle on utilities, and honestly, there again, they're an important part of what you do. And this is where you get into this idea of marginal gains. I'm a big fan of marginal gains, they are a great thing as long tail effect, because if you do enough of them, they actually start adding up to be a significant gain for your business.

Anna: If people want to make those marginal gains, how would they go about that?

One of the clearest easy wins, contact your energy supplier and see if you can get a smart meter. I think it's a really good, sensible thing to do. up to date information on how your business is running and how much things are costing is essential now more than ever.

This is more than just turning lights off. You could start controlling your stock levels, your exposure, and that sort of sense. Tighten up your menus to focus on the crowd pleasers and the profitable dishes and so on.

I want to know how much stuff costs to run now, I really do. I've got a sneaking suspicion that I'm going to be able to save a fortune on extra kitchen extracts and some of the electrical hardware in the kitchen, especially, you know, I'm interested to look at when my chef turns this on, when he turns it off, is it actually necessary at certain points If I can save maybe eight to 12 hours’ worth of electric a day, and trust me, you're talking high kilowatt devices here. Ronnie, you know, he was running an electric pizza oven, for instance, out there, they know this is a 12 kilowatt device. Yeah, this isn't small beans we're talking about anymore.

These are ways of controlling what you can, knowing that you've trimmed the fat, made your business lean, all those little these things, again, tend to be little things that are going on.

They also tend to be at normal trade times, tends to put these things on a back burner – ‘Oh, yeah, I must have looked at that one point’ or they’ve got a whiteboard in the office or a Post-It note somewhere or a to-do list or what have you. And you sort of eventually get around to them. Now is the time to dive into all of that stuff and start getting a really good handle on what you do and the way you work and being prepared to change as well. We all have to adjust.

Anna: Yes, it’s also amazing what some small business owners have done in adding in new kinds of services.

Merlin: Yeah, it's fantastic for the rural side of things. I'm loving the fact that loads of rural pubs, for instance, are reinstating lost village services like post offices and shops. The fantastic thing is if you look at them as standalone things, I can see why they largely closed in a lot of small villages. It's very difficult to make a profit as a small village shop, given the cost of renting a building, and so on and so forth these days. If you're already doing that as a pub, and you've got the space to expand to a retail offering, right now it's a given win and you're engaging with your community now in new ways, by restoring the services, it’s fantastic.

Let's not forget a lot of rural communities as well have people who will be shielding in certain ways or you know, just sort of largely keeping out society's way. So, a chance for them to literally just be able to walk down to the end of the street and get a bottle of milk or something without having to go into town is huge for them. Absolutely huge.

Anna: Is there anything else you'd like to add?

Merlin: I tell what I will add. Really plug into these hospitality networks, the industry networks, take advice where you can get it, speak to your accountant. If you don't have an accountant, take free financial advice from your bank as they will always be happy to give it, but wherever you can, take that advice. The more people you speak to, the more you suddenly realise you're not alone in all this. And there are ways still to sort of keep the glass looking half full, even though it may look half empty, if I can be so frank. But we are, as I say, creative, resilient, adaptable, this is hospitality! Challenges are something we routinely rise to, something we're very good at overcoming in this business.

Anna: Well, that seems like the ideal note to wrap up. Thank you very much for coming on the podcast, Merlin.

Merlin: Thank you so much for having me on, Anna, thank you.

Watch Merlin in First Dates on Channel 4’s catch-up service, All4. You can also visit smallbusiness.co.uk for more guidance on COVID-19 measures and running your hospitality business. Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case. Until next time, thank you for listening.   

In this episode I chat to Charlie Mullins, founder and chairman of Pimlico (formerly known as Pimlico plumbers).

We talk about how to build a customer base in the early days and upcoming IR35 changes.  

You can also visit smallbusiness.co.uk for more on running a family business.

Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case.

Would you prefer to read Charlie Mullins' podcast interview instead?

Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I’m your host, Anna Jordan.

Today we have Charlie Mullins, businessman and founder of Pimlico Plumbers, now known as Pimlico.

After finishing an apprenticeship in plumbing, Charlie launched Pimlico Plumbers in 1979. He started out with a second-hand van and a bag of tools, gradually building up the business. Pimlico reached a £1m turnover in 1994 and currently has a turnover in excess of £50 million. In 2015, Charlie was awarded the UK’s first OBE in relation to plumbing.

Earlier this year, his son Scott took on the role of chief executive while Charlie went into the role of chairman.

Anna: Hi Charlie.

Charlie: Hi Anna. Thanks very much for having us on. Been looking forward to this so I’m very excited, thank you.

Anna: Great stuff. How are you doing today?

Charlie: Very good. I’m in Marbella in Spain at the moment and we have a small business out here – also to do with Pimlico – and yeah, life's good.

I'm going to come back right to the beginning of the business, and a lot of our small business owners are in the early stages themselves. And I'm sure they're wanting to know how you built up your customer base in the early days, especially without tools like social media.

Charlie: Yeah, well, thinking back then, back in 1979, I finished my apprenticeship and had been working as self-employed, and then started working in the Pimlico area. I started getting repeat work and that undoubtably, whatever service you're offering, is quality of service. That's what's going to get you customers and keep you busy. I have to say I was a pretty good plumber and offering the service to people required.

It starts with word of mouth and then other people will recommend you to other customers. I  quickly learned that the art of it is to retain your customer and back in them days, I think I was working on that basis, and you go to these customers regularly, and that would just sort of get more and more. I quickly learned that it’s retaining a customer that gets you through. First of all, it gives you a customer base, and then it gets you through any difficult times that you may like recessions or lack of work.

As the business has progressed, we have a policy now at Pimlico once you’re a Pimlico customer, we work on the basis that you’re a Pimlico customer for life. I would say to anybody starting out, retaining your customer is the way to build up a great customer base.

What is the secret to retaining the customer?  

Charlie: Quality of service. Quality of service can mean many things: turning up on time, dressing correctly for the for the job, having identification on you, be very transparent in what you're doing, make people aware of your rates before you start, get the job done, tidy up after you. And I think in general, just your sort of behaviour in somebody’s house or for a customer, just be as professional as you can. That could be whether you're in their house, or you're running a business from the internet, or you're sort of got a shop or whatever you got. Undoubtedly, the way forward is quality of service, whether it be a product, whether it be something you're fixing, something you're selling, it's all about quality of service.

Anna: I think part of the reason that you became successful was there is a bit of a reputation for cowboy plumbers back then and you wanted to set yourself apart.

Charlie: Yeah, well, again, I had the idea that, I thought that when I first started Pimlico that I was doing anything clever, I just thought it was common sense things. I know common sense isn’t that common.

I wrote a list down of all the things – or not all the things, but about 20 items that I've heard over the years that customers get unhappy with a plumber. You can do that in any business you're in. Find that what upsets customers and just do the opposite. So, customers used to be very unhappy about a plumber not turning up on time, not finishing the job, leaving a mess, not clearing away any rubbish not being transparent, making excuses why they're not a job, so I thought just done the opposite.

In business I’ve also learned to be honest, if you're not getting there because you've got delayed or you're running late or you can't make it, be honest with the customer. Not keep making excuses about ‘I broke my arm’ or ‘my van’s broken down’. I've learned is that customers don't want excuses. They want results.

I understand that financing is essential to the running of a business, especially when you're trying to grow. I know that when you're trying to expand Pimlico plumbers, back in 1990, you sought out help from the bank but unfortunately, they turned you down. Can you go a little bit into what happened there and how you overcame it?

Charlie: Yeah, well, the business in 1990 was going okay. And what I wanted to do was buy a different premises to operate from, a larger premises. Basically, I went to the bank and they and they lent me the money to buy this property – it was about a quarter million pounds, this was December 1990. Everything was going great. They lend me that money and then around about April, all of a sudden, the recession’s kicked in, maybe I wasn't that aware of it. The recession kicks in, and then the bank basically comes down, I was getting in difficulties with run-ups and debts and didn’t get on top of things.

They came down to reassess the property to see whether I could get some more money on it, keep things going. They actually went the other way and told me it's not worth a quarter million pounds now – that's worth £50,000. So, I’d ripped it all out to refurbish it for when we were going to move in, and all of a sudden, it was a property not finished.

Basically, I was trying to get an overdraft and keep things going, or even a loan, but they weren't having none of it. If anything, well, they just went the other way. They said, ‘Look, we want our money back.’

And I know people think they can't force you into it, but I borrowed it on another property that I'd owned. And they said to put that property in an auction and I’d get £45,000 for it. Well, I didn't do that. I sold it for £90,000 in the end. With the property that I had in the I was borrowed the money for, they told me to sell that and give them the money I get on it. Well, I didn't listen to them. Well, I don't like banks anyway, they’re crooks in suits – they lend you an umbrella as long as it’s not raining.

Anna: I think people do underestimate the power that banks have, especially in situations like these.

Charlie: Well, what you mustn't get into is a situation where the banks running your business, telling you what you can do and what you can't do. And they were difficult with me so I said to myself, ‘I need to get rid of you people’. So, we carried on working, sold a few bits and pieces, made a lot of changes in the business and got rid of the bank.

I've changed banks, I don't I'm not sure how good banks are these days with businesses. All I do know is that thing I've been with this bank since about 1991/92. I've never met my bank manager. I never will. There's just no point now – I can't work with them. They just left a bad taste with me, as far as I'm concerned. All I do now with the bank is put money in and take it out.

Part-way through business, you decided to steer away from solely doing plumbing into other services like air conditioning, carpentry, commercial heating services, what kind of challenges did you face in shifting Pimlico's business model?

Charlie: Yeah, it wasn't overly difficult because what I was finding that, with plumbers and engineers, we were sending them to jobs and then customers had a carpenter and needed an electrician, or they had wall damage and needed a plasterer. I just found it so difficult to recommend people because not everybody works on the policy that we work on or the way that we operate.

And again, that what I have to say is that it's only common sense and being very professional. But there are so many bad tradesmen out there – I'm not suggesting that's all over because there's some great tradesmen out there. So, the fact that they kept asking for people, and I wasn't comfortable recommending anybody, we started getting our own people. We started employing a carpenter, employing a builder, employing a plasterer.

When you go to a job, and if the customer’s happy with you, and all sudden, you've got to send a carpenter or another tradesman, they’re even happier with you because it just flows nice. And they know what they're going to expect. If we're running it on the same terms, which we did, and it's just developed from there, we we've got roofers, air con, electricians, carpenters, painters, tilers. Yeah, all in everything, I think.

Were there any sort of changes in legislation or anything related that you had to deal with in taking on different kinds of tradespeople?

Charlie: Well, we've got one set of rules and regulations for everybody, so everybody follows our guidelines. And whatever requirements are needed for electrical work, or gas work or roofing work, there's just a formality. The most important thing is that you've got your rules and regulations worked out and everybody complies with that.

If it's a successful model, then why would you need to change anything? You just follow the same pattern. And to this day now, like 40 years down the line, it's the same thing.

We're seeing with a lot of small businesses right now that they are indeed changing their own business model, say going and taking more of their service online or offering takeaway service at home meal kits, that kind of thing. How has Pimlico adapted to the changing conditions around COVID-19? Because it's not just a central office, you're going into people's homes as well. I can imagine there is more to do in that respect.

Charlie: Well, you're right, the world has changed and it’s changed businesses. And again, you have to improve your quality of service to people. And immediately, what we've done was geared up all our tradespeople that go to people's houses with all the requirements: gloves, shoe covers, sanitisers, sinks in their vans, masks. We've got them all geared up correctly, we’ve also done the same for our office: social distancing, temperature machines we've got in there, all the bits that you need to run proper business.

And I don’t think it's a big deal if you think about it. It's just like a few things that you put in place. Unfortunately, a lot of people with things in business, they make it too complicated. We didn't stop throughout the epidemic, we haven't stopped and we won't stop. We were allowed to continue working, being essential workers, but we just made sure that it's a safe working environment.

From a customer's point of view, we would bring them up and say that you can just let the engineering leave the door open, you haven't got to be in the same room. He’ll come in, do the job, leave, close the door, then you obviously pay by credit card. And that went down quite well with customers.

That isn't so how much the case now. People seem to be getting a little bit more used to the situation, the virus is out there, but some people are very cautious. And we're doing what we're required to do, and it's welcome.

How do the rules and the guidelines that you give to employees translate to contractors?

Charlie: Look, engineers work on a self-employed basis. Some of them have been with me for 30 years, 10 years, five years, 20 years. There are a couple of differences about holiday, sick pay, but as far as working under their umbrella or working on a rules and regulations, it makes no difference whether you're self-employed or employed, the guidelines are the same. You turn up, you do the job, you do what we want you to do, and that's it. Okay, we've had a couple of problems, but it's no big deal.

Another potential difficulty we will be facing in the future, year is we've got changes to IR35, coming in April. I do understand that there has been some ambiguity [for Pimlico] in the past around contractors’ status and their rights. I'm wondering, with these changes coming in, how exactly will that change the way you operate?

Charlie: Yeah, look, it won't change the way we operate. What it changes is the contract for that engineer. If it says he’s not self-employed, then yes, the choice is PAYE or he needs to go somewhere else, basically.

But again, I'm going to say, I don't think it's a big deal. Unfortunately, if they're not going to let them be self-employed, then obviously, they're not going to earn as much, they're not going to be able to claim so much, sort of tax deductions. But there are pluses – they get holiday pay, sickness and they can claim for unfair dismissal.

But our policy isn’t necessarily, we’re not trying to get rid of people, we want to retain our engineers. We went to the Supreme Court on this where one of the engineers evidently had a heart attack, but there was a little bit more in it than that, I don’t know why he had a heart attack, non-related to work, and he was self-employed for seven years. And all of a sudden, he wanted to take the advantages of being employed. And we knew that was incorrect.

But we went to the High Court and various other courts and it took about eight years, and the end result the Supreme Court came up with that he should have been an employee, but no big deal – we've changed their contracts – the tax people are happy with it, our accountants are happy with it, and we're happy with it. If there's big challenges out there, you just got to try and challenge it that works for everybody.

Contractors have already been hit quite hard by COVID. And I can imagine if employers are less willing to pay increased taxes and contributions, they may be get less work from their existing clients as well. How will these changes affect the balance of employees to contractors that you currently have?

Charlie: Well, it’ll affect the balance. If they can’t be self-employed, then they’ll have to be PAYE.  But I don't think we'll be cutting their numbers down. I feel we can address it accordingly and work on something that everybody's happy with. I don't think that it’s a big deal but in the same token it's just changes. And if that's what we have to do, then that's what we do.

There's a massive demand for skilled workers who can demand good money. I think if you're paying good money, you’re a good company and look after your staff, and keep them busy all year, then people are going to want to work for you.

The last question I want to ask is, as mentioned in the intro, your son Scott has taken over as chief exec. And Pimlico is very much a family business because his children, your grandchildren, are also heavily involved in the business. For our audience out there who have family businesses of their own, how do you set that line between work and family life and keep them separate?

Charlie: This is a difficult one, and I'm probably going to say, working with your family doesn't work for everybody. And if it does, work it’s great and if it doesn't work then it's terrible, of course. How do you keep it separate? I just think that, obviously, when you're at work, I don't think family issues come up, or that you get too involved with family things.

And obviously, when you’re outside of work, you're going to get involved in a little bit of family work things, but I think it's nice to keep them separate as best you can. I didn't really plan anything but when we’re at work and, as much as we’re family, I don't feel that it's the big part of it anymore. In other words, they’re doing the job, they're happy doing it, we're happy with them.

I know it's difficult when you've got talk to a family member about it, but on saying that, most family members understand how you operate, and they follow the guidelines. But of course, there’ll be hiccups, bits and pieces.

I think we have about 12 or 13 members of family there and all I can say that it's great because I think we're all drinking from the same teapot. And it seems to work. But yeah, that's been our uphill sort of tasks. I'm on my fourth wife now!

I’m joking. It can be difficult, but I think pluses outweigh the minuses. Look, you can't run any business, whether it be your family or just other people working for you, without the ups and downs. With any business there's going to be many sleepless nights, there's going to be many struggling for money, but once you get it going, I mean, there’s no business like your own business.

Anna: Of course – I think that's the reason that so many people go for it.

Charlie: Yeah, that’s right, and a lot of people that want to start their own business, they're toying with the idea for years and playing around with it. They say, ‘I don’t know when’s the best time and Christmas is coming and winter's coming’ and it comes every year, and then it's, ‘This is bad, and the banks are not lending and interest rates’ and they ask me when's the best time to start your own business.

Well, the best time to start your own business is when it suits you. You need to get up there and just make it happen, that's what it's about. All the talking doesn't make you a busy business where actual action does, and you’ve just got to get it started. You got a 10,000-mile journey and that starts with the first step, you've got to make that first step in business. It just develops.

I mean, I didn't set out to run the largest independent plumbing company or service company in the UK, I set out just to be a plumber. And once I got the bug a bit of the demand and you can employ somebody, and it goes from there. I say this to anybody starting out or even if you're just a small business, the ways to become successful, obviously, quality of service, I'll always say that's number one. And number two is to employ people take on staff, whether it be friends, family or people you don't know but are believed that you need to employ people to grow your business because this is not about one person. It's a team affair and your business is only as good as the people that work for you.     

Anna: Well, I think that is an ideal place to wrap up, so I'll leave it there. Thank you very much for coming on the podcast, Charlie.

Charlie: That's been good and obviously if anyone wants to check the website at pimlicoplumbers.com, there are some pieces on there.

As Charlie said, you can find out more about him at pimlicoplumbers.com You can also visit small business.co.uk for articles on building your customer base and running a family business. Remember to like us on Facebook at Small Business Experts and follow us on Twitter @smallbusinessuk, all lowercase. Until next time, thank you for listening.

In this episode I chat to Theo Paphitis, businessman, retail expert, shopkeeper and former Dragon.

We discuss tips retail during COVID-19 and his experiences of surviving school and becoming a business owner with dyslexia. 

You can also visit smallbusiness.co.uk for more on running a retail business and supporting employees with dyslexia.

Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case.

Would you prefer to read Theo Paphitis' podcast interview instead?

Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I’m your host, Anna Jordan.

In this episode we have Theo Paphitis, businessman, retail expert, former Dragon and shopkeeper.

Born in Cyprus, Theo came to the UK at age of seven, living in Manchester then London. He left school at the age of 16 with no qualifications after having struggles with dyslexia. He started work as a filing clerk in a Lloyds of London brokerage, moving on to Watches of Switzerland at the age of 18. He had a stint in insurance then returned to retail, taking on names such as Ryman, La Senza and Robert Dyas. In spring 2011, he launched lingerie brand, Boux Avenue. Since then he’s created the Theo Paphitis Retail Group encompassing the aforementioned retail businesses and the London Graphic Centre, which he acquired in 2016.

In 2005, Theo joined Dragon’s Den and in 2012 to focus on his growing retail empire. He came back for a few episodes last year to fill in for Touker Suleyman.

10 years ago, Theo started Small Business Sunday, #SBS, where entrepreneurs describe their businesses via Twitter. Theo retweets his favourites to his audience to boost their exposure.

Today we’re going to be talking about retail in the age of COVID-19 and what it’s like being a business owner with dyslexia.

Anna: Hi Theo.

Theo: Hello! That was quite some introduction.

Anna: Oh, I know. I tried to shorten it, but it’s just come out as ‘Theo’s done quite a lot of stuff!’

Theo: It keeps me busy.

Anna: How are you today?

Theo: I’m good, thank you – in a very soggy Wimbledon.

Anna: Yeah, it seems like that all over the UK. I’m up in Scotland and it’s much the same. But that’s very much, you know…

Theo: I did refrain from butting in there but thank you for doing that for me!

Let’s crack on. I’d like to go back to – I believe you were 15 years old at the time – you opened up a school tuck shop, so retail must’ve been in your blood from quite early on. What was the inspiration behind that?  

Theo: Well, the inspiration was actually a need. I didn’t even know what retail was. I’d been in shops, obviously, but at that age – 14, 15 – there was a need at the school. We didn’t have a tuck shop. And on the basis that I didn’t enjoy school very much and I wasn’t a model student in classes. When I suggested to the school that they fund me to do so, they jumped at it because I didn’t have to sit in class for too long, being disruptive. I’m sure that was the main reason.

I thought it was a great opportunity, it was great fun. It was great to learn on the job, overcome problems – of which there were many – everything from litter to security to stock control. All the things that us shopkeepers do day-to-day now.

So, your first retail job was at Watches of Switzerland and you sold a Rolex on your first day. Tell me what that was like and how did it spark your love of retail?

Theo: On my first day, it was all very different for me from what I was doing as an office clerk before. There’s no paperwork involved, just loads and loads of shiny things. Watches and all bits and pieces.

I spent the morning having my induction by the manager. And then I was let loose on the shop floor, a customer came in and there I was, extolling the virtues of the Rolex Oyster, that I’d only just heard of barely an hour ago. All of the information that’d been fed into me came blubbering out with some authority. And there you go – I had a sale. It was amazing.    

We know that one of the things from this year is that online sales have exploded – what other changes in consumer habits have you noticed this year?

Theo: When we went into lockdown, I said quite publicly that the longer this goes on for, the more consumer habits will change.

And in fact, within the second week, I could see that digital was accelerating at unprecedented rates and I estimated at the time that we’d had at least five years of acceleration in the adoption of digital in the time from the end of March 2020 until the end of June 2020. Eventually, it was always in our businesses plan, investment in the digital side, that a lot of our business would go online. So, we’d already invested quite heavily as a business.

But the acceleration in those three months was phenomenal. We weren’t expecting to get that level of increase until about five years’ time.

Actually, coming back to that, your business portfolio is made up, as we heard in the intro, of a lot of retail firms that are traditional to the high street. That must mean you have quite a lot of faith in the future of retail on the high street, despite what naysayers might say and an encouragement to move towards more predominantly digital businesses. What would you say to that?

Theo: I think that like many retailers, we’ve got two legacy, very traditional brands in Ryman and Robert Dyas. Robert Dyas has been trading for over 150 years and Ryman for over 125 years, so they’ve been a big part of the fascia of United Kingdom high streets over those times.

But our services within those and the things that we sell within those businesses have changed quite tremendously in that time. And we always anticipated that some of our stores just wouldn’t make it out of the other side. That was always going to be the case. It was just a matter of when. There’s no point in keeping a store open if you’re the last person standing and nobody’s visiting the high street.

Or, in fact, because of short-termism. And, quite honestly, workshy politicians not reviewing the business rates, which in itself has killed so many high streets. It’s not the rent, it’s the ancillary costs. We’d already planned for that. That doesn’t mean we had plans to shut all of our stores – far from it. We just need to make sure that we focus on the stores where there’s a community. That was always the plan and remains the plan.

You’ve talked about an acceleration in adopting technology, do you think there will be some sort of push to reduce or reform business rates [in the longer term]? It’s been talked about for some time.

Theo: It’s been talked about forever, but I use my words very carefully. I use the word ‘lazy’. I use it a lot when it comes to various people that have held the seat at no.11 that just couldn’t be bothered to put the work in to repurpose business rates.

Business rates is an archaic tax from the 1500s. Ye Olde Internet Shoppe would not exist in the 1500s. The Exchequer needs income, of course it needs income, otherwise how are we going to pay for our services? But you can just keep loading it up on what is a very easy tax to collect and then put people out of business because you reach the law of diminishing returns.

They needed to repurpose taxation to reflect the new modern and digital age. It’s very difficult for people paying rent and rates when other people are trading out of warehouses and contributing very little. It needs to be balanced – it has always needed to be balanced – but even more so now.

Of course, since March, the present Chancellor has absolutely done the right thing in suspending business rates, giving a business rates holiday. That expires in March ’21 and it’ll be interesting to see what he does then. I can’t believe for one minute that he would even contemplate bringing them back. If he does, that would spell the demise of many high streets and many trusted names within those high streets.

What do you think should happen instead?

Theo: I think we’ve got to relook at the way we pay taxes. It’s very simple – it’s not complicated. It requires work, but we’ve got to look at the different ways of collecting taxation, whether it’s a sales tax or any other form of tax you put on, that is fair and allows people to trade on a level playing field.

I think that arguably, for a long time, the worry has been the wealthy individuals who benefit from having those business rates and high costs in place.

Theo: The fact remains that, with landlords, we’ve been able to negotiate as footfall has gone down in various parts of the country. We’ve been able to sit down with landlords a lot. We’re taking a lot less money now. If you want us to remain in your store, then we can only afford to pay X or Y and in the main, they’ve agreed.

We’ve got so many stores where the rates are higher than the rent. That can’t be right. And obviously, you can’t negotiate with the Exchequer.

Absolutely. Do you think there are certain types of businesses that would move into empty high street spaces in the future, especially when things start to settle post COVID-19?

Theo: What we’ve seen is the conversion of many high streets into old age people’s homes where they’ve just built loads and loads of retirement homes, sheltered accommodation because it’s in close proximity – right on top of the high street. If that’s what we’re planning – to turn high streets into retirement villages – then that’s a different story altogether because that’s what you’re going to get.

But high streets have really been the backbone of the community. So, you start destroying it and everybody stays in their homes and you’ve got millions and millions and millions of vans driving around and polluting the atmosphere, delivering a £4 or a £5 or a £3 product. Does that really make sense?

What do you think about a digital tax?

Theo: The Exchequer needs to collect income and that’s a great way of doing it.                    

I’ll move on a little bit here. In the intro we mentioned Small Business Sunday which, on the day of recording (October 12th), launched 10 years ago yesterday. In your view, what is the greatest success story to come out of SBS?

Theo: It’s got 3000 businesses at different sizes, different levels of activity. The biggest success story is the fact that it exists, and it allows small businesses and medium-sized businesses, all of a sudden, to get a leg up, get PR, get a social media boost, support for other SBS winners in the network.

It boosts sales. It offers opportunities for them to collaborate. It gets them together at our annual event to hear great speakers, talk to them and inspire them about what the future holds.

Don’t forget that it’s really tough to be a small business – 50 per cent of businesses fail within the first two years. And that’s probably normal because they haven’t got the skillset, the information, the support that they need. Some fail and then go on to run really successful businesses because they’ve learned from their failures. So, the whole gambit of SBS is to try and assist to lower that failure rate and give support and all of the things that small businesses need.

It’s tough – if you’ve got two or three kids and you’re running a business from your kitchen table and you’ve got to balance a household. Where do you go for help when things aren’t running your way? Who can you talk to that’s having or has had the same experience as you? I can guarantee that someone form SBS has and someone will be able to talk to you about it. And somebody when you’re having a tough time is going to be having a really good time and there’s nothing better than to talk to somebody to bring you out of those doldrums and give you that burst of enthusiasm that you desperately need to get you going.

Anna: Sometimes that’s all you need – I’ve seen some of the comments back and forth on the thread and it’s quite the community.  

As mentioned in the intro as well, you struggled at school because you have dyslexia. From the research I’ve done, it seems like people with dyslexia felt discouraged at school (‘you have this, so you can’t do that’) but went on to be successful entrepreneurs because they worked hard at their other qualities, like social skills. How does that align with your experience of school and going into business?

Theo: Oh, that describes me. When I turned 16, they showed me the door. Not because I was particularly disruptive, but because I was a lost cause. I wasn’t going to get any examinations.

Anna: They dismissed you before you even took them?

Theo: No, I did sit a few, but I ended up with great big ‘U’s. In fairness, I did get one certificate, and it was a Scottish certificate in colouring in maps. It was geography. And the reason I say it was a Scottish certificate is because we had the most amazing Scottish lady teacher who worked incredibly but had got all of our attention and made it very interesting. I always call it my Scottish certificate in colouring in maps.

It was clear school wasn’t for me. Even to get through to 16, I had loads and loads of workarounds to try and get my work and homework done. I couldn’t do it in a traditional way. I was always problem-solving to try and achieve what other kids were achieving in minutes. It took me hours.

I always found workarounds to deal with the issues so that when I actually went to work, dealing with issues and problems was a piece of cake – I’d been doing it all of my life. Some kids go to work, who had an academic upbringing at school, sit there and there’s a problem. Now they’ve got a problem. So that was one of the things that I benefited from.

Anna: What do you mean when you say workarounds? Could you elaborate a bit?

Theo: For instance, my first day at work, I had to go with a picture in my pocket. If I’m doing numbers – which I’m not bad at, to be honest with you – I couldn’t remember my times tables. It was a nightmare. But I could find workarounds. For instance, if I needed to do 12x12, it’d be 10x12 which is 120, and two more equals 24. That’d be 144. Or I’d break it down into fives or threes or ones to get there or find percentages.

You always had to find different ways, it takes longer, but you get there.

Anna: Exactly – and that’s what’s important.

Theo: And then the biggest thing that changed my life was computers. I no longer had to worry about spelling or rubbish handwriting. All of these things I could get over, so I really embraced technology very early.

Anna: That’s an advantage in a way, isn’t it?

Theo: It is an advantage – and always has been – hence why I embraced eCommerce and digital and I embraced computers and had one of the first computers. I learned to program because there wasn’t any programs to give me what I wanted. I thought, “It can’t be that difficult, can it?”

It gives you a push. It’s interesting to see that other entrepreneurs like Lord Sugar, Richard Branson and Jamie Oliver have dyslexia as well.

Theo: Well, of course, a lot of dyslexic people are pushed to be entrepreneurs because they can’t get a job anywhere else. The key thing is that that it’s difficult to get a job when you can’t spell or you can’t read very fast.

I can read, believe you me, I can read. Give me a contract and I will read it front to back and I will understand it and I will be as good as anybody else, but it will take me three times as long as anybody else to do. It’s just a speed thing.

Exactly. Fortunately, we are in a better place now, especially in schools with picking up dyslexia earlier on, allowing longer exams and that sort of thing. But if you’ve got someone out there who’s still at school, has dyslexia and wants to be an entrepreneur, what kind of things would you say to them?

Theo: Well, the good news is that it will be one of the least resistant paths open to them. You’ll find it hard to compete in the jobs sector when people have got all of these qualifications and you haven’t.

But all I can say to them is make sure that when you become an entrepreneur, become an entrepreneur doing something that you love and are passionate about. You can become an entrepreneur doing lots of things but find something that you’re passionate about because on those dark, wet winter days, when things are not running according to plan and you’re down to your last few quid, you need that passion, that enthusiasm, that drive, to get you out of it.

And if you’re doing something you’re not really passionate about, then you might, just might, throw in the towel. But it’s about doing something you’re passionate about. That’s the best chance of success.

Anna: Well, that seems like a great place to wrap up. Thank you for coming on the podcast, Theo.

Theo: Absolute pleasure.

Find out more about Theo at theopaphitis.com. You can also visit smallbusiness.co.uk for more articles on retail and supporting employees with dyslexia. Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case. Until next time, thank you for listening.   

In this episode of Small Business Snippets, I chat to John Tusa, author, journalist and one of the founding presenters of BBC’s Newsnight. 

He shares his experiences of the boardroom and how risk analysis and cumbersome objectives can overshadow your organisation's core purpose. 

You can also visit smallbusiness.co.uk for more on leadership and creativity in business.

Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case.

Here's the transcript of John Tusa's podcast interview

Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I’m your host, Anna Jordan.

Today we have John Tusa, author, journalist and one of the founding presenters of BBC’s Newsnight.

He’s served on several boards including The British Museum, the Clore Leadership Programme and, since 2014, the European Union Youth Orchestra. On top of that, John was the managing director of the BBC World Service and London’s Barbican Centre.

Today we’re going to be talking about the secrets of the boardroom, as outlined in his latest book, On Board: The Insider’s Guide to Surviving Life in the Boardroom.

Anna: Hi John.

John: Hi Anna.

Anna: How are you doing?

John: Pretty well, thank you. Looking forward to this, looking forward to talking to you.

Great. So as mentioned in the intro, I’m going to start with your latest book, On Board: The Insider’s Guide to Surviving Life in the Boardroom. In the book, you talk about the importance of having a plurality of expertise, but at the same time make clear that artistic institutions and not-for-profits are very different from businesses. Are there any transferrable lessons from these types of boardroom to the business boardroom?  

John: Well actually, my guru around governance, who was a major American businessman called Kenneth Dayton from Minneapolis, and he said that there is no difference between arts boards and cultural boards and corporate boards and, if anything, my British contacts said that cultural boards are much more complicated than business boards because they have so many different layers of accountability.

There aren’t two worlds, there’s only one world and that is governance and the relationship between the supervisory board and the executive board. And, if anything, arts and culture boards are more complicated than the others. That’s not me saying it; that’s businesspeople saying it.  

Ahh, that is interesting. I understand that, at times, the CEO of a company can also be the chairman [of the company board], but they can be very different roles. How do they differ, exactly?

John: The CEO, managing director – call them what you want – are responsible for management, for actually running the place. And they are also responsible for devising the strategic direction of the organisation. The supervisory board are there to advise, help, encourage, monitor, warn and, if necessary, get rid of the chief executive.

Again, my great American guru, Kenneth Dayton, said that governance is governance, that is, you look after the overall organisation, and management is management – and you mustn’t confuse them. And that is why anyone who thinks they can be a chairman and managing director, is riding readily, and speedily, for trouble. They’re separate functions. Somebody defined the role between the chairman and the chief executive as partnership, but separation. That is close partnership until the time that you have to sack them. That is an absolutely essential relationship – and a tension – but a constructive tension, at the heart of the governance management business.

Right – so this is typically one of the most turbulent relationships you’d find in the boardroom?

John: They can be. But on the other hand, I had at least two, maybe three, very good relationships with either the chairman when I was chief executive or the chief executive when I was chairman. And when you get it right, it is extremely productive, it’s very enjoyable and it’s very good for the organisation concerned.

Let’s be quite clear – any organisation which has a bad relationship between the chair and the chief executive is in real trouble – and I saw several of those. You can’t take too much trouble over getting that relationship right and making sure the relationship is right. One of the key things about it is absolute openness and transparency. I said to my chief executive at the University of the Arts London, ‘You will always hear it from me first. You will never hear rumours and you will never hear gossip. If there’s anything to deal with, you and I will deal with it first – alone and properly.’

If you do it that way, you have trust, you have openness, you have transparency – and you can have a terrific and successful relationship.

For a business owner or director who is fairly new, who isn’t used to the boardroom environment, perhaps is intimidated by it, what advice do you have for them in terms of survival?

John: It shouldn’t be survival, in the sense that it is a key part of the relationship. If you are whatever size of enterprise and you have a supervisory board, the assumption is that it is a constructive partnership. But, as I mentioned before, the supervisory board mustn’t interfere in management. And also, a chief executive must make sure that the supervisory board doesn’t interfere in governance.

It may be necessary sometimes to say ‘look, this is an executive decision’ or ‘this is part of management’ but it ought not to be a relationship of fear and, in any case, the chief executive should always have some idea of who the chair will be bringing on to the supervisory board. The really important thing is that the chair has to make sure that members of the trustee board are there to provide their individual skills, yes, but also to give good overall advice, but not to interfere.

On that basis, it should be positive, harmonious, constructive and lead to the success of the organisation.

How about managing tensions that come up between member of the board – what’s the best way to go about resolving those?

John: It all depends what they are, but if there are tensions between individual members, you might have to decide that one of them is in due course invited to step down.

Or it’s very important for the chair to make it clear if a member is overstepping their mark, being too intrusive, taking up too much time or being too unnecessarily dominant. The chair is responsible for the way the board works and they have to make it clear. I had one case at the University of the Arts London where I was chairman of the court of governors and one of the members of the court was the trade union representative and he refused to understand that he was there to look after the interests of the university as a whole and not just the trade union members. He would stand up and he would harangue the court as if we were a trade union meeting. I put up with this for two meetings and then I had a huge row with him and told him that this was not an acceptable way of behaving.

It was a big public row, I didn’t enjoy it and in a way I regretted it but it made it clear to him and to everybody that that was not how the court was going to run and it worked very much better afterwards.   

Anna: In the book you talk about managing egos. I suppose it’s just a case of reading the situation and on balance knowing how to deal with different types of personality in the boardroom.

John: Yes, in general and overwhelmingly, the people I sat on boards with, who are people with real authority and substance and responsibility in the areas they came from, overwhelmingly understood that they were there to support the organisation. You are holding in trust for others. It’s not something where you play individual games with it. And overwhelmingly, the people I sat on boards with understood that very well and left their egos at the door.

Absolutely. In the past I knew you’ve spoken about having ‘the wrong ambition’. Tell me a little more about what you mean by that and how it can affect your standing as a leader.

John: I think that sometimes in life, and this is nothing to do directly with governance, that you may misjudge what your abilities are or what you might be doing.

If you want this example, the worst one was when I decided to accept the offer to be head of a Cambridge college and I did that for all the wrong reasons. I did that because it seemed a posh thing to do, which it was. It seemed a good address, which it was. It was absolutely the wrong job for me. I shouldn’t have touched it and I lasted around six or seven months.

There’s a sense of what can I do, what can I do well and when am I being prodded by a false ambition and false vanity? That’s an important part of self-preservation.

There may also be some times when you shouldn’t accept a chairmanship. For a very short time, I had the post of chairman of the Victoria and Albert Museum and chairman of the University of the Arts London. That was, in retrospect, very unwise. Fortunately, the people at the University of the Arts London thought, ‘well, if he’s going to be chairman of the V&A as well, it’s obvious that that will be his first priority’ and at a very early stage said, ‘look, we’re worried about this, and we don’t think it will work. Would you like to think about it?’ And when I thought about it, I realised that they were absolutely right. It won’t work and once again, I’ve gone into that for the wrong kind of ambition. There will be a clash, and because I’d said yes to the University of the Arts London first, I stood down from the chair of the V&A. So that was the wrong kind of ambition and thank goodness, I was saved from getting into, what could have been, a very confused situation.

Talking more about the board as a whole, in terms of chaos and crises, there’s possibly no bigger than what we’ve been experiencing over the past months. How do you manage difficulties in the boardroom when you’re going through something like a global pandemic?      

John: With difficulty, and I think I’d try to go back to the basic principles of management and governance. Say, if I were chair of some organisation, I would expect the board of management to come up with a strategy – six months, one year, eighteen months, two years – first a strategy for survival, then a strategy for development then a longer term strategy. That would be put to the supervisory board, we would look at what the financial implications were, decide whether it was doable or not doable and then there would be a process of the supervisory board reviewing what management suggested, sometimes suggesting less, sometimes suggesting more, sometimes suggesting that they should be more ambitious in these times.

You can’t, for example, because there’s a pandemic, just say ‘we’ll stop doing anything’ because actually, the implications are too great. So the times are tough but the way that people behave in them makes it even more important that they behave as a good board and executive together should behave. The behaviour shouldn’t change.   

I’d like to go a little bit off-piste here. You’ve said that the BBC increasingly exercises ‘business dogma over creative values.’ What do you mean by that and how do you maintain creative values in a growing business?

John: I come back without apology to ‘why are we here? Why are you here? Why is the organisation here? Why is the new organisation starting up?’ Because somebody wants to do something.  

Business tools are just that: they’re a set of tools. If you are observing them and that’s all you’re doing, I don’t think that you’ll ever succeed. There are toolkits to help you succeed. What worries me about the BBC is to, too often, they go into forms of business behaviour which lose sight of the nature and the purposes of broadcasting and programmes and the needs of the audience. I’ll give you one example which I think may help. That is the whole business of risk analysis. Everyone says you need risk analysis and you’ve got to be very serious, you’ve got to know what’s coming over the hill.

On one occasion we were looking at risk analysis for the university at the University of the Arts London. By the time the centre had listed its risks, every one of the six colleges had listed their risks and different faculties had listed their risks, it was about six or seven pages and, as I recall, about 130 risks. It’s ludicrous.

And it was the chair of the audit committee, who’s an accountant, who said ‘I can’t deal with this, nobody can deal with this’. He said ‘let’s have eight, ten, a dozen, maybe – a dozen main strategic risks. He said let’s get rid of the rest. This becomes a separate activity in its own right, dreaming up risks. It’s ludicrous. And he also said, ‘if you’re going to have a risk register, why not have an opportunity register?’ He said that risk and opportunity are different sides of the same coin.

Anna: Yeah, I understand. And I think it’s a good exercise for business owners to have this opportunity register.

John: Can I also say about objectives? A good colleague of mine, actually he was the chair of the British Museum and he used to run Unilever. On one occasion, he was at the gathering of chairs of the major cultural institutions, had a meeting organised by the department of culture, media and sport. They were discussing – the chairs and the department, ministers and so on, the whole business of objectives. This man who used to chair Unilever said, ‘ you know, in my years of chairing Unilever, we would set about seven or eight objectives, and if I got most of the people, most of the time, to work to half a dozen of them, I thought we were doing very well.’ And he noticed that the secretary of state looked a little pale. Afterwards a senior civil servant came up to him and said, ‘you know when you said you could work to eight objectives and if six were observed, you were doing very well? He said that we in the department set 48 objectives this morning.’

That again is an example of a management tool becoming something completely useless. And by the by, the man who invented objectives said, ‘if an objective isn’t being met, you may have the wrong one. Ditch it, think of another one.’

That’s not a great use of your resources. I guess my final question is what advice do you have about setting objectives in the boardroom?

John: I’ve always had a, what some would regard as an over-light view of objectives. I was managing director of the Barbican Centre for 12 years. In general, I say this without false modesty, it was a much better organisation at the end of 12 years than it was at the beginning. It wasn’t just me, of course, that was my team. And from time to time, people would say to me ‘did the corporation of London set you strict objectives, what you had to do? And I said no, they never said anything, but I knew that I worked to four objectives: 1) run a good arts centre 2) run it within the financial limits that you have 3) bring credit to the corporation of London so that everyone can say ‘isn’t the corporation of London wonderful? They fund the Barbican and 4) don’t insult the Lord Mayor. In 12 years, we didn’t need any other objectives.

I would say strip yourself of these things and say,‘are they helping me do the things that I want to do, what the organisation needs done or are they a substitute for making sure the organisation works properly?’ And if you can shed all that and keep things clear, then the governance will work better and the management will certainly work better.

What about critics that would say that you need SMART goals that are measurable and based on precise numbers?

John: The answer to that is measures measure what measures measure. Measures hardly ever get to the heart of what an organisation is about. You look at the finances the whole time, of course you do. In the case of the BBC World Service, you looked at the audiences. You’re aware of numbers, you use them, but you don’t say that such and such a number is a success, and if we don’t it must be a failure. It’s much more complicated than that. They may be a guide, but they are not the most important thing which determines the success or failure of an organisation.

Anna: Absolutely. I think in business today we do have a way of getting caught up in it and it causes a lot of tension and anxiety. Where, as you say, remembering what you’re doing, what people need and what keeps it going should be at the heart of it. Well, that seems like an ideal place to finish. Thanks ever so much for coming on the podcast, John.

John: Thank you very much, Anna. Nice to talk to you.

John’s latest book, On Board: The Insider’s Guide to Surviving Life in the Boardroom, has been published by Bloomsbury and is available now from Amazon and all other major book retailers. You can also visit smallbusiness.co.uk for more articles on leadership and creativity in business. Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case. Until next time, thank you for listening. 

In this episode I chat to Jenny, businesswoman, investor and former Dragon.

We discuss tips for investment in the time of COVID-19, exit planning and whether your business should still be accepting cash.

You can also visit smallbusiness.co.uk for more on raising capital and choosing the right payment system.

Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case.

Would you prefer to read Jenny Campbell's podcast interview instead?

Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I’m your host, Anna Jordan.

Today we have Jenny Campbell, businesswoman, speaker, investor and former Dragon. Rather than going down the traditional education route, Jenny left school at 16 to become a cash counter and cashpoint filler.

She worked her way up in the banking world and by the age of 23 she earned her banking qualifications and a Chartered Institute of Bankers prize.

Her first taste of running a business was when she bought RBS-owned cash machine firm, Hanco, which she rebranded as YourCash Europe. At the time, Hanco had expanded too quickly and was making a loss. The company underwent a major operational restructure overseen by Jenny. In 2016 she sold the business for £50m.

During her time on Dragon’s Den, Jenny invested in companies including Didsbury Gin, Look After My Bills, Driven Media and Carun UK. These days, she is the vice chair of the Prince’s Trust Enterprise Fellowship Programme and supports the Young Enterprise and the New Entrepreneurs Foundation.

She’s also a dog breeder and an accredited breed judge.

Anna: Hi Jenny.

Jenny: Hi.

Anna: How are you doing?

Jenny: I’m really good, thank you. Really good.

Anna: Great. OK, let’s get cracking.

One of your mantras is to live by corporate standards but breathe like an entrepreneur. Tell us a bit more about what you mean by that.

Jenny: Yeah, that really came out of the time when I was taking over the cash machine business then owned by RBS. I found the business to have got enormous growing pains [from] when it was incorporated in 2000 and sold to RBS in 2004. It had grown enormously fast and it did have an impressive customer and asset base, but it had grown up on very simple – if any – policies, procedures, people, codes of conduct, etc.

So, the business I came to in 2006 was in quite a lot of chaos, to be honest. But I found that all the skills I’d learned over my banking career, which you don’t really appreciate at the time, but I could apply them to this business, particularly around change management, turnaround scenarios, risk management, process mapping – all those corporate things. I could apply them to this business and that’s what got me through the first two years in getting it ship shape.

It was losing a lot of money at the time and by the time we got two or three years down the path it was breaking even and that lead into the management buyout.

On reflection, when it came to selling the business, before that even became a management team buyout, I said to RBS, ‘Look, you’ve helped put the corporate procedures into this business but it now needs to have its entrepreneurial wings in order for it to be nimble and compete against its competitors in the UK.’

It’s important for a business of that size to have corporate standards, but it also needed to be nimble in terms of decision-making and innovation and product development, which we weren’t at that stage by still being part of a bank, due to how bureaucratic that can be in a big corporate.      

How do you introduce ‘entrepreneurial wings’, so to speak?

Jenny: Start with the people. One of my big transformations was the people – the quality of the people, the culture of the people. I turned over a lot of people in the early days, those who didn’t have the right skills or attitude to drive the business forward. I created a real people culture in the business: work hard, play hard, lots of rewards for delivering performance, lots of fun as well.

And the ability for the staff to feel they had their own initiative to drive the business forward [was important]. You could always put your hand up to suggest this or get on with doing things and mistakes were made – you wouldn’t get berated for that – it was, ‘Get up, you’ve grazed your knees, let’s move on’. It was a real ‘can do, will do, want to’ attitude in the business and we lived it and breathed it from the top, right the way down.     

On your time in Dragon’s Den, perhaps it was clearer that you’d come from this corporate background and moved up in the banking world, as opposed to starting up a business from scratch like some of the other Dragons and the other businesses coming in. What do you feel your experience brought to the table over the other Dragons who had started their businesses from nothing?

Jenny: I came to pure entrepreneurship myself later in life when I went to Hanco (which then became YourCash), so I was in my mid-40s by then.

But as I reflected on how I turned from corporate career to entrepreneur, some of my reflections were, firstly, around my childhood where my grandparents were all entrepreneurs – builders, printers, etc. in my local town, so I came from quite an entrepreneurial background.

Yes, I went into a profession, but that was seen in those generations as safer and more secure and you’ve got the pensions and all of that good stuff. But I also dealt with entrepreneurs almost every day in my banking career, just on the other side of the desk.

One of my roles was as a business relationship manager and I had 200 clients out in the community. Everything from famers to builders to lorry driver to retailers. I was working alongside those entrepreneurs for all of my banking career, so I just felt like I’d stepped from one side of the desk to the other, to be honest – and it’s in my DNA.

What did you find was the biggest difference of going from one world into the other?    

Jenny: Freedom, scary, exciting. You realise that there’s a lot that rests on your shoulders. The first month after we’d bought the business out, instead of me receiving a salary cheque on the 18th, I had to think about paying a quarter of a million pounds’ worth of wages every month and you feel responsible for people’s homes and families and that sort of thing. But equally, all of the freedom that comes with that and the responsibility to keep that business going and grow it.    

Coming back to Dragon’s Den. Look After My Bills, in your own words, ‘negotiated hard’. What advice would you have for business owners who are looking for funding but are that sort of position? What negotiation tips do you have and what would win you over?

Jenny: I think what wins me and many investors over is that, besides investing in that business and that product, you are ultimately investing in that person or persons.

With the people standing in front of you, I’ve got to get a rapport with them straight away – that I admire them, I believe them, I’m confident that they can deliver on their proposal. The boys, Will and Henry from Look After My Bills, did negotiate hard, but that showed me that they had the experience to do that. I admire that. One of my other entrepreneurs accepted my offer before I’d even finished making it, but he was much younger and much more inexperienced.

Will and Henry did a great job of negotiating and Tej (Lalvani) and I got a very small slice of Look After My Bills, but it proved to be a great investment as they sold to GoCompare ten months later and we got a very nice return on a very small investment.

Anna: I think it’s interesting that because of them not budging much on their offer, Peter said that it shows a certain level of naivety, so it must be quite different between investors.    

Jenny: Yes, but there’s quite a bit of gameplay in the negotiations – you’ve all got to play your own part. There’s admiration behind that hard negotiation stance as well. As an entrepreneur you’ve got to have some emotional intelligence as to where that tipping point is with the investor. You can push them so far, but you’ve got to realise where you’ll lose that investor, where they just going to sign out and say, ‘I’m out’.    

Let’s come back to raising finance. Of course, we’re going through a difficult time at the moment – this is the first of the remote recordings we’re doing because of COVID-19. What advice do you have about raising finance in particularly tough times such as these?  

Jenny: Is it any different in these times to pre-COVID? If anything, there are more options because of Microbusiness Bounce Back Loans etc around, so my advice is probably the same: cover a lot of bases in looking for those options.

First of all, think about the structure of what it is that you’re looking for – are your able to take any debt into the business? That’ll save you giving away equity. Equally, sometimes it’s a strategic thing to find an equity investor because you get smart investors in the business who will help to propel your business further than if you were trying to do it through the existing equity structure. It’s always a balance of what your business can take and what it needs and that strategic aspect.

I’m working with one of my businesses now on doing our first fundraise. I’m just educating them on taking those steps really carefully, to find the right structure of equity and debt and, crucially, the right people to come into the business. I always say to them, ‘This is like a snooker game: it’s not just about getting the first red ball down, but it’s about getting the black ball down, which is your exit.’

Every step is fundraise is important – you must think about how that impacts the next step and your eventual exit. But I think all those usual funding routes are there and, if anything, there is pent up demand from private equity and VCs to get money invested right now.

Has COVID-19 affected the way that you invest in or the companies that you’d be interested in investing in now?

Jenny: I don’t think it’s affected the way that I invest. Apart from not meeting in person, we’ve all got very used to tiled Zoom screens or Teams or Google. We’ve all got used to those virtual meetings, so the way in which I invest has not changed.

Maybe where I invest has changed. Some areas you might have thought of investing in pre-COVID, but in post-COVID they’re either not the right areas or there are certainly better areas which have capitalised on COVID. I always say that wherever there are challenges, there are opportunities, and it’s just watching which ones will rise out of this. My Didsbury Gin business pivoted into hand sanitiser and they’ve done a fantastic job. Did I think I’d ever be invested in hand sanitiser? No! But it was the right thing to do and they’ve done very well.

Anna: It’s been very much extremes – either a company has done very well or struggled quite significantly.

Jenny: But that’ll be the true test of the entrepreneur in dealing with that. My eldest son has three restaurants in London, and it has not been an easy time. However, he’s probably going to come out of this leaner, fitter, stronger and with a different strategic path, which will actually be a better one. You as an entrepreneur have personally got to have the resilience, the foresight and the vision to deal with that. And that’s what the key strength of an entrepreneur is.

Anna: And going digital has helped a lot of businesses. Ones that didn’t have a website before are very quickly learning and moving online.

Jenny: Yes – you’ve got to go where the consumer is going to go which is a huge shift to online as you say.   

I’d like to ask a couple of questions about your views in business. I’ve read that your plan wasn’t to become a business owner, rather, you ‘take things when they arise’ and when your children were young, you’d ‘just think about the year ahead’, contrary to popular business advice of planning one, three, five years in advance. What’s your view on planning vs spontaneity in business?

Jenny: I mean, I always say that when I was 16, 18, 25, I didn’t really see much further ahead than the next year. As you get older, you tend to plan your runway out a bit more. But it’s always a balance for a business owner of never losing sight of today and the detail you need to do of today while balancing that with a vision of the future. And that’s a tricky thing sometimes – you can be lost in the weeds on a day-to-day basis and never have that time to think about the future.

But you can find different places to do that future thinking. I remember when I was very busy in YourCash with the turnaround work. Where my vision and strategy used to come from was when I was on the running machine at the gym in the evening or in the bath. I used to come back fuelled with what we need to do differently, so you just need to find those spaces to let your head clear and think about the future of the business. You must do that and not just be lost in the day-to-day.

Now I think I plan much further ahead, hence it’s actually driven my exit of YourCash because I’d been at the business for ten years. And I had half an eye on where cash was going as well in the future which proved to be quite prophetic. And equally I wanted another ten years in business doing other things, so focusing on the end game is quite important.     

My next question was going to be about your exit from YourCash. Talk us through your exit plan – when did it begin, how did it unfold, did it change?

Jenny: When you reflect on these things, again, I think it happened on the day I did the management buyout in 2010. The reason for that was as soon as the business became independent from RBS, I straight away started getting courted by other independents to amalgamate with them, so I realised from day one of year one that there was an opportunity for a trade sale.

But I knew it wasn’t going to be right then when I put all of my energy and passion into buying this business out and mortgaged my home and I was on a journey and I was going to sell at an optimum time. But knowing those courtiers were out there, I played that dance with them for five years and it eventually reeled one of them in there for an exit. So there, you can see I was planning, even in 2010, to exit, probably five to six years down the path, which is what I did.

I think in any market, I’ve seen in the supermarkets, in industry, etc. I’d say all businesses compete on the ground. But at top level, CEOs all meet each other at conventions and industry gatherings, and all have quite a professional and grown up relationship. I always had those relationships with the bosses of the other businesses and there were always muted conversations, seeing if there were any areas of cooperation and synergies between us. There’s a lot of dancing around handbags before you come to the formal marriage.

Anna: I suppose it’s like networking of any kind, isn’t it? You’ve got to build it up quite slowly.

Jenny: And it’s important to do that. That’s a really good point – I had extensive networks across my industry, not just in the UK but across the globe. I would take plane trips across the globe to go to certain conventions to make sure I had face time with people, so I was out there and present and had a really good black book.    

Finally, given your background with YourCash, what do you make of cash vs contactless, especially in this COVID-19 landscape? Is it still worth it for businesses to accept cash?

Jenny: Before I sold the business, there was also a challenge externally around the future of cash. And I think cash is still here for another generation in this country. It’s very entrenched in this country as it is in other countries such as Ireland and Germany. Yet if you look at other countries like the Nordics, they’ve been almost cashless for a very long time so where do we sit in all of this?

I still think there’s a place for cash in the UK for a while because I don’t think we have all of the systems to donate to charities, to pay for certain things for the elderly and the disadvantaged, so all of the systems aren’t there yet to digitally support moving to totally non-cash.

I do think there is a place for it and, to that end, that it’s important for retailers and businesses to accept cash, because not everyone is able or ready to move to digital. The consumers have to be educated and cajoled but not forced, if you know what I mean.

Yeah, of course it’s important in terms of budgeting or for people who may not be best able to manage their money. Do you think we’ll ever go completely cashless and if so, at what point?

Jenny: [laughs] Crystal ball again… I think we will, it depends how you define cashless, if you mean totally cashless.

Surely in the next 25 years we’d go cashless, I would’ve thought, providing all of the systems are there to cope with that. But if you look at the young people of today, they just don’t carry cash – at all.

And I myself would have always had cash with me and never have I used Apple Pay so much as in the past three months, and I’m much more comfortable with it now. That has forced buying habits but equally, I doubt very much that older people have changed their buying habits and the disadvantaged need to work with cash as well.

Anna: Well, I’ll wrap up there unless there’s anything you’d like to add.

Jenny: No, thank you for letting me come on your podcast. I’m delighted to come on any time and have a chat and happy to do it any other time you wish.

Anna: Thank you for coming on the podcast.

You can find out more about Jenny at jennybcampbell.com. You can also visit smallbusiness.co.uk for more articles on raising capital and choosing payment systems. Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case. Until next time, thank you for listening.   

Welcome back to Small Business Snippets, the podcast from SmallBusiness.co.uk.

Today’s episode features professional performance coach, Phillippa Hurrell, who shares practical and insightful tips and advice on how small business owners can look after their wellbeing in these high-pressured and stressful times.

Covering healthy habits, how to understand stress to combat negative thoughts and how to increase productivity, the recording is packed full of practical tips every small business owner can start implementing today.

For more advice on running your small business, head over to the UK Domain.

In this episode I chat to Sherry Coutu, a serial entrepreneur, angel investor and one of the leading names in the UK digital sector.

We talk about tips for investment pitches, time management and difficulties in the tech sector.

You can also visit smallbusiness.co.uk for more on raising capital.

Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case.

Want to read Sherry Coutu's podcast interview instead?

Please note that this podcast was recorded before COVID-19 became prevalent in the UK.

Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I’m your host, Anna Jordan.

Today we have Sherry Coutu, a serial entrepreneur, investor and advisor. She’s also on the board of Founders4Schools, Workfinder, Raspberry Pi, the Department of Culture Media and Sport (DCMS), Pearson and the London Stock Exchange.

We’ll be discussing the most common slip-ups that businesses make when pitching to investors and the most pressing issues in the digital sector.

Anna: Hello, Sherry.

Sherry: Hello.

Anna: It’s lovely to meet you. How are you doing?

Sherry: Yeah, I’m very well, thank you. Good to see you.

Great. OK, I’d like to start off by going back to the beginning. As the intro suggests, your background is in digital and tech. You were a developer and programmer before you became an entrepreneur and an angel investor. What was it like being a female developer at the time you started out?

Sherry: Well, I’ve never been a male developer. I think I came to it thinking it wasn’t that unusual being a female developer. I had studied at EF International and some other women had gone into digital when I was at the London School of Economics studying so it didn’t seem that unusual. I’d joined a large consulting company and that large consulting company had a number of women in that intake and we were all programming. It didn’t seem that abnormal to me. I was doing things that I thought were interesting and I was learning skills that I didn’t find that difficult and that I enjoyed, so it was pretty easy by and large. I didn’t know at the time how unusual what I was doing was or would be seen afterwards.

When did that become apparent?

Sherry: I don’t know. Again, I don’t approach things on a gender basis. I saw other people that I liked who were doing work that I enjoyed, and we had projects which were interesting. When did it become apparent? You do sort of notice that you’re often the only woman in the room, and it was probably afterwards that I thought, ‘Oh, that’s odd. It’s no longer 50/50 – it’s a lot less than that’. It didn’t bother me that much – I was pretty absorbed in what I was doing. It was really interesting work.

It’s a good way to look at it and some women thrive on that kind of atmosphere as well. It’s a similar situation for investors. What were the most common pitching mistakes you saw from businesses pitching to you?

Sherry: Well, I think there are a couple – I was thinking about your question earlier. And I think there's a couple of common issues. One is not researching. I'm a member of the Cambridge Angels and have been members of HBS Angels as well. And if an investor comes to you and they haven't researched who they’re in the room with, that is really common blooper, and it's not a sensible one.

I think if I had advice for them, it's to research who you're pitching to and know what's in their portfolio and to know what they've what they've done before. I think, having somebody explain to me something that, clearly, if they'd looked at my background, they would understand that I knew. It's a waste of their time, whereas you can get into more detailed things right away otherwise.

The other issue, something that is unforgivable to me as an investor is not understanding who your customer is. Or demonstrating your keenness to delight that customer. A lack of focus on that is really annoying to me.

I think the only reason we are given opportunities as entrepreneurs is because we can delight customers and create things that will help them in their life in a multitude of ways. And I think a lack of customer focus is annoying to me. And it's usually makes for a fairly short meeting. And it definitely means that I won't follow up because, it's like, well, why are you doing this? The first question I'm often asking is why are you trying to solve this problem? Who are your customers? What does this do for them?

Yeah, exactly. So, encouraging better work experience at school is a key focus for you especially just now, what kind of barriers do you think that small employers face when taking on work experience pupils?

Sherry: Work experience for people in school and in university is something that I'm really keen on. I don't think of it as barriers. I think all small businesses have projects that they need to get done. You can ask a full-time permanent employee who's already working full tilt to do a project, or you can think, ‘Are there ways that I can get other people from outside my company that might have a fresh view, who I don't have to offer a permanent job to, to get this project?’

To me, the biggest issue there is as a small business person is finding people to do those extra projects that I really would like to do for my customers. Maybe it's so that I can be more obsessed with my customers and get them more focusing on a new product development or customers in a new country or in a new city. But I think that current students at university, supplemented possibly by students doing their A Levels, are a great way of getting projects done quickly and efficiently. And hey, you might even be able to hire the student who is doing the work for you afterwards.

But we all have projects, we've all got dozens of projects. Maybe it's sitting down and thinking of which of the projects I have that would be suitable for five students doing a month or five students doing a couple of weeks, breaking it down into something that can be accomplished that will be meaningful to me as a business.

Taking it back to the start, for an employer that has never done work experience before, has never offered a kind of programme of sorts –

Sherry: They don't need a programme. They've got projects all the time. And we all have projects. I think there are big company ways of approaching work experience and there are small company ways of approaching work experience.

The big company ways tend to be structured programmes that happen in June or July. And they might be quite cumbersome on the company. What I've seen work brilliantly for small companies, small and medium sized companies and start-ups and scale-ups are joining project teams, or all working on a project that the employer wants to get done that can't get done any other way.

And that means that for the supervision of that project, you've got four people on it, but you put together the brief that might take you a tiny bit of time, or you could use Workfinder, we've got more than 100 briefs that are appropriate to ask students at university. You could take one of our briefs of, well, you might be thinking about this, here's how you do this type of project.

You brief them on the first day, you touch base with them for half an hour just to make sure that they're going along the right path for the length of the project, and then you get them to present the project view at the end. I think it's great. And then you use it, because it's a project that will help you do something more for your customers that you haven't been able to do, because everybody's really busy. I mean, we always are pressed for time in small businesses and large businesses.

Yeah, absolutely. What's the kind of state of things at the moment in terms of small businesses taking on work experiences? Is it quite common? Or could it be done more widely?

Sherry: Well, I would love it to happen more widely. But it happens more often in start-ups and scale-ups than it does in large companies. We published this at the Gallup Institute earlier this year, that it was it was more likely that they had taken on students both at university and at school to do those extra projects in small and medium-sized companies.

For me, I've got endless projects. I'd rather have a constant stream of people.

And I think the other one of the other barriers is that large companies tend to do it in the summer, but when we spoke to small and medium sized companies, they had projects all year round, and they didn't want to be constrained to having to do it in July or something like that. With lots of other small companies that we work with, it worked fine around it Founders4Schools fitted in through throughout the year so that it works better with them.

Anna: I suppose they have the advantage as well because They don't have the processes and the departments to go through that larger businesses do.

Sherry: Yeah, exactly. And they may not and they'll have urgent projects that pop up, maybe it's a pitch, maybe it's a pitch for a customer and what you need is somebody to ask, ‘Well, can you do a bunch of customer research for me?’ We don't know these people, use Google, use LinkedIn. Yeah, help me put together this pitch. But there's lots of really good projects that help people who are at school and university understand what work experience is. It's deeply meaningful to the company, it also gives them a proper sense of what it would be like to work for that company.

But it's risk-free because maybe it's a week, maybe it's two weeks, maybe it's a month and they can choose, they get the project done, they decide if they love it, or they hate it. If they love it, they can keep on talking if they don't love it, they can try different project and a different type of company and see if they like that industry better.

Actually, as lately pertains to your expertise and for companies in the digital sector, and they're experiencing a lot of upheaval at the moment – politically, financially in so many different ways. What would you say are the most prominent issues affecting the digital sector right now?

Sherry: Well, most recently GDPR was a change. I think was a change for the good because it protected consumers and customers and made sure that all companies were being mindful of whose data it was that they had the privilege of being a custodian of. So, I think I think there's that.

In the UK, I'm not going to say that word [Brexit], but it's been harder. It's been harder to retain people from Europe for reasons that are outside of our control, and that's tricky. Attracting people who have the right skill set is also really difficult because there's been a sequencing issue with small companies, we create lots of jobs, but they are jobs in agile management and data science.

Schools and universities aren't yet churning out people who have those skills. And I think solving that issue so that we small digital companies don't suffer from a skill shortage any longer is certainly very much on my mind. And I hope to make some contribution to that agenda.

Anna: It feeds back into the work experience as well, doesn't it? You teach them as early as possible and let them know what opportunities are out there.

Sherry: Yeah. And I think it’s understanding that you're not going to have the same job for 30 years, and actually, that really sounds quite boring anyway. Let’s sort of just assume that we need the framework for working here on this type of project for this type of company for a period of time and then we'll move on and we'll do something else.

The needs of the customers will change. And our needs as we go through our own lifetime change as well. Often we'll work full time, we might work very flexibly when we're having children. And then once they're off at university, we might go back up to full-time or, like me, choose a portfolio of things, which is like having a bunch of part-time jobs, all of which I love.

But I love the flexibility of this. If you listen to LinkedIn, the average person now has 25 jobs between graduation and retirement, seven different identifiable career streams. What's your next career stream? I mean, it's kind of neat when you think about it that way.

What would you say to small business owners who maybe have trouble establishing what skills their workforce needs, and maybe the resources well, to provide them?

Sherry: Well, I think there are some great online resources. For staff I use LinkedIn Learning quite a lot. For coding skills, there's Coursera, there's Udacity, there's Futurelearn, there's a lot of free online courses that allow us to upskill our staff.

I think we all need to be learning all of the time. If we don't invest in ourselves as the leader of a small business and we don't invest in our staff then well, it might be harder to retain people, it might also be harder to fulfil those customer orders because they'll be asking us for stuff that we don't know how to do.

I think I a commitment to continued learning and allowing and encouraging creativity in ourselves and in the people that work for us as a culture of learning is really important.

Actually, now that we're touching on it. You fit a lot into your days and obviously, there's the continual upskilling as well. What kind of time management tips do you have for our listeners who may be struggling and a bit stretched?

Sherry: I'm sure anybody who knows me doesn't necessarily think that I'm great at managing my time. But I try to. I think if you're a portfolio, it's quite helpful because you compartmentalise things and you're context switching. That keeps you fresh. It also keeps you managing quite closely. Something that I have used for a long time is trying to be at home 20 out of 30 nights, especially when the kids were at home and younger, being at home 20 to 30 nights a month. And if you've got that rule that you will be at home by 6pm or earlier if you can, that allows you to show the commitment that you have to your family and to yourself.

I try to exercise as much as I should. I'm not sure I think probably in the last month, I have definitely broken my rule. But I've got I've got training set up in January, February and March and it's scheduled into my diary. I try to schedule things.

I do try to review on a weekly and a monthly basis. Am I content with how I'm spending my time? And when I went to the rule of 20 or 30 nights at home by 6pm, I found that because there's so many interesting things going on all the time. And I wanted to do everything I literally did find myself out every night. And then you think, ‘My God, I haven't really seen my children. I haven't spent any time with my husband, and I don't feel good about that.’ And so I just sort of put a hard and fast rule and it's like, nope, this is how I'm going to do it from now and it works.

Are you working when you're home at 6pm? Or is that a cut-off point when you stop working?

Sherry: I'll stop working. Not necessarily for the day – I might go in and back on it between 10pm and 11pm and just sort of plan out the next day. I do tend to be crazily busy. Even if it's just planning out what you're supposed to wear, because you've got this little jingle jangle of meetings and you think, ‘Good Lord, what's going to navigate through that set of meetings of that day, what am I going to wear?’ Just sort of thinking about the how you're going to execute the next day, if it tends to be mixed up. I don't ever go to an office and sit at a desk.

I think, ‘I'm going to be home with family. I'm not going to have my phone on, I'm going to focus,’ and that gives them the right message. And it also gives me the release that you need as a person from work.

Do you rely more on people or tech to sort of help you organise your schedule?

Sherry: Both. For the tech, I use calendar Google Calendar. I'm not making an advertisement for Google. But I think many small businesses use it rather than some of the more traditional ones. And if I'm meeting someone, I asked them to append in what the agenda is and what the papers are. My call forward file is not a physical call forward file that say, it's literally in the description of that. And I find that really helpful as I prepare for the meetings, I find the ability to invite people to meetings from within your diary. And then if you move it, they all get notified and you don't have to do all of that is really helpful.

I do have an executive assistant (EA) who I adore and she's kind of a magician, because I tend to want to do too many things than might actually be possible, and she makes it a lot more possible than it might otherwise be. I do depend on her and enjoy the fact that she helps and is very au fait with and good at using technology as well, which is helpful to me.

If you're a small business owner and you could have an entourage of sorts, what kind of people would you hire in terms of, say, a PA or an accountant?

Sherry: Well, I would certainly use LinkedIn very aggressively. I probably am on LinkedIn two hours a day as I prepare for meetings as I research the people that I want to pitch these sorts of things are the people that I'm about to speak to. I think it's really important to use tools that are there. An accountant? Yes, you definitely need accountants. I think in small businesses, there are great part time accountants that you can that you can have. And I'm a real fan of those because you don't necessarily need a full-time one. And there's a lot of particularly women returners to work who have been full-time finance directors and they're there with kids and they want to work on a part-time basis. And I think they are a godsend to many, many, many small businesses.

Anna: Seems to work for everybody, right?

Sherry: Yeah, absolutely. You may be a small company of ten people, you might need someone who's doing finance a couple days a week well, you need somebody who's a returner, returning to work for that. And on PA I don't know if everybody needs me know, there's lots of people that I know that work in large tech companies that no longer have PAs there's many people who have the whole senior management team has a sort of shares in EA or a PA, I think many people and in fact, it's been shown that 65 per cent of those jobs have already disappeared because people are using technologies more aggressively.

If you look at the research on what jobs are disappearing, sadly, PAs and EAS are definitely far less prevalent than they were five years ago, but I couldn't be without LinkedIn. I also use a service called Accompany which will sort of harvest your diary and then it'll give you notes about the backgrounds of the people that you're meeting the day before. And if you don't use it, you should use it because it's amazing. I find those I find those really, really helpful.

Well, I realise you're busy lady, so I'll wrap up by coming back to your expertise as an investor. You were an early investor in firms like LoveFilm and Zoopla saw for new tech companies looking to pitch what would you be looking for in their pitch?

Sherry: Well, for me, solving a problem that matters is the most important thing.

I'm particularly interested in the future of work. It's been a real interest for 20 years that the skills crisis is getting worse. And I am interested in working with others to fix that problem, which I think is the number one problem that we have. I'm also very interested in the application of AI and ML in the sphere of health. And I think that, just around the corner, there are some great solutions to really irksome terrible problems of a health nature, that technology will help us solve. And people who are determined to solve those problems using technology will help themselves, so I'm particularly interested in those two areas.

Some people shy away from them because they're complicated, and some people shy away from them because they're highly regulated. They're really important – the health of our citizens is really important, as is the ability to have the right skills so you can prosper and make a contribution to your community.

I'm not that interested in hearing people pitch me on things other than those two sort of, they're fairly broad subjects. But those are those that what I'm really interested in and can be an active in what they call smart money, rather than just dumb money. I'm interested and can probably help in some ways as well.

The health and wellness industry is massive. What would you say to entrepreneurs who are put off by a large amount of competition in the in the sphere?

Sherry: Create a fantastic product that your customers love. That's way better than anything else, that they're either getting the way that, you know, 40 per cent of our GDP is controlled by companies that didn't exist five years ago. Think about that. What competition? There are really big issues that are absolutely unsolved. And we entrepreneurs, and the people who find entrepreneurs are the only ones who are going to solve it on the time on, on the timeframe that we've got available to us. So, I'd say, solve them. Do it.

Anna: Fabulous. Well, that seems like a good place to wrap up. Thank you very much for coming on podcast.

Sherry: My pleasure. Thanks very much for having me and good luck with everything.

Anna: You can find out more about Sherry at uk.linkedin.com/in/coutu. You can also visit smallbusiness.co.uk for more on raising capital and managing your time. Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case. Until next time, thank you for listening.

Today’s episode brings together a panel of experts to help SMEs understand how to remain secure online and navigate the world of GDPR.

It aims to help micro and small business owners become familiar with common cyber threats and take away simple practical tips to protect important data, process it correctly and improve cyber security.

In this episode I meet Rachel Elnaugh, businesswoman, author and one of the original Dragons. We talk about her time running Red Letter Days and what it means to be an evolutionary entrepreneur.

Be sure to visit SmallBusiness.co.uk for more articles on wellbeing. 

Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case.

Would you prefer to read Rachel's interview instead?

Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I’m your host, Anna Jordan.

Today we have Rachel Elnaugh, author, speaker, mentor, former Dragon and the creator of Red Letter Days.

She launched the experience day voucher company in 1989 when she was 24 years old. And after a precarious start, a print brochure campaign launched it to success. This led to multiple awards and a place as one of the original Dragons on Dragon’s Den.

The company went into administration in 2005 due to over-expansion and the remaining assets were bought by fellow Dragons, Peter Jones and Theo Paphitis. They eventually sold the firm to Buyagift and it’s now owned by French firm, The Smartbox Group.  

Taking the lessons of Red Letter Days with her, Elnaugh now mentors business owners and speaks at events in the hope that fellow entrepreneurs can learn from her experiences.

Anna: Hi Rachel.

Rachel: Hi Anna. Thank you for that intro.

Anna: Not at all. How are you doing?

Rachel: Yeah good, thank you.

Great. The first thing I’d like to ask you about is that you describe yourself as an ‘evolutionary entrepreneur’ – what do you mean by that, exactly?

Rachel: Well, I’ve been on my own journey of transformation and particularly being a business mentor, have got really interested in what makes one person successful and one another not. That’s kind of my holy grail – to really understand what makes the difference which has kind of taken me on this journey of discovery through mindset, through energy work and metaphysics and so I do think there’s a new era of consciousness opening.

I think I’m moving out of that old capitalist business paradigm into this new era, along with many other people, which is a very different way of doing business. It’s much more intuitive and much more about manifestation and effortless flow.

If your focus isn’t capitalism, what is it?

Rachel: Well, capitalism is fundamentally about scarcity and really about putting money ahead of all other considerations. As we move into this new era, we’re seeing that businesses that aren’t just about profit but are also very much about people and about the planet are really coming to the fore – those brands that embrace a much wider idea of success than just money. We’re seeing a massive change and we’re also starting to unravel some of the programmes of capitalism like scarcity.

For example, with renewable energy, the sun never stops shining, the waves and the wind never stop. There’s so much natural resource to tap into that I think this deep programme of scarcity is being unravelled and uninstalled.

Anna: Yeah, you can see in businesses now that a corporate social responsibility is non-negotiable. If the business doesn’t have an ethical basis then at least it’ll be embedded in their business plan.

Rachel: Yeah, and I think it goes way beyond the veneer of corporate social responsibility of wrapping a company with that. I think the companies that are really powerfully coming through are ones that have actually got ethics at the heart of them.

So, I think there’s a new breed of entrepreneur coming through which goes way beyond social enterprise, it’s people working from the heart, really passionate about their businesses and their brands. And wanting to do business but in a way that is very nourishing.                  

Definitely, I agree. I’d like to talk a bit about Red Letter Days as well. You made a loss of £4.7m at the time that you realised something was amiss. According to previous reports, there were various issues: management consultants taking on too many projects, a dud CEO, suppliers going unpaid, your financial director keeping information from you.

Rachel: I think that when a business goes wrong, a lot of waves hit the ship at the same time. Up until that point, we’d had a very successful company that was growing every year, that was profitable. In 2002, I started winning awards and getting on television. I think you can get the Midas touch and start to push too far and fast. Suddenly it’s driven by profit motives and ego rather than just wanting to create great products and experiences and services.

We brought in some management consultants who recommended that it was time for the business to grow up and to parachute in a new chief executive to take it to the next level – we really thought we could groom the business to float it. It was really that process of over-expansion, as you said in the intro, that was our undoing.

It was a very big lesson. I think if I had to share that lesson with other entrepreneurs I would say just grow organically and in a very steady way rather than trying to step change a business and leap to the next level. That was the mistake we made.

Anna: So, there’s a surge in confidence – then a real dip in confidence – on your part.

Rachel: Well, as I said, a lot of waves hit the ship at the same time, so we parachuted in a chief executive who was brilliant at spending money. He’d actually come in from Thomas Cook and he is the one who created the JMC brand which, literally the day before he joined, was closed down by Thomas Cook. That should have been a warning.

I also didn’t have a strong enough finance director and I think that’s really crucial in a business, I realise now. To have a very trusted, rock-solid finance director is key. So we over-expanded, overspent and then crucially, our credit card takings were bonded by our bank. When we were forced into administration, we had £3.3m cash at bank. That was another big lesson in that whoever controls the money has all the power. We had a huge amount of cash at bank but we just couldn’t touch it.

And the bank forced us into administration. When that bond was unbound over the next year, all of the vouchers had been redeemed, the actual cost of fulfilling them was only just over £1m. While the bond was appropriate, the level of it was way in excess of what was necessary. And it was that cash flow that strangled the business and forced us into administration.

There were a lot of factors involved and it was a very very dark, difficult learning process for me.

From your learnings, what kind of advice would you give entrepreneurs about finding the right bank, the right account, the right adviser for them?     

Rachel: It was interesting because I remember having a discussion on the set of Dragon’s Den with Duncan Bannatyne, my fellow Dragon. I was telling him the problems at that time I was struggling with trying to get this bond lifted. And he just turned to me and said: ‘Rachel, the first rule of business: do not bank with Barclay’s’.

And the thing is, you don’t really understand how much power a bank has over you until you run into problems. And I think some banks are more ruthless than others. It was a big learning curve.

But I don’t want to sound like I’m blaming and in victim mode because in truth, we were undercapitalised. And it’s very difficult to re-finance yourself out of a cash flow issue like that. If I could’ve re-run the clock it would’ve been much better for us to have got some proper venture capital funding before embarking on the expansion plan rather than trying to fund it out of cash flow.

Tell me about the months after the company went into administration – what was it like for you?

Rachel: It was a bit of a double-edged thing because on one side of things, it was quite tragic for me because I’d spent 16 years building this company literally from nothing, it was literally like my baby. I’d poured my whole life into it. All of my passion and all of my money, I’d lost that.

On the other side of things, it was so stressful towards the end that when I finally signed the papers and put it into administration – and I really had no choice – it was a massive relief and a release. I’d just had my fourth son the week before so that was a great gift from God, you know. It was August, the sun was shining, I had a newborn baby and also, I’d just been on Dragon’s Den.

So, I had this new world opening up to me of being this TV celebrity entrepreneur. And even though I got annihilated by the press, I was given a book deal. I wrote a book called Business Nightmares about the fine line between success and failure. That came out in May 2008 and in September 2008, world economies crashed, and we had the banking crash.

And this repositioning of myself as a business survivor was actually perfect timing because it opened up a whole new world of speaking at business events, becoming a mentor and creating lots of products and ways of helping other people on their entrepreneurial journey.

It was synchronistic and beautiful even though at the time it felt like the worst possible thing that could ever happen to me.

Anna: I read that you found a note that you had written some time before about what you wanted for the future. It said something along the lines of ‘I will sell off Red Letter Days’.

Rachel: This was long before I understood the power of words and the law of attraction. A friend of mine was training to be a life coach and she needed guinea pig clients. I said, ‘I don’t need a life coach but I’ll be your guinea pig client’. She got me to write this life plan and I found it after the company had crashed. I had written this several years before, but I found the piece of paper.

On it I’d written: ‘By 2006, get rid of Red Letter Days so I can spend more time at home with my children, be creative and write.’ And so the universe had delivered that little cosmic order exactly to plan. You notice I didn’t write on there: ‘Sell Red Letter Days for £20m, be creative and write’, it said ‘get rid of’. And ‘get rid of’ is a very angry energy and so the universe got rid of it for me.

We have to be very careful about our spelling, spelling is very powerful. You have to be careful what you ask for because it’s delivered often exactly to the word.

What about planning what would happen within your business, including the staff. What was the process there?

Rachel: We didn’t want to go into administration and we were working on all sorts of ways to re-finance. I had a re-financing offer from HBOS and I was looking for match equity funding. What happened was one of our suppliers – and sometimes in these situations, suppliers can be their own worst enemy – took a winding up order against the company.

Could you briefly describe what a winding up order is for our listeners who don’t know?

Rachel: Basically, if a company owes you money and they don’t pay, you can enter into court a winding up order which is if they don’t pay, you’re going to wind up the company and get paid that way. It’s a bit like dropping a nuclear bomb on someone to get what you want.

Usually, in normal circumstances, if you get a winding up order from a creditor then you just pay them. But in our situation – it was a long time ago – but there was a legal reason why we couldn’t just pay them because we couldn’t create preferential creditors. When a winding up order has been put in, it basically opens you up to every other creditor.

What happened was the creditors started arriving at the company offices to try and take the assets. So the only way we could protect the staff was firstly to lock the doors. We were in London and we had staff in our head office in Muswell Hill on the phone saying, ‘There are people at the doors, what do we do?’ We had to say, ‘You just have to lock the doors.’ We were advised by the lawyers that the only way to protect the company and its assets from these creditors in their vans was to put the company into administration.

Through that winding up order we were forced into administration and as a result, no one got paid because I couldn’t complete the re-financing and it was game over.

It was a very fine line between success and failure. Had we not had that winding up order, I could potentially have maybe, and it’s always an if, completed on the HBOS deal, the bond would’ve been released because we would have re-financed. Then we could have traded through and floated the company which was the plan because it had growth and it had profitability and it had a great brand. But alas, alack, it was not to be.

How long would the re-financing process take?

Rachel: All of my time was spent in meetings with bank and financiers, so I had the deal agreed. It was just a case of finding match equity funding. I actually did go to Peter [Jones] and Theo [Paphitis] and said, ‘I’ve got this deal. Could you match-fund it?’

There was potential they could’ve done that, but they felt there was a bigger opportunity to push it through administration, although that proved not to be the case. It is a bit like going nuclear, pushing your company through administration. And certainly with that industry, they couldn’t wipe the deck by putting it through administration because no one would supply the business without getting paid. It was quite messy.                                         

The experiences industry is huge now. If you could have started Red Letter Days at any time within the past 30 years, when would you have started it?

Rachel: We were the pioneers of the industry. And really, the 1980s were about how much you owned and the 1990s were about what you could experience, so the timing of creating the company was perfect because it captured the zeitgeist of the era. We weren’t the first company that did experiences, but we were the first company to truly embrace the concept of experiential giving.

Anna: I suppose – I’m not sure about our listeners – but for me it seems like a pretty recent shift towards less buying of stuff to more buying of experiences, but it’s interesting to find out that back then that it was emerging – it’s always great to get in on that emerging market.

Rachel: Yeah, for sure – we were creating that as we went. And a lot of people picked up on it, so we had lots of copycat companies and competitors. Then Virgin Experiences came in on it followed by all the retailers. And now it’s commonplace to see experiences as your prize or gift as opposed to a TV or a tangible piece of technology or kit.          

You’ve said that part of the struggle of Red Letter Days initially was getting experience providers on board with something that was novel at the time – what would you say to entrepreneurs running a business based on a fairly new concept?

Rachel: In essence, Red Letter Days was a marketing portal. When we launched in 1989, everyone’s books were full, and business was booming. Then the first recession happened in the early 1990s and people’s revenues started dropping.

Even though a recession was opening, that was a great opportunity for us because people could see that their sales were dropping, and they wanted more promotion – especially free promotion – which is what we were offering. So I think in every era there’s always opportunity in adversity and I think you just have to tune into the market and be resourceful and just go with the flow and find out where people’s point of pain is and provide a solution to it.     

Anna: Well, that’s it from me – is there anything you would like to add?

Rachel: No, that’s fine. Hopefully that’s been useful.

Anna: Yeah, it has been. Thank you so much.

You can find out more about Rachel at rachelelnaugh.com. You can also visit smallbusiness.co.uk for more guidance on mental wellbeing and expanding your company. Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case. Until next time, thank you for listening.   

In this episode I meet Deborah Meaden, businesswoman, author and Dragon. We talk about her definition of success and what makes a disastrous investment pitch.

Be sure to visit SmallBusiness.co.uk for more articles on pitching to investors. 

Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case.

Want to read the Deborah Meaden's podcast interview instead?

Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I’m your host, Anna Jordan.

Today we have Deborah Meaden, investor, businesswoman, author and one of the longest-serving Dragons on Dragons’ Den, second only to Peter Jones.

She launched her first company at 19 years old, importing glass and ceramics and supplying UK retailers such as Harvey Nichols. She then took on a franchise of Stefanel, an Italian clothing company and sold it two years later. Next came her family’s amusement arcade business, where she went from shop floor worker to operations director before moving to Weststar Holidays. Within two years she became managing director and did a management buyout in 1999. Then in 2005, she sold the business for £33m.

After deciding that retirement wasn’t for her, Deborah joined Dragons’ Den in 2006 and has since invested £3,746,000.

Anna: Hello, Deborah.

Deborah: Good morning. I’m still smarting for being called second best to Peter Jones!

Anna: How are you doing today?

Deborah: Good! Yeah, very good day – so far.

Anna: Yeah, that’s it – you want to touch wood but unfortunately there’s not much wood in here at the moment… 

Right, I’ll start off with something quite general. In the past you’ve said that you like success and successful people. How do you define success?

Deborah: I can tell when someone is successful because they’re comfortable with themselves. And it’s odd because often when people think of success, they think of these driven people who are constantly reaching for bigger and more and more money and more profit and whatever. But actually, I consider success someone who’s reached that stage in life where they’ve thought, ‘This is great, this is good. It might not be great forever but I’m enjoying what I’m doing now – I’m having a great impact. And the thing that I’ve set out to achieve I’m achieving and I’m achieving well.’

That is my idea of success. You can tell when you’re around successful people – they enjoy it, they’re comfortable with themselves.

Anna: So, it’s not necessarily financial.

Deborah: It’s easy to say it’s not financial. Of course, in the early days when I didn’t have money, it was financial. But when you reach a level you can start thinking that money isn’t the be all and end all.

The thing I always say about money is that it’s kind of the measure of business, or it has been in the past. It’s, ‘If I’m good at business, I make great profits.’ I think that’s changing and that suits me better. It’s more a case of, ‘What do I want my output to be?’ Of course, I’ve got to make money, otherwise I wouldn’t have a business. But do I want to have a social impact as well? Do I want to feel good about what I do? I’m much more comfortable in that space.

Anna: Yeah, we’re seeing businesses move towards having more of an ethical basis in their business models, supporting animals, doing charity contributions on the side.

Deborah: Yes, and I think it doesn’t have to be through charity, just behaving well. If you believe in something, it should be reflected through your business and treating your people well, being respectful of them. Making an impact in your community. Sometimes I feel the charity side can be absolving yourself of responsibility: ‘Let’s just give them the money and they can do the work for me!’ I feel there’s a bigger responsibility – we should all behave well in our business lives.           

And no matter how successful you are as an entrepreneur, everyone has their own set of strengths and weaknesses. You said that when you were at Weststar, you lost some good people because you didn’t temper your approach to nurture them.

Have you adapted to different personalities in the workplace since, and if so, how did you got about it?   

Deborah: That is very very true. I’m very robust. And anybody who’s watched Dragons’ Den will know that I’m very robust. But what I mean when I’m robust is that I throw things out there and I’m hoping that people are going to challenge me. I’m not just saying it because I want everyone to go, ‘Oh yes, I agree with you.’ I put things out there and I want a lively, energetic conversation around the stuff.

But I did realise early on that that doesn’t suit everybody. Sometimes I’d say things and they’d think, ‘Ohhhh, alright! Okay!’ They don’t debate it, they don’t discuss it with me. I think that’s part of experience: take yourself off transmit and receive as well as transmit.

Anna: How did you put that into practice?

Deborah: It’s a bit odd because, of course, life is about communication. I just realised I had a great group of friends that I communicate and debate with and I listen to and I think, ‘Why am I behaving differently at work?’ People are people – just because they happen to be in the work environment. Why don’t I just the use the skills I use when I’m outside of work?

When you first meet people you sense them, you feel them out. Are they shy, are they very robust, are they gregarious? What are they? And you temper yourself to them.

I just remembered to do that in the workplace and of course, the response was amazing. It just meant that people with a different style could find their style with me. We found a way of working together as opposed to [them] thinking, ‘I need to just shrivel up and leave the room because she’s said something that she obviously wants to happen!’

One of your greater strengths as an entrepreneur is your frankness. And we’re surrounded by so many options these days and plagued by indecision. How do you make good decisions as a business owner?

Deborah: Well, the first thing is learning to make decisions, good or bad. It’s better to make a bad decision than it is to make no decision. In making no decision, you destabilise everything and everybody gets into this awful limbo land and thinks, ‘Ohhhhh, I really don’t know what’s going on’ and they lose the ability to make decisions.

So learning to consider, know what you need to know, and the moment to say: ‘Right – I’ve heard enough, now I need to make a decision.’ I have watched people get trapped in this, ‘Oh, well I’ll just ask’ and ‘Maybe if we ask this’ and sometimes we get to a stage where we’re doing research and I’ll say ‘Okay, we need to stop the research now, because I think we know enough’. Otherwise, we shouldn’t be doing our job. The researchers aren’t going to tell us what we should do. They’re going to give us the information to help us make our decisions. We need to make those decisions.

And coming back to different personality types, how would somebody who is perhaps less confident, less decisive – how do they make the most of their qualities as a business leader?

Deborah: It’s interesting that you say ‘business leader’ because I was reading a really interesting book on leadership. It was saying that people need different leaders in different environments and at different times. If you think about the history of the country, we needed different people at different times and businesses are the same.

Leaders are given permission to lead. It’s not like, ‘I’m a fantastic leader – I can walk into any environment and anybody will follow me.’ Because actually, if you don’t do a good job, I promise you that your permission to lead will be taken away very very quickly. People will just start finding ways around you. They’ll think, ‘You know what? They don’t know what they’re doing so I’ll carry on with my thing.’

So I actually think that knowledge and experience and proving that you’re good eventually attracts people around you. [They] work out really quickly, ‘Who is it that makes my life better because I can do my job better? I know they’re going to help me do my job better.’

Be good at what you do, be really helpful to other people. Recognise that you are all in this together because the more helpful you are, the more people look to you. We all think of leaders as these big strident people who are born leaders but actually in the wrong environment – and the wrong time – people will just say, ‘Oh, shush’.

Anna: But sometimes people just need to be given the chance to come out and make those decisions.

Deborah: Absolutely, and to get the feedback on those decisions. A lot of it is a lack of confidence. I’ve seen so many people sit in a room – and this has happened a lot since I’ve been on Dragons’ Den – suddenly, it’s like I’m the expert on everything. I’ve been on television, so I know everything.

I’ve got confident, competent people who know way more about their subject than me, who will not stick their stake in the ground because they think, ‘Deborah’s in the room – she must know more than anybody.’ I’m like, ‘Guys, if I think I know everything, what am I doing sitting in a room talking to you lot?! I’ll just carry on, thank you. You know way more than me so could you just carry on making the decisions you made before the day I was on Dragons’ Den?

It’s much more difficult now to get people to challenge me – and I love challenge. What’s the point of sitting in a room with people who are just agreeing with me?

Anna: I feel like I should disagree with you right now, but I actually do agree!                  

One of the companies you have invested in, ran into difficulty last year [the founder is no longer part of the company]. How do you know when it’s time to walk away from a business?

Deborah: In the case of Gripit, it’s what to do. It’s come through and it’s selling to the US market.

It’s when to stop or it’s when to say, in the case of Gripit, actually we’ve got a fantastic product here – no one ever questioned the product. So, what we’re going to do now is present it in a different way and have a completely different structure sitting behind it. I’ve got a feeling that if I wasn’t there, it probably would’ve gone. It was definitely in a very difficult moment in time.

But I was able to see through that, underpinned by a product. What I do see sometimes is a product that is clearly failing. When you’ve got to wander around, holding up the product going, ‘Buy me, please please buy me’, that worries me much much more.

If you’ve got a good product but the structure in which you’re selling it isn’t quite right, that’s a problem you can get through. If you’ve got a bad product and you’re having to work too hard to get out there, that’s the time to call it a day. You’ve got to understand why you’re at that difficult moment. Every single business I’ve ever been in has had a difficult moment and if you can’t work out what’s causing it – and see a way through it – that’s the time to stop. But if you can work out what’s caused it and think, ‘Oh, I can fix that’ then clearly, you need to carry on.     

Anna: Coming back to Dragons’ Den, I’ve read that when you do a day of shooting you record six pitches. Most are about an hour long, but some are as short as 15 minutes while others are two hours long. What are the common themes run among the not-so-good pitches, the ones that tend to end after 15 minutes?

Deborah: I’m not sure there’s a common theme. Sometimes it’s purely and simply: ‘That isn’t going to work’. It’s just, all five of us – and we’re all very different – but you’ve got a lot of experience sitting there, in a lot of sectors. And we’re not always right. Fantastic businesses go out there and prove us wrong, that’s brilliant, that’s fine. But sometimes you just think, ‘You have not thought that out’ and you fall at the first hurdle because what’s your market? How are you going to make it? What does it cost to make?       

Anna: So, people come in with no idea…

Deborah: Well, they come in with an idea sometimes and that is the problem: there’s a mile of difference between an idea and a business proposition. You’ve got to have something that I’m investing in – not just a thought. That’s one of the big issues.   

Anna: Although that is to say that they’re quick because they’re weaker pitches than the ones that are longer and you want to know more.

Deborah: Oh, absolutely. I think the shortest pitch I’ve ever seen is 11 minutes and it was a product where everybody was clearly just wrong on all counts. It was badly thought out, it was badly presented, there was no idea what the market was going to be, didn’t know what the cost of making it was going to be, didn’t know what the cost of selling it was going to be… that’s a quick pitch! There’s nothing to invest in here.

I think the longest pitch I’ve ever been on was three hours. And to be honest, by that point you’re interested. We don’t sit there for three hours and don’t invest – we’re trying to unpick a business.

Anna: Wow. What do you discuss in a three-hour pitch?

Deborah: We’re trying to get to the stage where an investment is going to proceed because once we get out of the Den, not all of the businesses pass due diligence. I don’t want to waste my time or their time – life’s too short to agree something and then find afterwards, ‘Damn, if I’d known that I wouldn’t’ve made an offer’.

So if you’re interested, it takes longer because we’re trying to eke out all of the things so it shortens the process. In my experience, when you come out of the Den, the longer it takes for that deal to get away, the less likely the deal is going to be. And I don’t want to walk out the Den and find out that actually, they haven’t got a patent, they’ve made a patent application. Or their numbers are wrong by a factor of 100. Or – this happens a lot – they have loans that were not disclosed in the Den. And I specifically ask now – people sometimes don’t count a Director’s Loan as a loan. Well, of course it’s a loan! It’s still a loan. So often we’ll come out and then find out that something wasn’t disclosed that should’ve been disclosed. Because in good faith, we’re both trying to find out about each other. And there’s no point me agreeing a deal in the Den and then walking out and thinking, ‘Ohhh, if only I’d known that, I’d have never…’

Anna: And you’re hoping to build a long-term business relationship so keeping stuff from each other at that point is never a good sign.

Deborah: Actually, the deal just won’t proceed. We are agreeing to invest but between that and the investment is normal due diligence that you would do on any business. I might as well know in the Den what’s going on and if you haven’t told me something material, the trust is gone and I need to trust people.

Anna: What’s the worst pitch you’ve seen in the Den?

Deborah: Oh, it’s hard to tell. False fingernails for cats was a funny one. There was a fantastic – it was a guy who came up with an invention of a fold-out sunbed in a suitcase which you can take on holiday with you and take your suitcase down to the beach and then unfold it – because obviously people use all the beach chairs. You think, ‘You don’t seriously believe I’m going to carry a huge big suitcase on holiday with me.’

Anna: People only have so much checked-in baggage, you know?

Deborah: At least he was thinking!

Anna: Yeah, he can make one for himself.

How about pitches that you turned down at the time but turned out to be quite successful after the show. Were there any of those that you thought, ‘Oh, I wish I got involved in that’?

Deborah: I’m not an ‘I wish I had’ kind of person. I put everything into achieving the thing that I’m trying to achieve and if I don’t, I don’t. There will always be other opportunities. And I’m not just saying this: that’s the best kind of mistake to make. If you don’t invest in somebody and they go on and make a huge success, it’d be a bit churlish not to think, ‘Well good on you’.

Anna: That’s a very mature approach to take.

Deborah: We started off by saying I like success. I get no pleasure from seeing people fail. Even if a fleeting ‘I told you so’ crosses my mind, it’s very fleeting.

Anna: I know for some people it must be quite difficult.

Deborah: I’m actually quite hard to interview because people ask me, ‘What are you most proud of?’ and I honestly don’t know. I don’t really look back, I don’t worry, I don’t carry stuff around with me. Bad stuff has happened and at the time it was awful and two days later it’s gone.

I’ve always looked forward. I’ve always been more interested in what’s coming up than what’s going on behind.                            

Anna: And in the spirit of moving forward, we have a Budget coming up. What support would you like to see to support small business owners?

Deborah: I would definitely like to see the EIS and SEIS schemes maintained, just in case there’s any consideration that they go. Because if ever there was a time for people to get their investment out of the bank and working with small businesses, that’s what we should be doing. We should be supporting them.

What else would I like to see for small business? I think this is a very very difficult Budget because we still don’t know about the Brexit scenario and we have no idea on the basis on which that’s going to be very difficult to say what you want for a business when you don’t know what the landscape is.

You asking me this question in a normal landscape, I’d say, ‘You can do A and B and C and help’ but I have no idea what we’re aiming at anymore. So I really don’t know which levers to pull. That feels really awkward for somebody who spends their life making decisions and working out what is the best thing to do now.

Anna: Yeah – business owners are planning three, five, ten years in advance. They’ve just been at a point where they can’t.

Deborah: Listen, we’re in a really funny time at the moment. We don’t know the landscape and we can only control what we can control. But I really do worry that there are some businesses that are really not looking at the potential pitfalls and preparing themselves for it.

I’ve spoken to a lot of businesses who at first thought, ‘Well, of course Brexit won’t affect me’. That’s because they weren’t doing business in the EU, but they’re not really looking back through their supply chains, not understanding what could happen to the data within their business. There’s no agreement on data transfer.

So, I think businesses should just look into themselves for a moment and think, ‘Actually, which bits of these could be affected in terms of a future trade deal?’ There’ll be a lot of stuff that’s left undone and you need to know your risk.

With a lot of my businesses I’ve had to set up offices in Ireland, almost as an insurance to say ‘just in case we can’t directly trade with the EU without pretty hefty tariffs. I need to find a way of trading’.

There are things you can do to mitigate on a best guess scenario – you’ve got to understand what’s at risk in your business.  

Anna: That seems like a good place to wrap up. Thank you for coming on the podcast, Deborah.

Deborah: Thank you for inviting me. I enjoyed it.

Anna: You can learn more about Deborah at deborahmeaden.com. You can also visit smallbusiness.co.uk for more insight on preparing for Brexit planning and how to pitch to investors. Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case. Until next time, thank you for listening.   

In this episode I meet Tim Campbell, an entrepreneur and the first winner of The Apprentice back in 2005. We discuss his views on apprenticeships and the idea behind one of his more unusual business ventures.

Be sure to visit SmallBusiness.co.uk for more articles on apprenticeships and grants. 

Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case.

Want to read the Tim Campbell's podcast interview instead?

Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I’m your host, Anna Jordan.

Today we have Tim Campbell, an entrepreneur and the very first winner of The Apprentice back in 2005.

Since working for Lord Sugar, Tim has launched Bright Ideas Trust, a charity for disadvantaged young entrepreneurs and Alexander Mann Solutions, a talent acquisition firm.

We’ll be talking about what it was like to be in the first crop of candidates on The Apprentice and how to give interviewees useful, constructive feedback.  

Anna: Hello Tim.

Tim: Hi, how are you, Anna? Good?

Anna: Yeah, very well, thanks. A bit of a grim day but doing alright. How are you?  

Tim: Oh, if we didn’t have the weather to complain about, what would we have?

Anna: Exactly! It’s the essence of being British.

Tim: It is unfortunately, but let’s hope for better tidings to come.

Anna: Awesome. Right, for a bit of context, we are recording in the Alexander Mann Solutions offices today – in a sound booth, which is very nice.

Tim: It is indeed. But one of the interesting things that amazes me about London and is very exciting, is the juxtaposition between the old buildings we can see and the new cranes you can see everywhere.  

Anna: Exactly, yeah. It’s wonderful seeing the architecture of the new vs the old. You wouldn’t think they work together, but they do.

Tim: That’s the thing about London – we make it work. That sings to the essence and the entrepreneurial nature of individuals from the UK.

My mum was an entrepreneur, but she didn’t call herself an entrepreneur. She was just making ends meet, as it were. A Jamaican immigrant to the country who had three children and brought them all up to be relatively successful. But she always underpinned that with working hard, going out and earning a living. And London has always facilitated that and I suppose the inspiration for me in a lot of the things I do is my mum in that she came over with all the skills and attributes but didn’t have the knowledge, contacts or mentors to be able to do that.

Do you think your mum didn’t call herself an entrepreneur because she didn’t go through the formal avenues of having a grant or a mentor?

Tim: Definitely. She just didn’t have time to worry about the nomenclature, she was just focused on the outputs and I think that one of the things we talk about with the people that we either mentor or support is to strip it down to its bare necessities.

Lots of people are very interested in the successful outputs of getting in business. They want the money, they want the accolades, they want the title and we have to start at the very beginning: ‘What problem is it that you’re solving? What is your business? Then we get some blank looks and they say, ‘We just want the money at the end. Can’t you just give me that?’ And I say, ‘Well, no actually – there’s a process to it.’

I think with my mum and me and the people we try and support, we try and encourage them not to focus on what the title is because titles are for corporate environments, whereas when you’re a business owner it doesn’t matter, particularly when you run a micro or small business, you do everything.

But essentially, you’re focused on the output and delighting the customer. As long as you keep that at the forefront of your mind, then you can enjoy the pats on the back and the celebrations of what you’ve done. But never lose sight of why you’re in this and that’s to delight a customer and make them happy, and then get them to give you money as a result.      

The thing I’d like to talk about is your time on The Apprentice. You were on the very first series before anyone even knew what it was.

Tim: A long time ago, neither did we! We didn’t know what it was. For the 14 contestants on the first show, there were probably only two people who did the investigation to find out exactly what The Apprentice was, which is a bit stupid to admit, but I’m going to be very honest.

Anna: Was one of them you?

Tim: Yeah.

Anna: Oh really?!

Tim: No, I didn’t. I was very naïve, I actually applied for a job with the main focus being to get the six-figure salary. That’s what I wanted. Because [the programme] wasn’t as popular as it is now and didn’t attract the millions of people watching every single episode, so it was a different beast.

But when I applied, it was about securing a salary that would look after my family. And naïvely, I just applied thinking that 1) I was going to work with a great British entrepreneur in the then Sir Alan (as he is now Lord Sugar) and 2) it was a sizeable multiple on the money I was earning at the moment. I thought, ‘What could I lose?’ Little did I realise what you could actually lose, but that’s why I carried on with the application and thankfully it was a positive outcome.

Yeah, that’s it – because people who apply now see it as a platform for a business idea that they might have and obviously you get the investment at the end.

Tim: Correct. I suppose the thing for me is that the bigger opportunity for a show like that, apart from shouting and screaming at the contestants who don’t want to do the dreadful things they sometimes have to – or coming out with the ridiculous one-liners they seem to continually do every year without fail – is learning from Lord Sugar himself.

He’s a brilliant entrepreneur in the truest sense of the word, in that he can spot problems, come up with solutions and deliver true value, not just to investors, but stakeholders, customers, in what he would be able to deliver.

From what I’ve seen, there weren’t as many zingers in the first series as there were later on. What else is different between then and now?

Tim: Probably because I was just boring. On the first series, I remember all of the contestants. All of us were really competitive – we just wanted to win. What we agreed on very early, was that the way we could secure victory was by not losing task and not falling out with each other. If we worked as a team, we’d actually do more. That must have been so annoying for the television producers because that’s not what they want to hear, but that’s what we had.

When we went on task, we were going to be polite and civil. And when we were on task, we were going to be competitive, but not devious to the point where we would hurt other individuals. That wasn’t on our agenda. And that sung to our values – particularly me and Saira – who were project managers a number of times. Our values were that you could win without being negative to people. And I think that’s sometimes lost, particularly when people talk about business in general, where the image that people get is ruthless, belligerent character that kills everybody and steps on the heads of minor people to get to where they are. And there are some people who are like that in business, but the vast majority of people I’ve worked with – either on the show or in business in the real world – just want to survive.

Anna: Those relationships are so important.

Tim: It’s critical. What we took from our series was that the power of strong relationships helped you go further.

As you said, the prize in the first series was a job with Sir Alan, back then. You set up his health and beauty division at Amstrad.

Tim: It was a very interesting journey. You were asked on day one to come up with a health and beauty product. And I thought, ‘What is this?’ And what I saw it as was a test. What we were trying to do – and we did successfully, was replicate other multi-level marketing processes. We got other women to sell the products to other women. It was a very interesting two years I spent.

The whole gambit of business was involved in that particular project. I look at it like it was a real-life MBA. It was phenomenal in terms of learning and experience. I still rub cream on the back of my hand now and say, ‘Ooo, isn’t that lovely?’ because I understand how it was all made.

How was the reception of MLMs back then? Now we’re seeing a backlash, particularly with companies that don’t have a great reputation, make false promises, are quite exploitative.

Tim: Yup, and I think people are right to see a backlash against those ones who don’t deliver against what they say they’re going to. The key thing that I learned from Lord Sugar was to deliver on your promises.

The products that we put on were about empowering people to make a revenue from the products that we had already generated. But we had very clear outputs, a very clear rewards structure and had very clear marketing, which had no false pretence behind it. And the good thing about going on a television programme which had multi-million people viewing it is that you get held to account very quickly if you don’t do what you say you’re going to do.

So thankfully, all of the work that we did was regulated, it was checked and verified by independent people and delivered against the promises. What we were really focused on was them learning about business while possibly generating some income for themselves as well as using a good, highly potent and effective product.

If you were to go back on The Apprentice now and win the investment (£250,000) rather than the job, what would you do with it?

Tim: Very interesting. I think if I were to do something today it’d be around artificial intelligence and some form of tech. You look at some of the industry sectors on a medium scale which are accelerating in excess of 20pc every single year and you’re immediately gravitating towards use of tech, particularly in the financial sectors. The fintech market has been amazing.

I think there are some really interesting plays in the insuretech space and the edutech space. Education and people insuring against risk are never going to go away.

If you look at some of the fast-growing businesses at the moment, they’re providing ancillary services behind businesses, so courier servicing, making sure that you can deliver consultancy advice and guidance into business. Or anywhere around tech in terms of promoting business propositions. Those are the areas I would’ve come up with a proposition for him to give me some money for.     

I know you’re supportive of apprentices. From a small business owner’s perspective, we’ve seen that some are put off hiring apprentices because they don’t have time to train them or they can’t afford them. What would you like to see that would make things easier?

Tim: I think for small businesses you’ve got to make the decisions which are really important to your company. You can’t just follow on. It’s got to be right for you as a business. The difficulty with a small company is if you make a mistake the impact is much bigger than in a bigger company where you make a mistake, it might not be right, but you can move around and you’ve got the resources to absorb that.

Small businesses have to make really critical decisions around can they take on an additional wage because when you take on an apprentice, it’s not a free resource. In my opinion, you have to pay them the living wage – and the London wage if you’re in the capital. Then you’ve got to work into the equation how long the value add is to you as a business owner. They’re going to have to learn the ropes and get off the ground before they become of value to you as a small business.

And the training that comes with an apprenticeship – how valuable could that be to an organisation in making an assessment? It’s not for every small company, with the amount of supervisory element to an apprenticeship programme, the resources may not be there for a small business to be able to go along that journey yet. But it’s something that should definitely be on the agenda and maybe for the smaller to medium-sized businesses that are growing, as opposed to the micro businesses who are at the beginning.

I’m going to take what is typically seen as a more morbid turn here. I understand that you are the director of a company called death.io.

Tim: Yes, I am indeed. And rather than scaring lots of people, it should fill them with joy. What we have done, and when I say we it’s me, my co-founder Paul Wiseall and our chairman, Tom Ilube, have come together to start a company which is using artificial intelligence to help people better prepare for the inevitable.

And the rather shocking title of ‘Death’, similar to the likes of Virgin or Google, makes you wonder what this is about, where is it coming from and it’s a bit of a shock factor. We want it to stick in people’s minds that this is one of the last taboo areas that you should be talking about. Because the whole industry is a conversation which happens behind closed doors, in hushed tones, and no one really wants to speak about it.

There are so many different ways to talk about death. What we at death.io have done is utilise technology to help you live forever. We are able to take the essential elements of you as an individual and tell your story, tell us the significant moments of your lives and utilise technology to create a virtual person out of those recollections, which others can interact with.

Is that verbally or in writing?

Tim: Both! At the moment, we have a platform which allows you to talk using typed words back and forward to your avatar. But the developments are quickly incorporating voice into that. So very much like you might like you might tell a speaker to turn the lights or the music on in your house, you will have the ability to talk to yourself via one of those devices as well.

Anna: Oh, that’s kind of eerie.

Tim: In one way, I can understand why people think, ‘Oh my gosh, I don’t want that, where would that come from?’

But at the same time, bringing it to back business, I had the privilege of speaking to the head of the Chinese Takeaway Association. It was very interesting – I didn’t know one existed – but one does! What he said is that you’ve got a lot of people who have come over as immigrants to this country and worked really hard to build up fantastic businesses within every single major city in the world. They’ve done that to facilitate a better life for them and their children. What happens though is that these children go to fantastic schools, go off to university, and may decide that they don’t want to run Mum and Dad’s Chinese takeaway. What happens to all of that information? What happens to all of that insight around how you pick stock, how you purchase stuff, how you set up a marketing campaign to get people to do stuff? That information has to go somewhere otherwise it just passes with the individual.

It’s also an opportunity for us to make sure people have their lives in order: have you got the right insurance in place? Have you got the right protection for your family going forward? We have the facility to let people do that in a nice, friendly, social way.

Yeah, from what I saw I like the holistic approach of it, especially with the blog. It’s touched by so many of today’s topics like rapidly advancing technology, sustainability, gender identity. It’s fascinating. I like the tone as well – normally with traditional funeral care providers and planners there’s a formal and sombre tone where again, on the blog, it helps breaks the tension around, as you say, a taboo subject.

Tim: We had a great conversation with a phenomenal agency called Ready Ten, started up by a very good friend of mine, David Fraser. He was the only agency that picked up the potential of this in terms of how you could turn this into a positive conversation. Their ideas around how you could really grasp a difficult subject like death – you have to talk about these things because they’re not going to go away.

We want to take the stance of not making light of the conversation, but in lightening the conversation around subject matters that have to happen. Like, if you got sick, what would happen? What’s your blood type? I don’t know – most people don’t know! If you don’t know what your blood type is or you don’t know if you’ve got any hereditary diseases, we have a way to capture that and share the true essence of who you are rather than the curated bit that you might do through other social platforms.      

I think there are some interesting ethical questions around grieving, the way that people’s memories are held. Because we touch so many people, you might want me to come back alive, but I might’ve been really horrible to someone else who doesn’t want me to continue on living. What are the ethical implications of all of those?

But for us as a platform, we want to give that ownership and option over to the individual. Where you can sign up to have this delivered in any way, shape or form based on what you feel those around you need. It’s not for us to act as judge and jury around that, but it’s going to be a very interesting development to see how far people want to take it.     

Well, I’d love to talk about this a bit more, but I must move onto our last topic. You’re an advocate of the Fight for Feedback campaign, encouraging employers to give interviewees good quality feedback. In your opinion, what makes quality, decent feedback from an employer?

Tim: I think it’s incredibly important that employers to understand that they have a responsibility to leave candidates with a good candidate experience from their resource process. Why is that important? I was always told that it’s important to say goodbye in a nice way rather than just say hello in a positive way. Those people will tell another ten people exactly how you treated them. It’s very important from an employer brand perspective to make sure that employees – whether they’re successful or not in going through a process – leave with a good feeling.

And the best way to leave with a good feeling is to be told ‘No, but this is how you could improve’. As employers, I think we all have a responsibility to raise the level of our candidates, and I think the only way you can do is alert them to what they can do better in the future.

Let me make it clear, because there are lots of very big employers who are saying, ‘Hang on a second, Tim – we see hundreds of thousands of people every year for our placements.’ Yes, that’s true, there are a lot of people coming through. It would not be impossible to put a structure in place which says to individuals, ‘You might not get direct verbal feedback from every person you spoke to but we can at least highlight the areas that we didn’t select you on.’

There are so many candidates who talk about filling out an application, taking the time to nurture a CV and make it bespoke to that employer, write the covering letter, do everything necessary, and don’t hear anything – not even a ‘no’. That’s a very negative seed that’s been planted around that brand and the value that they place around the people who interact with them. And for me, just to be able to say, ‘No, but these are the areas you fell down’ is as powerful as a half-hour phone call with an individual to walk them through exactly what they could do to improve. Now, the scale of when you can do that may alter depending on how far they’ve gone through a process and how senior the actual role is. I don’t mind that.

And the other thing to think about from an employer’s perspective is that it’s a two-way process. You could get some free marketing research from individuals who have interacted with you and they can tell you what they found and that can help you develop and get better as well. You can create a brilliant campaign, attract a fantastic funnel of talent, but you don’t know unless you’re asking them how they are receiving it.

I think feedback is such a small thing to do which can have such a big impact on how people perceive that brand and how they will go and work in the future. So, if somebody has a big problem presenting information in a way, tell them, help them to be better and you never know, they might come and work for you in the future because of that feedback. Plant good seeds; give good feedback.           

Anna: Well, that seems like the perfect place to end it on, so I’ll wrap up there. Thanks ever so much for coming on the show, Tim.

Tim:  Thanks so much for having me, Anna. Let’s hope that the sun is shining now in London and elsewhere and that all of our businesses improve. Thank you very much for having me.

Anna: It’s been a pleasure.

You can find out more about Tim at timcampbellhq.com. You can also visit smallbusiness.co.uk for more information on apprenticeships and grants. Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case. Until next time, thank you for listening.   

In this episode I meet Timo Boldt, founder and CEO of recipe box service, Gousto. We discuss ethics, personal data and the importance of managing yourself before you manage others.

Be sure to visit SmallBusiness.co.uk for more articles on artificial intelligence and improving sustainability. 

Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case.

Want to read the Timo Boldt's podcast interview instead?

Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I’m your host, Anna Jordan.

Today we have Timo Boldt, founder and CEO of recipe box service, Gousto.

He launched the firm in 2012 and it has been growing exponentially year on year. Earlier this year they raised £18 million collectively from health influencer Joe Wicks, Unilever Ventures, Hargreave Hale, BGF Ventures, MMC Ventures and Angel CoFund. In July, they raised a further £30 million to develop their artificial intelligence technology, bringing total raised to £100 million.  

Boldt is also on the digital advisory board for Unilever.

Anna: Hello, Timo.

Timo: Nice to meet you.

Anna: Yeah, and you. How are you doing?

Timo: Very good, excellent.

Anna: Great.

Timo: What would you like to talk about?

First, I’d like to talk a little bit about the artificial intelligence side. I understand it is a substantial part of the business. There’s also a real emphasis on tech, so much so that you have a separate Twitter account for @GoustoTech. I was wondering – do you see yourself as a tech company as much as a recipe box service?

Timo: We see ourselves as a data company that happens to trade in food. We have always been on this huge, huge mission to be the most loved way to eat dinner and we can only really do that by harnessing the power of technology, transforming the way that UK families eat, plan, shop. So, technology is kind of the enabler.

AI for the past six, seven years has played a crucial role. And the idea is that when you open the app, you should see a completely personalised menu. I should see a different menu. We should only see what we really love to eat. I think that’s the power of AI integrated into the app and that’s providing real differentiation.     

From a personal data perspective, how are the pages personalised? What data tends to be taken to personalise these pages?

Timo: The section is literally called ‘Just for You’. You open the menu and it has a selection of recipes on it that only you should see, no one else should see. You can still browse the entire catalogue of the menu, but you don’t have to.

What we do is pretty simple – we look through your history, we look at what you ordered before and we try to make a recommendation. We also try to look at similar customers, so pattern recognition and then trying to predict what else they might want and then offering that to you.

And those algorithms are the exact two types of algorithm Netflix is using.

How did you find the transition when GDPR came in?

Timo: Look, I mean, I think GDPR has caused a lot of increase in process. Directionally, I think it’s quite good for the customer. We definitely had to up our game in terms of process and understanding the legislation. I don’t think that it’s has impacted, at all, our ability to surface better menus and better value for the customer. We welcome it, it’s fine.

I’d like to move on to Dragon’s Den. You appeared on the programme in 2013, but unfortunately you were turned down by the Dragons. You were contacted by an investor shortly afterwards offering you a substantial sum. How did that fit into the expectations you had from the programme when you signed up to go on?

Timo: Yeah – as a young entrepreneur, I think you have to try absolutely everything to get attention and raise money. I hand-delivered 100+ boxes to journalists. One of the opportunities that emerged was Dragon’s Den. I had an enormously fun time going onto the show.

I actually got two offers on the show – one they didn’t show and the other one we rejected. Duncan Bannatyne became a customer after the show which is almost better than getting money.

And as you said we had a great offer from a group of angel investors. They’re amazing people – they’ve all spent their lives in the food industry. They added not only capital but lots of knowledge, helping us in the early days to set up the supply chain. You know, talking to farmers, making sure we source the best quality food. I think it was a big catalyst for us. We didn’t take the Dragons’ money, but it was an amazing opportunity and we had lots of fun.   

Ethics play a big part in the business. It’d be interesting to know how you maintain those ethics throughout the supply chain.

Timo: We’ve always been on this mission to make the planet better off with every single meal we sell. In the early days, when I launched Gousto, I really wanted to find a way of taking the 40pc of food that’s wasted our system out of the equation, both in the supply chain and at customer level. By setting up Gousto we’ve really managed to take out food waste and that’s been a phenomenal part since day one. And it makes great business sense because you don’t waste food.

We are also extremely focused on plastic, on packaging. This year alone, we’re pledging to reduce plastic by 50pc and the team is on track. We’ve always had this massive ethos, or sustainability focus. Now that we’re larger, we employ people who really go deep into the supply chain to understand farmers’ credentials, animal welfare and so on. It’s very close to my heart.

I’m interested in finding out more about the food waste side. If you’ve got a certain demand for one of the meals on the menu. If you had leftovers – say you have potatoes, for example – you have a certain demand and have some left over, what happens to that?

Timo: What the clever guys are doing is that they are literally helping to come up with menus that reduce food waste to zero. One, there’s a huge focus on food forecasting, making sure we only buy what we really need. But then secondly, we can really play with the menu, so that we can make sure that we only use the food all the time when it’s fresh and tasting the best.

You talked a little bit about sustainability before – and it makes up a large part of the brand’s image. As we’ve mentioned before, you’ve got Unilever as an investor and you’re also a member of the digital advisory board.

Unilever hasn’t always had the best reputation when it comes to sustainability. For example, it was named one of the most prominent plastic polluters in the Philippines [research from Global Alliance for Incinerator Alternatives] earlier this year.

When you were presented with the opportunity to partner with them, both on an investment level and on their board, what was going through your mind? Did you worry that it might affect Gousto’s company image?

Timo: Almost no FMCG (Fast-Moving Consumer Goods) company in the world has done as much as Unilever has done for sustainability. They are so driven by the topic of sustainability. Paul Polman, the former CEO, is leading the agenda and the charge globally. I really admire what they’ve done.

Are they perfect? No. Do I work for them? No. Do they ask me what they should do about sustainability? No. I think they are a force for good. They’re not perfect.

I think when I joined the Digital Advisory Board, I saw an opportunity to impact and influence and raise the agenda even further. But I’m not working for them in any way – I’m an advisor, I’m unpaid and I think we have to work with large business to really drive change.

It’s amazing if Gousto can change the world. But ultimately, we need Tesco, Amazon, Sainsbury’s and Unilever to have impact at scale.  

Tell me more about your role on the Digital Advisory Board. What kind of things do you do in that role?

Timo: It’s an amazing board, they’ve got super-experienced CEOs from large companies. Unilever is spending £10bn on marketing per year and the big challenge is yesterday they got beaten up by Tesco, tomorrow they probably get beaten up by Amazon and Ali Baba. Everything is moving online.

And it gets even harder for them – their brands are getting cannibalised, competition is on price all of a sudden, the Chinese market is growing rapidly. It’s all e-commerce, it’s no longer in the shop.

I’m in a very humble capacity trying the educate the board around direct-to-consumer capabilities, our sustainability mission, that 100pc of Gousto’s revenues are online, how you build data science into your business model, how you hire tech people at scale.

I’m playing the tech advisory role, wearing my start-up hat.   

In the past you’ve talked about the importance of growing yourself as a CEO within your business. What do you mean by that?

Timo: I’m a massive believer in the power of learning and being curious. I’ve done an Executive MBA, so at weekends I’d go to Cambridge to upskill myself. I’m becoming a certified coach right now, so I’m on a one-year coaching diploma course in the evenings and on the weekend.

I also joined other scale-up wards, so I massively believe in this philosophy that everyone should aspire to be the best version of themselves. For me, the question is: how can I be the best CEO possible?

Seven years ago, I didn’t manage anyone, today we manage 500 people. Tomorrow, we’ll manage 1,200 people. I need to constantly upskill myself, leading by example, then role-modelling to the organisation that you’ve got to invest in yourself and you’ve got to take time off to think about your own development. I think that’s super important as the work is changing so fast. Plus it’s a lot of fun.    

I think it’s hard for business owners, particularly small business owners, to really take the time for themselves. How would you suggest alleviating the guilt that they feel a lot of the time and leaving some of the work to the people that they’ve employed?

Timo:  Yeah, I totally think that’s true. Lots of people feel like they have no time. I mean ultimately, if you want to be brutal, busyness is some form of laziness. We’re all way too busy, but as a leader you have to get yourself out of the minutiae and the day-to-day. I think you’ve got an enormous responsibility to lead by example and help people understand how important self-development is – reflection, reflection practice – so I think it matters, but it is really hard.

Once a quarter, I try going off-site to only focus on my own development. And I probably spend 50pc answering my phone and another 20pc responding to emails so I’m not perfect. I’m trying really hard, but it is challenging.

If you have the right people in the business and you surround yourself with amazing people, people are the key to success. The more incredible talent you have, the more structure you have, the more you can afford to get out. If you feel guilty you might not have the right people.

You can’t be controlling. In my head it’s not about accountability, it’s about ownership. It’s about giving people autonomy and then cheerleading them. Your job as leader is to set the North Star and then to galvanise people – buy them cake, celebrate, collab. Do whatever you can to make them feel good, celebrating every step towards success. If they fail, build them up again. Focus them on the richness of learning from failure. But it’s not about the day to day and controlling every step.

The food industry as a whole is facing quite a few problems – not problems, more challenges – as we go into the future. Particularly with sourcing enough food, changing temperatures, all sorts of things. What kind of challenges do you see in the food industry and what advice do you have for an entrepreneur looking to start a business in the food industry?

Timo: The bigger the problem, the bigger the opportunity for entrepreneurs. I think grocery is a wonderful market for entrepreneurs to enter and to do good. If you look at the grocery market, you’ve got huge supermarkets that for the last 50 years have built a supply chain of 10,000 stores which after 50 years is no longer fit for purpose. Everyone wants to order food online, people pay a premium for convenience, sustainability and health are so important. I think there’s a big opportunity around how we sell to customers, how we fit into their life.

I also believe that there are lots of issues on the supplying side, for example urban farming. In perfect conditions, you can grow organic salads and organic tomatoes using a fraction of the water that traditional farming uses, with none of the nasty chemicals. None of this is mainstream today, but in the next ten, 20 years, it’ll become mainstream and all of us will eat through those new ways of growing food and to me that’s hugely exciting.

Anna: The rise of hydroponics, growing food underground, things like that?

Timo: Totally, yup. But it’s in an embryonic stage right now.

Well, that’s it from me. Is there anything else you’d like to add?

Timo: The one piece of advice I’d give to anyone starting a business is to really focus on managing yourself before you manage other people. I think that’s one of my biggest learnings in building Gousto.

Having deep recognition of your own strengths and weaknesses, knowing how to handle your demons, solving your weaknesses, turning weaknesses into sources of energy and strength. You need to understand the ups and downs of the emotional rollercoaster of entrepreneurship. I think that learning this and building up the self-awareness and appreciation then allows you to have the energy to talk to other people and build them up when they’re down and to lead other people. But that to me is one of the biggest lessons I’ve learned.  

To help our listeners, what would you say is your greatest strength and weakness? How did you go about realising that and managing it?

Timo: My strengths are that I like people and I’m a people person. I’d say that I’m 99pc extroverted. I have huge levels of energy – I never run out of energy.

From a weakness point, I’d say that I don’t pay much attention to process and how we get there. I’m more focused on the idea and empowering the right people and I think that can alienate certain people sometimes because they might be more interested than I am in the exact process of how we get there. Whereas I feel like if we’ve got the right people, I should cheerlead them and they figure it out.

So over time, if you look at our team that’s surrounding me, they all pretty much play to my strengths, they offset some of my weaknesses, they are amazing at process and structure which I’m not the best at. I think that if you’ve built a system that plays to your strengths, you’re absolutely fine to apologise for your weaknesses every once in a while.

Anna: That’s really good advice. Well, thank you for that Timo and thank you for coming on the podcast.

Timo: Thanks so much and that was super fun. Thank you.     

Anna: You can find out more about Gousto at gousto.co.uk. You can also visit smallbusiness.co.uk for more information on artificial intelligence and improving sustainability. Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case. Until next time, thank you for listening.   

Anna Jordan talks to Jackie Fast, an entrepreneur, author, speaker and candidate on The Apprentice in 2018. We discuss how to build a business at home and how to get started with sponsorships.  

Be sure to visit SmallBusiness.co.uk for more articles on bootstrapping your business and managing your cash flow.

Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case.

Read the transcript for the podcast interview

Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I’m your host, Anna Jordan.

In this episode we have Jackie Fast, an entrepreneur, speaker, author and former candidate on The Apprentice.

She came to the UK from Canada in 2007 as a first stop on her European backpacking tour but decided to stick around and work as a sponsorship director at the Data & Marketing Association instead. In 2010, Jackie began building her business, Slingshot Sponsorship. She sold the firm in 2016 and is now running REBEL Pi, a Canadian ice wine company. 

We’ll be talking about building a business from home and how to make sponsorship work for you.

Anna: Hello, Jackie.

Jackie: Hello, Anna.

Anna: How are you doing?

Jackie: I’m very good, thanks.

Great. Let’s start with your arrival in the UK. What made you decide to give up your backpacking adventure to work in London and build a business here instead?

Jackie: Honestly when I arrived – I’m from a small town in Canada – my experience was minimal. I’ve always been very ambitious and very determined. A lot of the people around me were not so much. So when I came to London it really was to explore Europe because obviously people talk about it and I’d never been to Paris.

When I landed in London I was just overwhelmed with the energy of the city – not necessarily the energy you’d get from a city like New York but the people and the views that the people had here and the types of work that they were doing. I met a lot of people in finance and I didn’t even know that was a job that you could have and I was just blown away.

It wasn’t an immediate thing. I was supposed to be here for two weeks and then travel the rest of Europe and then I was like: ‘Oh, I love London, I’ll stay a couple more weeks, that went on to a couple more months and then I was like: ‘I don’t want to leave’ and then over time I thought: ‘I just really want to stay here.’   

When you launched Slingshot Sponsorship you only had a laptop and £2,000. How did you support yourself financially in the early days of the business? I’m sure a lot of our listeners will want to know.

Jackie: Not well! I’m pretty frugal, actually – generally. But basically, over those initial months I just cut back hardcore. I didn’t really leave the house for weeks on end. I wasn’t eating beans on toast, but I was certainly eating a lot of ready meals and stir fries and cereal. But for the first, I’d say, year and a half, I wouldn’t even go to Starbucks. I couldn’t even afford takeout coffee, quite frankly, because every single pound I saved was going towards hiring my first employee and it was really hard. Slingshot got successful early, but I didn’t really have personal money for at least two or three years, I’d say. And you know, I only literally just bought this house when I sold the business. Up until then, all my friends owned houses and I couldn’t afford to – I was renting. But I always had it in me that I’d make that sacrifice.

We’re recording in Jackie’s house, by the way, just for a bit of context. What about income?

Jackie: So, £2,000 could pay the rent for four months, basically, and I took a couple of commission-only things. I had a lot of small clients. It took me nine months to secure my first client. So, I’d take small jobs that’d pay £500, £600, £1,000 and I’d just live off those kinds of things and those kinds of projects.

I worked hard to try to get people to give me money, like all small businesses do, but I was really conscious about how much money I spent. And our website is a great example. When we launched Slingshot I went out to loads of agencies, everybody was quoting something like £7,000, £6,000 and I didn’t even have the money. I ended up going to a digital agency who I knew through the Data Marketing Association and asked to swap, to be kind of like a case study for them. It was kind of like a guinea pig thing and I ended up paying, like, nothing for it. I just bartered for everything.

Anna: It’s interesting because they say entrepreneurs, even when they start earning a lot more money, still have the frugal mindset all those years later.

Jackie: Yeah, I’ve always been like that. My husband jokes a lot because before I sold Slingshot and after I sold Slingshot – there’s no difference. We have a nice house and we’ve had some great travelling experiences for sure. But I don’t spend a lot of money – we don’t spend a lot of money. Almost all of the money I made from Slingshot has been reinvested in other businesses. I bought our house which is a huge accomplishment for me, but everything else has gone into making more money.           

Anna: Usually we ask about our guest’s specialisms, which in this case is sponsorships.

Jackie: It’s everything, Anna. What do you mean, just sponsorship?!

For a beginner, what is sponsorship and how can a small business owner make opportunities work for them?

Jackie: In a nutshell, sponsorship is a collaboration between two businesses. Most people look at sponsorship as a transaction of giving somebody logos or branding or badging in return for money, but in a lot of cases the big sponsorships are done in contra. In a way, the website agency I was just talking about – I swapped to be a case study for them and they gave me a website. In a sense that was a sponsorship and I think the future of all business is sponsorship. Most people will be familiar with stuff like FireFest and Beats by Dre. All of that is sponsorship.    

Any kind of collaboration between two organisations is effectively sponsorship.

How do you handle that first approach, then? I imagine that those relationships and creating those first impressions are very important.

Jackie: Actually, one of the things you said was the right and the other thing you didn’t.

A lot of people think it’s who you know. Everybody thinks: ‘Well, I could sell sponsorship if I just knew the head of HSBC.’ I know the head of HSBC and I’ve never ever sold him anything because I everything I ever had wasn’t a good fit for what they did.

Knowing people isn’t the point but what you also said is having a first impression. Where people fall flat is they don’t really understand what they’re selling, they don’t package it very well and they don’t value it. It’d be like going into a shop without a price tag, with rubbish stuff in the window, you wouldn’t go in. Same deal with sponsorship. And I think there needs to be an increase in professionalism for making those approaches and I think that Slingshot was testament to that because effectively, that’s all we did. I didn’t create events, I didn’t make something better – I took what I had and made it valuable to brands.

When a small business is starting out, what kind of information and events can they seek out to help them?

Jackie: I think there are two things. If you’re a rights holder, say you are an event or an online publication or a podcast or a travel blogger or whatever, it really is about how you package your assets and then understanding which brands to approach. I’ve written a book called Pinpoint which is the only book dedicated to sponsorship sales.

If you are a brand looking for a sponsorship, that in a way is easier because everybody wants money but from a brand perspective, it really is

• Is the event you’re interested in going to speak to your target audience?
• Do you have a good reason for being there?
• Is it authentic?
• Are you going to approach it in an interesting way?
• How can you connect with people in a genuine and authentic way?

And that’s best done by market research?

Jackie: I think it’s dependent on the brand but yeah, market research, I think, understanding your audience.

Let’s just say you’re after mums. Let’s say you’re a new gym for mums, or… I don’t know, I’m not a mother, this is the worst thing to go! You can actually look for a platform out there to reach mums. Race for Life is a huge one and it’s in local communities.

But let’s say you want mums based in Leeds. You can find forums and groups within Leeds and the events they’re approaching or the physical venue space. There might be a digital community or a forum and then say: ‘This is my product and I’m interested in working with you as a sponsorship.’ Not advertising – I’d never recommend advertising. And most people will have a sponsorship package.

What kind of things should you be looking for in that package, then?

Jackie: I would always look for opportunities that go beyond a logo – I don’t think badging is valuable anymore. Brand recall used to be valuable in the 80s, but we’re hit with 60,000 messages a day now. Your brain just gets tuned off.

So, I’d be looking for what kind of assets engage with your audience. Speaking opportunities would be something because they give you an opportunity to talk. Guest blog spots, posts, can we run a joint promotion, a campaign? Can we distribute free product? Those are the kinds of things I think really push the needle on sponsorship.    

As mentioned in the intro, these days you’re running Rebel Pi, an ice wine company, which is quite a niche. It’s also quite a risky business – you were explaining that it’s very dependent on temperature, weather conditions and people being able to pick grapes quickly in the middle of the night at short notice. How do you manage this risk, particularly in terms of cash flow?

Jackie: I’d probably say that I’m not managing it well. I went from selling ideas to selling a physical product which I wanted to do to test myself. It is very hard from a production standpoint because the only way to make ice wine is picking grapes at below -8C. If it doesn’t get below -8C, you don’t have a vintage, you don’t have a product. So, you have to be patient, you have to work with really smart people in the vineyard who know how to create ice wine each year and you have to be willing to ride it out.

In our first year, we’ve done really well, we’ve sold about 60pc of our bottles. It’s now listed in places like City Social, 67 Pall Mall, Pied a Terre, Dinner by Heston – all those kinds of top places. Now for me it’s asking: ‘Do we have enough production for next year?’ We’re holding back stock, so that if we didn’t get a vintage next year, we could then still distribute. I wouldn’t want you to be able to go into a restaurant, be able to order it and then next month you can’t – for 12 months.

I’m managing stock but from a financial perspective, I’m taking a hit, basically. I’m not talking about being profitable on this until year three, really. It will be – if all things go to plan – it’s not winter yet – if all things go to plan, it should be fine for next year. But in the event that we’re not, I’m looking long-term at this.  

I created this product because I was on TV and I didn’t want to waste my 15 minutes of fame. I wanted to have something that people could buy. That was a stupid strategy because the majority of the people who watch The Apprentice are 14-year-old girls. They can’t even legally buy my wine! I launched the business with an expectation that was incorrect and I’ve had to fix it. I’ve changed the strategy and everything’s fine. It’s great – I’m super-excited to be working with a product that you can touch, you can taste – I’m excited about it.    

It does seem like you have a very clear target market, especially the premium which I think people are moving away from more disposable, fast type things to buying less but better quality. It’s a better direction to go in.

Jackie: For sure – people are drinking less, people are buying less, but when they do it, they want to enjoy it. That’s certainly what I’ve found personally, and amongst my group of friends. And the greatest thing about ice wine in the UK market is that almost nobody’s had it. When do you get to give somebody a first? It’s so unheard of. I’m so excited about that.         

Yeah, for sure. You mentioned The Apprentice and it giving you a kind of platform. But you were already a seasoned and successful entrepreneur when you went on The Apprentice, having sold Slingshot. Alan Sugar even fired for you for being too experienced to be the business partner that he wanted. What did you get out of the programme in the end?

Jackie: I’ll go back to the first part. The only reason I did The Apprentice was because I sold my business. I don’t know if I would’ve had the courage to do so before, but I’d built enough of a name for myself so if I came across looking awful, at least I had a fallback on my previous success. Well, I mean you don’t know. You have no idea what you’re going into, so I was lucky.

Anna: So much of it is in the edit as well, isn’t it? You never know what’s going to happen!

Jackie: It’s unrealistic to think that – first of all, it’s an entertainment programme and I am not stupid to not be aware of that. It would also be naïve to think that you are 100pc great 100pc of the time. There are very long days, you’re working with people you don’t know, you have no idea what to expect, you can’t prep at all.

All of those mistakes that I made that were absolutely hilarious, I totally made. That’s not an edit, that’s 100pc what I did because that’s what happens – that’s what happens in life. You just don’t have a camera following you around 24/7 waiting for you to mess up.

But in terms of what I took away from it, so when I got asked, I was like: ‘I don’t even know if I can do this’, but then I did. My husband was very kind and said if I was awful, we would fly to India and blow off steam for a year. Fortunately, we didn’t have to move.

Now, in hindsight, if you asked if I would do it again I would do it in a heartbeat. It was so different than what I expected. What I got out of it was experience doing totally different things which I love. If I could spend a year doing that every single day, I would.

Anna: Oh yeah, the variety’s so much fun.

Jackie: I got to make doughnuts, I sold stuff at a bodybuilding thing, I created an art gallery. You couldn’t do those things in a lifetime. I was really fortunate to do that. I still talk to Claude Littner (one of Lord Sugar’s advisors) a lot and he’s been great and met some great people on it as well.

What was your favourite part of the process?

Jackie: I think my favourite part – at the time it was pretty stressful – I can say that I didn’t love being in the house. I loved doing the tasks. My favourite task was possibly the art task. Wait no, actually, that’s a lie – the shoe task! I lost, but my favourite task though.

What made it your favourite?

Jackie: I got to design a shoe! I love shoes and I got to be the boss, which I like to be because it’s easier. It was a lot of fun. It also played to my wheelhouse like selling stuff to businesses – and B2B sales is what I do.

You said you got along well with Claude. There was one contestant you didn’t have a particularly good relationship with. What advice do you have for working with a personality that clashes with your own?

Jackie: I think The Apprentice isn’t a real-life situation. My recommendation to myself was having more patience which I did not have. In a real-life situation, honestly, and this is not what people would say – avoid the person, quite honestly.

You won’t always get on with everybody, and people won’t always get along with you. And that’s OK, there’s nothing wrong with that. Being able to work with somebody that you don’t like is an asset. I wouldn’t try to beat a dead horse. You shouldn’t really be there to make friends with people, you’re there to do your job. You should also try not to make their job harder. My honest advice would be to have minimal interaction with the person you don’t like.

Anna: Just trying to stay out of each other’s space, I guess.

Jackie: Which in The Apprentice was impossible because we were living together!  

Anna: Smashing. Well, thank you so much for coming on the podcast, Jackie.

Jackie: Thanks for having me, Anna.

Anna: You can find out more about Jackie at jackiefast.com. You can also visit smallbusiness.co.uk for more guidance on bootstrapping your business and managing your cash flow. Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case. Until next time, thank you for listening.    

Anna Jordan meets Piers Linney, an entrepreneur, investor and former Dragon on Dragon's Den. We discuss the most memorable pitches from the show as well as Piers' first foray into entrepreneurship.   

Be sure to visit SmallBusiness.co.uk for more articles on starting a business and raising external finance.

Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case.

Want to read the interview instead?

Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I’m your host, Anna Jordan.

Today we have Piers Linney, an entrepreneur and investor who is best known for his time as a Dragon on Dragon’s Den.

We’ll be talking about Piers’ enterprising beginnings and how you can drive your small business forward, even during difficult spells. 

Anna: Hello Piers.

Piers: Hi Anna.

Anna: How are you?

Piers: Very good.

Anna: Great.

OK, as the intro suggests, I’d like to go back a bit. As we know, it’s easier for entrepreneurs to get started earlier and reach a larger audience, helped by the likes of selling platforms like eBay and Depop. But you were just as entrepreneurial, even when you were a teenager – that was before the introduction of social media, apps.

I understand that you used to sell the Sunday papers, but you bypassed the…

Piers: Ah, you’re going way back now! [laughs] Yup, yup, I did.

So, you bypassed the newsagent because you saw a gap in the market there and you want to the wholesaler and distributed the Sunday paper around your neighbourhood.

Piers: Yes, so, just going back to your earlier point. The fact that you can start a business more easily these days – there are platforms that help you in terms of distribution – it doesn’t mean you should. It’s still about the idea. What I learned early on – I’ve always been fascinated about business, really – I grew up in a village in Milltown, so a lot of the neighbours had their own businesses. I didn’t really know anybody who had a job in terms of getting up in the morning and going off to work. They were builders, joiners, jobs that you work with your hands. Maybe owned a quarry.

I sort of thought: ‘Right, I had a job’ which was my paper round, which paid £5 a week. If I was late it was £4.50, which shows you how long ago this was. And I thought: ‘This is just a mug’s game’. It was very cold up in the north in those days. Global warming’s made it easier. And I thought: ‘What can I do?’ So, one morning on a Sunday when they [the newsagent] didn’t deliver, my dad said to me: ‘Could you get me my paper? I don’t want to get out of bed.’ And I said: ‘OK, I’ll go and get it for you.’ And he gave me 50p. I said: ‘Hang on a minute, that’s pretty good money compared to what I’m earning on my paper round.’ The next-door neighbour said to me: ‘Oh, can you do the same?’ My dad was telling him about the new service. And I thought: ‘Hang on, there’s something in this.’

I flyered my whole neighbourhood and built a paper round. I was earning £15-£20 on a Sunday morning for doing a bit of a longer paper round, but it was first entrée and my first understanding that if you find a niche and you find a product or a service that somebody wants and it adds value to their lives, and they’re willing to pay you more than it costs to deliver that service, i.e. it’s profitable, then you can create value and – in this case, it was a small example – some wealth.

I used that money to buy my first and very expensive BMX. And through that I understand that the idea’s great and the execution clearly, but what it also came down to is a lot of hard work and graft.

I Imagine it must’ve taken quite a bit of confidence as well at that age. How did you approach the wholesaler and how did they respond to you?

Piers: I’ve never lacked self-confidence and it’s probably something that’s helpful in being an entrepreneur. Becoming confident or becoming a leader in many ways is something that can be instilled in you or you can be born with it, or it’s something you can learn. In the military, they can train leaders.

I was always confident, and I could see the opportunity to make money. And again, the wholesaler, all he got was another customer, it just wasn’t a newsagent. His bundle of papers, rather than drop it outside a newsagent, was dropped off at someone’s house, at a residential address. He didn’t really care – he was just making a bit more money.                

I understand that your mother set up her own business after retiring from nursing in the NHS, I’m sure that was some kind of inspiration to you.  

Piers: People say to me: ‘Who are your role models in life?’ I’ve never had formal mentors. My initial role models were my parents. My dad was a Mancunian working-class lad who got into Cambridge on a scholarship, so he was bright.

Then after that, it was people that I worked with. I’ve always worked with people who are more senior that are better than me. Then after that, I’ve always tried to hire people that are better than me.

I’ve had three meetings today and they’ve all been with people that know more about something that I’m looking to get into. And that’s really important because you never have all the answers. The world’s moving so quickly now and the market is so dynamic that you can’t be expected to have the answers. And if you think you have, you’re probably wrong.

What would you say in terms of small businesses being able to hire better talent? Perhaps because they’re nimbler, they can innovate at a faster rate. Would you agree with that?

Piers: I’ve been through this quite a few times where you’ve got a small business and you want to attract talent. Now, a couple of things: the first one is that, really, you shouldn’t be concerned about where talent resides. If you want to have a talented forklift truck driver, they probably need to live reasonably close to your warehouse. But if you’re looking at the creative economy and tech-based businesses, talent can live anywhere now. It doesn’t matter. The idea of a city even is arguably unnecessary going forward into the future. Don’t worry about where talent is, just go for the best talent.

You’ve then got to be more creative to access more talent because they’re going to have more people talking to them, they might have a nice cushy job in a big company. You’ve got to be more creative about how you bring them onboard, about renumeration. If you’ve got a company you intend to sell or float one day, you can offer people shares. You shouldn’t give shares in a company that’s intending to be a lifestyle business forever – unless you’re going to make money in dividends. Think about how you’re going to add value to their lives.

A lot of the entrepreneurs I come across think that these senior people who are joining them are doing them a favour. But you’ve got to remember that you’re doing them a favour actually because if they didn’t want to leave corporate life and do something more interesting and entrepreneurial where they have a better work-life balance, they wouldn’t be talking to you.

And when you bring people onboard – no matter who they are, how talented they are – think very carefully about handing out shares. Make sure that when they leave, for whatever reason, you can get them back.

But the talent is out there. And the other thing about talent that I’m very passionate about is diversity. There’s a pool of talent. If you’re looking for people who look like you, have the same religious beliefs as you, same sexuality as you, they live in the same area and went to the same school as you, you’re limiting your talent pool. Don’t do that. You need to think about diversity in all of its forms, especially in terms of thought as well, to access a broader and deeper talent pool. That’s the competitive advantage. There’s a huge amount of talent out there.

I’m a trustee of Nesta as well, the innovation charity, and if you look forwards, the research about robotics and AI, menial jobs and even jobs such as accountants and lawyers [are at risk]. Software’s pretty good at adding up numbers, it’s pretty good at looking at datasets and applying logic to it. It’s not just Uber drivers and forklift truck drivers that have got a problem; it’s the professions. So, creativity is what differentiates us from the machines. And the talent you access in the future is going to have that creative edge.

My mantra is that you’ve got to have a plan, but your plan has to have some growth in it. Add some creativity, some innovation, some differentiation to your product or service to attract different customers. Having no plan for growth, in a world that is changing very quickly, is a very bad plan. You wake up one morning, and you find your market, your customers, your product, your supply chain – something’s changed which means that you’re no longer relevant or you no longer have a profit margin.

Anna: I was actually reading an article about ice cream vans the other day and they seem to be a type of business that – there are some that have moved forward but a lot of them are in the same types of vans, still doing your normal vanilla with a Flake and they haven’t moved on and they’re wondering [why they’re falling behind].

Piers: They should be doing smoothie vans!

Anna: Yeah!

Piers: It doesn’t matter what you do, 20-30 years ago – I’m generalising now – you could do that. I don’t think it’s a wise plan these days – ice cream van, corner shop, tech company, it doesn’t matter – to rest on your laurels. You’ve got to keep talking to your customers about what it is they want so you understand change, ideally before it happens.                       

You’ve spoken a bit about instilling the values of entrepreneurialism. How are you doing that with your two daughters?

Piers: Another interesting thing I’m quite interested in is the future of work, the future of employment. Dell has some research that says in 30 years, 85pc of the jobs that exist don’t exist today. There’s other research that says ten years out, half of them don’t exist today.

You’ve got an education system that’s training your children to enter a world that the teachers don’t understand, that I don’t understand. It’s very difficult. They’ve got to equip kids with these sorts of skills and keep them as a rally car, as I call it, to the unweighted so you could go left or right as you go over the brow of the hill – and that’s hard to do.

My daughter – I’ve got a daughter called Tiger. I got called into school, actually, by the head teacher. She said she’s been selling things at school and they need to talk to her. I thought she’d made a couple of quid. I asked what happened and the teacher said: ‘She got some erasers and she was making them funky and selling them on at a margin.’ I asked how much money she made and she said £60. They said that I need to tell her off and I refused. I take the point about taking money off the other kids, maybe there should be some kind of bartering, but I’m not going to punish my daughter for being entrepreneurial and making some money – that’s all she’s ever seen me do!

Anna: Exactly. Do you know who her dad is?!

Piers: It was quite interesting to see that. I bring them up to – they’re young, so I don’t really sit them down and go over how to start a business with them. But I think they get it, that my view is that – especially when they enter the labour market – is if you can, work for yourself. It’s got its problems, you sacrifice, it’s got its risks, but at the end of the day you’re masters of your own destiny.

You seem to have a knack for identifying emerging markets as well [Piers launched cloud tech firm Outsourcery before the cloud was popular]. What kind of emerging markets do you see coming up? 

Piers: I was into the telecoms which was the tail-end of that, really, the particular way it was done. I was into cloud and cloud is the way things are now. Since then I’ve been looking at what I do next. I made some investments, some work and some don’t, and I’ve been looking at doing something big, something disruptive.

I’ve been looking at wellness, so health, fitness and now I’m looking now more at going back almost into what I know, which is markets, SME services. I’m trying to disrupt those because a lot of them just have not changed, even since I was in them ten years ago. And even ten years before that, they haven’t changed. I think there’s an opportunity in there in services for small to medium-sized businesses to disrupt markets.     

Coming on to everybody’s favourite, Dragon’s Den. I’m sure you would’ve had a lot of pitches in your time on the show, but which was the most memorable one for you and why?

Piers: There’s two, I suppose. I’ll give you the negative, funny one first. That was Bathomatic, which was a chap that turned up wanting £1m or £2m for 20pc and he had a product which pretty much filled a bath and dropped some rose oil in it. I said I’ll do that myself actually. I don’t need to spend £15,000 on something that turns a tap on and off.

We asked what the money was really for. He had this pretend plaque/device that didn’t really work, it was a mock-up, and he said he needed a floor in the Shard for the marketing suite. You laugh at that, but I’ve heard about entrepreneurs who have got equally bonkers ideas and raised money from people. That was one of the comedy moments.

The most interesting one for me was a company that at the time was called Lost My Name and now it’s called Wonderbly. That was the leading producer of personalised children’s, it was books, now it’s increasingly content. They raised investment from the likes of Google and other venture firms, and they’ve been growing.

I was one of the first to do real tech on Dragon’s Den. There were four or five Israeli entrepreneurs walked in the Den and they all had their venture capital term sheet and I thought: ‘What’s there not to like?’ They knew what they were talking about and that’s been very successful. So hopefully out of Dragon’s Den I’ll make some money because it’s like a portfolio – some work, some don’t, some you lose money, some make money.

Anna: Yeah, it was as you were saying as well, personalisation is a huge market and growing, as is tech, so combine that –

Piers: Personalisation is everywhere now. I’ve met lots of founders recently and whether it’s books or baby’s clothes, technology allows you to do that now. It was very hard, very expensive to do this. Companies like the Moonpigs and all those kind of people in the world and the moo.coms, personalised greetings cards and business cards, is normal now. It was very hard to do a decade ago, so personalisation is somewhere where you can really add value.

People want to see personalisation, they want to see provenance, they want to know the founder’s story. The new consumer that’s beginning to amass disposable income, they want to see more, they don’t want to have some clever advert that’s sold on something they don’t really want.

But increasingly, people are interested in – not all sectors – but they’re interested in where did this product come from, who’s put it together, what’s the ethos of that business – how do they treat their customers, their employees, the environment – locally, globally. That’s what you need to think about because especially on the eco side of things you’re seeing now that the Millennials, whatever you want to call them – Gen Z – Millennials now have the…

Anna: Hiya!

Piers: Like yourself. Millennials are mid-level managers in most companies now, they’re moving up, because they’re getting older. And they are changing the way in which products and services are consumed – because these were little things that didn’t matter too much, they were seen as ‘got to have it for the marketing’. Now you’ve got to have it because if you don’t have it, they’re not going to buy your product or service.

Anna: And it’s so easy to research as well. So, if there’s something you fall down on, people can research it. Boom – there you go.

Piers: That means you have to be transparent about it as well.  Because if you’re not, people are going to start asking questions.

You don’t have to be, always. There are lots of people that make good money out of businesses that don’t do any of this. They just found a product. I mean, mobile phones. I used to be in mobile, and people made a lot of money out of it and the service was pretty awful. But at the end of the day, they had a product that selling it was like shooting fish in a barrel. Because it was an amazing new product that everyone wanted, nobody had one, so you couldn’t really go wrong – and those markets haven’t really changed much since.

At the time of recording, it is Small Business Advice Week. This year it’s running from 2nd-8th September. First off, it’s a little bit difficult to get around this topic and it may very well change by the time the podcast goes live. What advice do you have for small businesses to prepare and operate in the event of a no-deal Brexit?

Piers: Well, the problem with that is that we don’t know what a no-deal Brexit means. That’s the bad thing about it: we should not be in this position. The economy depends upon entrepreneurs and entrepreneurship and innovation. And having a period of time where – and I’ve seen this – on a large scale and also on a small scale, where investment, decisions, sales cycles, things have been delayed. That slows the economy down and it has slowed the economy down and that’s going to continue.

And even if we end up with a no-deal, and it’s been said that over time, we’re all dead. So, if you’re looking at it in one year it’s probably bad but in five years, ten years, things change and water will find its level again. But there’s going to be a period of time where the innovation in the UK, the economy and entrepreneurs are being stifled. And I don’t care what the outcome is, we should never have been put in this position.

So, in terms of answering your question, it’s very hard. It actually makes sense, and I hate saying this, it does make sense in many ways to delay investments. Maybe in terms of marketing or looking overseas or EU relationships or your supply chain. Just give it a week. It was worse six months ago, at least now you’re looking at maybe days and weeks. It’s a very hard question to answer.

Anna: It is, isn’t it?

Piers: It’s incredibly frustrating.

Anna: Yeah, we’ve had so many people ask.

Piers: There’s no easy answer to that, sadly.

Possibly something a little more positive. What is the most common question you get and what advice do you give small business owners in return?   

Piers: One thing I’m talking about this week a lot is financing.

I’ve worked in the US quite a lot and you look at entrepreneurs there and even small business owners, the ones who aren’t looking to grow exponentially, it’s about if you need to grow a business sometimes, your net income, your profits, don’t provide sufficient capital to fund your growth aspirations. You need to raise money. That could be debt, it might be equity. It depends where your business is in its life cycle and its profitability, and your balance sheet.

And a lot of UK entrepreneurs, it seems, are afraid of raising external finance. So, raising external finance isn’t for everybody, but given the numbers are 70pc-80pc of UK businesses would rather forego growth than raise external finance, that needs to change. I don’t know exactly how much, but by changing it you can put more into the engine of the UK economy, and how these businesses grow.

And that’s really simplistically about understanding your options. There are lots more options now: peer to peer lending or challenger banks or angels or angel funds, crowdfunding. There’s lots more ways you can raise capital which you couldn’t do five, even three years ago in some cases.

Go and look at the options if you need to grow, understand them and then it comes down to a contract. Be happy with the terms of that contract and the small print. Can you lose your business, can you lose your shirt? Are they draconian terms?

This is where you need a good lawyer, I’m not joking about that either. When someone hands over a term sheet or a document for debt (or a shareholder agreement if you’re looking at equity), you need to understand exactly what that means for you and not just if things go well. You need to understand what happens if things don’t go well.

Extreme examples – there’s no point having an investment agreement where you are restricted, you have a veto of you raising debt and equity if you need to raise more because they can hold a gun to your head, essentially. There’s no point having documentation for your start-up which says that in year four, you will hit this EBITDAR number (Earnings Before Interest, Depreciation, Amoritisation and Restructuring or Rent costs) or they have swamp rights. They can take over the board and fire you.

They’re extreme examples, but I’ve seen them. Both professionally and I’ve seen them in things put before me as well. So, understand the detail and the small print and make sure that if things don’t go to plan, you know where you stand. And I’ve known one example recently where someone built a business, they had a 12 million evaluation, they raised £2-£3million and within a month, they were out. They missed some sales target.

But don’t be afraid of raising finance if you want to grow because otherwise in many, many cases, you can’t really grow.

Anna: Well, that’s it from me unless there’s anything else that you’d like to add.

Piers: No - we’ve covered some ground there.

Anna: Thanks for coming on the show, Piers.

Piers: It’s a pleasure.

Anna: You can find out more about Piers at pierslinney.com. You can also visit smallbusiness.co.uk for more information on starting and growing your own business. Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case. Until next time, thank you for listening.   

Anna Jordan meets Nicola Horlick, an investment fund manager and founder of business P2P lending firm, Money&Co. She talks about the slowing economy and why you should never go into the restaurant business.   

Be sure to visit SmallBusiness.co.uk for more articles about peer to peer lending.  

Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case.

Want to read the interview instead?

Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I’m your host, Anna Jordan.

Today we have Nicola Horlick, an entrepreneur and investment manager with other thirty years of experience. She’s the CEO of P2P investment firm, Money&Co, and as such, we’ll be talking about business finance.

Anna: Hello, Nicola.

Nicola: Hi.

Anna: How are you doing?

Nicola: Very well, thanks.

First, I’d like to ask you about moving from finance. How is it becoming an entrepreneur for the first time having worked in that industry for quite a while?

Nicola: Yeah, well originally, I worked for big banks and I was very lucky. I started at a big bank that was going very strongly and after that I was sent to another bank which had a very major problem with one of its businesses and I had to turn it around.

And then I went to the French bank, SocGen (Société Générale) and they asked me to set up a fund management business for them literally from scratch, so it was just me, a Frenchman and a secretary on day one.

That naturally took me to the point of saying “I really need to do something on my own now.” I’d sort of done everything within the banking environment and having literally set up a business from scratch it then gave me the bug, so to speak. The next step after that was to set up a fund management business with no big bank – just me – and getting some backers. I set it up in 2004 and it was approved in 2005 by the Financial Conduct Authority (FCA) that was Bramdean Asset Management.

I’ve set up numerous different businesses since then, mostly around finance. In 2011, I set up a private equity business called Rockpool with two guys who are both ex-3i (an international investor group). I then also set up some film finance businesses and I got involved in the music industry and I listed a vehicle on the London Stock Exchange to invest in alternative investments.

And then I’ve done less successful things like setting up a restaurant which was a very, very bad idea. I’m still trying to extricate myself from that now. But you know, it’s led me to a different world, really.

And then ultimately I set up Money&Co in 2013 and Money&Co is a peer to peer lending platform. So, it’s individuals who want a better rate on their cash lending to businesses to help them grow. Our bad debt experience to date has only been 0.04pc per annum. We’ve actually only had one bad debt in five years. And so with this, it’s not that we’re unique – there are others, Funding Circle is massive – that lend to small businesses. We take a more considered approach. It’s mainly because I’m a fund manager and I’ve been an investor for so long. Whereas a lot of the people running these businesses might come from different backgrounds – they might come from tech or marketing backgrounds rather than money management backgrounds.

What criteria do you look for in the businesses you want to invest in?

Nicola: So, we have some very basic requirements, like you must have three years of filed accounts; the company must have been profitable in the last year of operation; and it needs to demonstrate to us that it’s affordable for them to borrow so we’ll never ever lend to a start-up, for example.

I’d like to talk a bit about the peer to peer lending market. On the retail side, the FCA are introducing tighter rules for retail investors after the collapse of Lendy. How is that going to affect the business investment side and the industry as a whole?

Nicola: Well as far as I’m concerned, it’s a very good thing. Because when it started it was what was known as ‘light touch regulation’. So there weren’t many rules and it did concern me that there were people running these services who often didn’t have a financial services background and I’m not sure that’s the right thing for the lenders. A lot of them are older as well and are looking for income and it’s important to protect them as much as you can.

So I actually welcome the new regime which is going to come on 9th December by the FCA which is going to tighten up on all of this stuff because it’s hopefully going to mean that the right people are lending and that the people doing the lending on their behalf are better qualified to do that and that their money is better protected.

So, Money&Co, as far as you can see, will always exist as a P2P lender? Will you ever introduce other products?

Nicola: I mean we could, but that might confuse people. I think we should focus on that because there are huge opportunities in lending. My own background is very much an equity background, so I’m relatively new. I’ve only being doing lending for five years out of 36 years of being in financial services., so I’m a relative novice.

There are huge areas of lending that you can bring into the P2P arena. So for example, leasing is an absolutely vast industry. There’s £100bn a year of leasing contracts in this country, 25 of which is business critical leasing. So that’s the printing press for the printing company or the trucks for the trucking company or the dental suite for the dentist: things that those businesses can absolutely not do without. There is absolutely no reason you can’t put those in a P2P environment, those types of loans.

And housebuilding is a very good example of where banks are reluctant to lend – there’s a shortage of housing in this country. There’s no reason why we can’t devise a product and in fact we are in the middle of doing just that, for that industry to build more houses. And that’s taken us to the point of thinking that prefab has never properly taken off in this country. It’s much more of a thing in countries like Germany and Austria, but that’s a way of building them much faster and in a much more eco-friendly way, because you can insulate them in the factory and you can put the houses up in a couple of weeks. You can fast-track the build so that instead of having men standing out in the rain putting one brick on top of another, which is crazy in this day and age, you can assemble them really fast and you can make much more interesting developments architecturally.

It’s a bit like LEGO; you can have all different shapes and you can make it more interesting. So, we’re looking at ways of raising money from institutions to actually fund housebuilders. Now these would still in effect be P2P loans but from an institution lending to a housebuilder rather than an individual lending to a housebuilder.

Coming back to you as an entrepreneur, I understand that Money&Co has suffered a significant financial loss [£1.4m going into March 2018]. You have said there’ll be a substantial profit going into March 2020. What are your recovery plans and how will you go about setting them?

Nicola: Ugh, this is such a typical Daily Mail story. If you actually look at how much money we’ve lost in the last five years and compare that to Funding Circle, it’s a fraction of the amount. Funding Circle in 2018 lost £50m in one year. Money&Co has made very small losses relative to Funding Circle.

My aim is to make the business profitable as soon as possible because I don’t really believe in building businesses that make losses and losses and losses. And we could’ve lent an awful lot more money if we’d burned more money, but that’s not our approach. Our approach is to build it in a very steady way and I do expect to make a profit… well, certainly break even in the year to 2020.

In fact, we may not because it depends how much we spend on marketing. And you know, if we really want to accelerate the growth of the business, we may decide we want to spend more on marketing. If we spent less, we could make a profit; if we spent more, we’re going to end up with a bigger business the year after. It’s a fine line.

How do you make that decision of whether the marketing is worth it?

Nicola: Well, just before I spoke to you, we were having a meeting about that and just going through our marketing strategy and trying to decide how much we should spend. It’s quite formulaic, really. We sort of know.

Of course, we’ve got this problem – not really a problem – but the fact we’ve got the FCA which is tightening up all the rules which makes direct consumer marketing a little bit more complex than it was previously. But it’s a bit binary, you know – if you spend this amount of money on Google in its various forms, you’re likely to get a certain number of clients. So it’s really a matter of how much we want to put into the hopper and how much we’re going to get out at the other end.

And also, how many loans we’ve got that we think need to be funded? But assuming we are able to get the institutional money that we need to get to help us fund housebuilders, we’ll certainly be at break-even and probably make profit by the year to March 2020. But I don’t make any apology – it’s a start-up fintech business. That’s what fintech businesses do, make losses.

You started up in 2013, correct?

Nicola: So the company was formed in 2013 and then we launched the business in 2014, April, the site went live. And we completed the first loan in July 2014. 

Right, OK. Normally with a start-up company, it’s usually the first year or so that’s a bit crackly but then it starts to even out after that.

Nicola: What, in terms of profitability?

Anna: Yeah.

Nicola: Yeah, well not in fintech. If you look at all the people with fintech businesses who have been running them over the last few years, you’ll see that they’ve all made big losses. It’s sort of accepted that when it’s a new industry, you’ve got to establish the industry and you’ve got to throw money at it in order to create it. It’s not like setting up shops – well actually, shops are a pretty bad example because they’re not very easy to do these days – but there are more traditional businesses where somebody might have been working for an engineering company and then sets up on their own.

Usually the rule is that companies move into profit in year three, in its third full year of operation, that’s what I’d normally expect. But you know, with this, there’s a discretionary element to it which is the marketing spend. We could just run a business that is profitable and keep it small, or we could decide to make it to make it a lot bigger and in order to do that we need to spend a lot of money on marketing.

What do you think about the state of business in the UK, especially in the light of Brexit?

Nicola: Nobody seems to have noticed that the economy has slowed down very significantly. And we do see it – though a lot of our loans are property-backed loans, we do have some engineering businesses, for example, that we’ve lent to, that are beginning to see a slowdown. And that is Brexit-related in that uncertainty means that people don’t make decisions.

So, businesses have not been investing because they don’t know what’s going to happen and there is evidence that car manufacturing companies, for example, are beginning to move things out of the UK. And the number of cars being manufactured in the UK is down 20pc so far this year on the same time last year. These things are beginning to impact on the economy, and they’ll have knock-on effects on all of the businesses we lend to, which is one of the reasons for being very cautious and one of the reasons why I have been so cautious about growing our book.

But yeah, I have found generally, during my investing life, that I make a lot more money in bad times than in good. Because in good times any fool can make money, because everything is going up. In bad times, your skill comes into play. It sounds counter-intuitive, but I’m likely to be lending a lot more money in a recession than when things are booming because I will be taking on less risky loans.

It’s just that lenders tend to withdraw; they react to recessionary conditions. The banks react during recessions. So, during a recession, there are more opportunities for people who have money to lend. I expect there to be a recession and I expect to build the loan book faster, rather strangely, than I was when things were going really well. When things were going really well, you had Funding Circle throwing money at these borrowers, you had banks, you had international banks, you had vast amounts of money sloshing around. We had quantitative easing – a lot of money being printed. If it’s being printed you’ve got to do something with it.

All of that will come to an end and it’ll be much harder for borrowers to find lenders and that provides us with the opportunity and means we’re more likely to find better-quality borrowers during that period of time.

And one last thing I’d like to talk about. So the restaurant, Georgina’s, that you used to run, went bust. What are the toughest lessons you learned as an entrepreneur?

Nicola: Well, it’s not quite true to say that it went bust. What we did was we closed it down and we moved to a different location. Although it wasn’t called Georgina’s – we called it The Walrus Room – and it was in Battersea Rise. It’s more a bar with food rather than a restaurant.

And we’ve just got a new manager to come and manage it. I’m still involved in it, but it’s a nightmare industry and I absolutely recommend that nobody should go into restaurants. I think it only works if you’re a really talented chef and it’s your restaurant. Or if you’re Pizza Express. Anything in-between doesn’t work, so just a vanity thing where you open a restaurant because you like the idea of owning a restaurant, that’s a very, very bad idea.

What are the toughest parts of running [a restaurant]?

Nicola: Well, the costs are just ridiculous. The rents on the high street are still ridiculously high. A unit on Georgina’s – the original unit – the annual rent was £65,000 a year. The Council Tax was £28,000 a year, I mean it’s outrageous: £28,000 a year?! Then one-sixth of your turnover goes to the VAT man, plus we had 14 employees because it was a full-service restaurant. So, we had to pay 13.8pc of the wage bill in national insurance. You’re basically in business to pay tax and rent – that’s it. And the idea that you’re going to make a profit, unless you’ve got some really big-name chef behind it, is pretty much impossible, in my view.

And finally, coming slightly back to my first question, what tips do you have for entrepreneurs – or want to be entrepreneurs – starting their own business for the first time?

Nicola: You need to make sure you’ve got some proper funding. A lot of people end up funding their business through credit card debt or getting loans from loan sharks, I mean that’s just absolutely not the way to do it. The Seed Enterprise Investment Scheme (SEIS) is a very, very good thing because it allows you to raise £150,000 and the people who invest can get 50pc back as long as they’re UK taxpayers.

And so I think people need to put in the work at the beginning to make sure they’re raising the money before they’ve actually started the business and they shouldn’t be putting their life savings at risk and they shouldn’t be putting their money on credit cards or going to loan sharks. It’s really important to make sure that the business is financed properly from day one. 

Anna: Great. Thanks ever so much for coming on the show, Nicola.

Nicola: Not at all.

Anna: You can find out more about Money&Co at moneyandco.com. You can also visit smallbusiness.co.uk for more on alternative investments. Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case. Until next time, thank you for listening.    

Anna Jordan chats to Caprice, a supermodel turned entrepreneur. She tells us more about the struggles of the model stereotype in starting her first business and protecting your brand when you enter a licence deal.   

Be sure to visit SmallBusiness.co.uk for more articles about starting a company and Government funding for small businesses.  

Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case.

Prefer to read it instead? Here's the transcript.

Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I’m your host, Anna Jordan.

Today we have Caprice Bourret, a former model turned businesswoman. You might recognise her from the front covers of Vogue and Esquire or from her appearance on Channel 4’s The Jump in 2017. She’s here to talk about moving into the business world and the experiences that came with launching her lingerie brand, By Caprice and her homeware range, By Caprice Home.

Anna: Hi, Caprice.

Caprice: Good morning!

Anna: How are you?

Caprice: I’m…OK.

Anna: Nice. Right, let’s crack on.

When you retired from modelling you were well-known and then you moved into the business world where you were relatively less well-known. How did you rebuild your reputation in another field?

Caprice: That took quite a few years. I’m not going to paint a beautiful picture because it wasn’t. The stereotype was quite severe. I didn’t think it would be that difficult coming from being a well-known model to having credibility in the business world was difficult. But it took a lot of tenacity and I had to ascertain stockists.

So, I would call up and go directly to the CEO and try it that way because with buyers I was a bit chopped liver, regardless of who I was, so I went to the CEOs. I said, “Listen, I’ve got this great idea and this great brand”, ba ba ba. And most of them – you know, when you invest in a new brand, you’re talking about a massive investment in some regards.

When I started, it was a licence deal so they would invest. I know because I invested at least a half a million into a new brand, so I know it was a hard sale. And then when I started supplying myself, I didn’t have any sales so they just thought, “We’re just not going to invest – we could go with this brand and we know off the bat that we’ll make a quarter of a million in the first drop. Yeah, she gets notoriety and she gets press but we don’t get any sales traction.” So it was really really difficult initially.

The stereotype worked to my advantage in a way because I did get the meetings with the CEOs or the CEOs went to the buyers and said, “Listen, you have to take this meeting.” But then it worked against me because they thought, “Oh, a model. Come on, she’s going to be here one day and out the next. Forget it – we’re not going to make this investment.”

But all I needed was one stockist and I got the one stockist and then I worked at it and the sales were great. Then I went to the other stockists and said, “Listen, you can stereotype all you want but I got the sales.” So, I had to be very patient and in business it’s hard. Every time you fall down you’ve got to get back up and if you think you’re not going to fall down, then shame on you, because it happens. The ones that are successful are the ones who keep getting back up.      

Anna: You must have thought about branding yourself before you retired from modelling and building it up slowly. How did you start that when you were still modelling?  

Caprice: Welp, I have to tell you that when you’re in the modelling business – and not only the modelling business but when you have some notoriety behind that and you become sort of a household name – you start to believe your own bullsh*t, I have to tell you. It’s fantastic on the ego but you don’t think it’s going to end, ever.

But for some reason – I think because I know what it’s like to not have enough money to eat – I know what it’s like to be really really down and out, from nothing. When I was 18, my mom said, “See ya, good luck, write me a postcard!” I had no money, it was hard.

When I started building my career, it makes you a different person: it makes you a grafter, it makes you hungry, it makes you smarter. So, I knew that the modelling industry would – I was in my 30s and that’s, like, one foot in the grave regardless of how successful you are, so I knew I had to think of Plan B. So, I thought, “What will everyone buy into?” Boom: lingerie. Easy peasy. Right?

So I had to think about that while I was at the top of my game because that’s when I had the power – which I did – and I initially started out with a licence deal because I didn’t know what the hell I was doing, so I let someone else take the risk. I convinced the CEO of Debenhams to do that and he did and that was a smart risk to take because I made them very very rich! Then I took the licence back and started to supply myself.        

Anna: Let’s talk a bit more about the licensing. You were doing that six-year deal with Debenhams and with By Caprice Home you’ve just done a licence agreement with Sadaqat. They must’ve been totally different experiences. What kind of tips do you have for entrepreneurs who are going through that licence agreement process for the first time?

Caprice: So, every deal is different. Let me explain what a licence deal is to begin with. I give them my name and they develop my brand and supply it. Boom. You get five to 12pc of sales.

Now with Debenhams, they had creative control, they basically did everything and all I had to do was say, “OK, that’s pretty, yeah great”. It was pretty straightforward stuff. But with Sadaqat it’s a different kind of deal. I have creative input and control, because my name is much more established and I need to protect my name. So, it’s even more to my advantage to be more intertwined and not just to say, “Here’s my name, go get ‘em, bad boy, let’s do this.”

With the Sadaqat licence deal I had to build my brand first, [they] didn’t just take me on board with this new idea. I was supplying myself for two years – and then I had the power. Then I went to Sadaqat with gold on a tray saying, “Hey, listen, after two years, we’re making money.” And they were like “Oh, oh.” They’re like the Victoria’s Secret of the home world so there were no qualms – they took it.

Obviously, the contracts are iron-clad, you have to – but even with the lawyers I’m telling them what to say and what to do. I mean, you’ve got to be careful. You’re lucky if you get a good lawyer and a good standard contract but you even have to tweak the contract. You have to protect yourself, you have to protect your brand because when you enter the corporate world, they don’t have the same passion. They don’t dot their ‘i’s or cross their ‘t’s. They have more money than God.

You know, even though I have a licence deal, I’m very intertwined. Every single stockist I’ve gotten myself – even with Sadaqat – but I have this monster machine. I’m still micro-managing my brand right now. And for me it was really important to go with one of the big boys because now we’re expanding to the world. I just got into Bed, Bath and Beyond, into Macy’s, I’m hoping to sign a deal with this massive conglomerate and they base themselves out of Dubai so I wouldn’t be able to expand the way I’m expanding now [without Sadaqat].

This is another thing in business: you need to know your strengths and your weaknesses. Though some people become very complacent, “Oh we’re making money, we’re making six figures, this is great”, ba ba ba, but you have to keep growing. If you stay stagnant, you will die. And I didn’t have the capability to grow my brand. I needed more people – and even though I was working 12-hour days, I’d just had two babies and they are my priority and they are my business. So, I just couldn’t do it myself and that’s why I went for a licence deal.

Anna: Do you feel you were slightly taken advantage because of your lack of business experience in the early days?

Caprice: If you think you’re being taken advantage of then boo-hoo on you! It’s your responsibility to go out there and to learn, so that no one ever takes advantage of you. So I’m never a victim here. I am taking full responsibility for everything that happens in my life and that’s my power and that’s what I recommend to all – especially – I’m all about the women and I’m such a supporter of women in business and women in general. Don’t ever be a victim because a lot of us play that card. Don’t do it – you lose your power. You’re not a victim – you take responsibility and you move forward.

I learned every integral part of my business. I mean, I trained the people who are so-called ‘specialists’. I know how to manage my brand, I know how to market my brand, I know how to negotiate, I know about the factories. I know a lot about production – I don’t know everything about production – but it hasn’t been a detriment to me, not knowing everything about the factories.

But I made it a point to educate myself and I never went to university, I’m a grafter. It’s all about Googling, researching, asking and just doing. Sort of learning from the streets, learning from your mistakes and never making them again.

Anna: Has Brexit had any impact on the business?

Caprice: Yes. With the exchange rate – massive. Not so much on me anymore. When I was supplying myself, it killed me. The sterling dropped so tremendously and then obviously sales were impacted. It’s tough, I’m not going to lie. Retail is tough. That’s why I need to expand to the world.

Anna: I’ve read that when you started By Caprice that you made underwear and swimwear that you wanted to wear and that went wrong because sales suffered as a result.

Caprice: Oh my God, everyone knows?! I know now that my personal taste, no one else likes. So I will never let my ego get involved again because I lost money. It makes me laugh with corporates, right – they spend hundreds of thousands of pounds on these marketing research groups. Just look at your sales! Look at your weekly sales and understand your customer.

Anna: I understand that you were looking at the sales when you were partnered with Debenhams and that’s how you got ahead and got yourself out of the licence agreement to start supplying yourself.

That’s what I do, every single week. I’m obsessed with sell-through on every single stockist and that’s how I get to know my customers. And you know what? By the way, my customer changes. It used to be so young and I catered to that. Now, maybe because I’m middle-aged, it’s getting slightly older: age 18-42. It used to be 18-30. So I have to cater to that, the designs are different – they’re a little bit more elegant, a little bit more timeless, rather than quirky and fun.

Anna: Now we have more celebrity-led products, but you were among the early adopters.

Caprice: I was the first one. I know Elle Macpherson was doing it but only in Australia, she hadn’t come over [to the UK], so I was one of the first ones. That’s why it was so difficult for Terry Green – he was the CEO of Debenhams – to come on-board right away because this was a new concept. It wasn’t tried and tested. He took a big leap and was hailed king of innovation as a result because we sold out in, like, two weeks. This was the initial stages in 2000, I think.

That’s why I initially stopped doing a licence deal with Debenhams because I knew I wouldn’t be the flavour of the moment and they’d dump me. I had to be on top of my game and supply myself to other stockists while my name was hot, while the brand name Caprice was popular – and respected.

Anna: How do you think celebrity products have evolved since the early noughties?       

Caprice: You know what? It’s saturated. The market is absolutely saturated with celebrity endorsement. I think with some of the celebrities, it works for a year and they’re finished. Then they see who the hot Love Island winner is of that season and then they go with it. With my product it’s different. I actually supplied, I actually paid for the business, I’ve actually become a brand name. I’ve gone past the celebrity endorsement. This is a business.    

Anna: What kind of difficulties did you face in moving away from Debenhams?

Caprice: The biggest difficulty was that I was risking all my own money. In that first drop I almost lost a quarter of a million. That hurt! And then with the exchange rate – although it impacted me in 2009 – I lost over a million, just in exchange rate. I was so silly. I didn’t understand forwards, I didn’t understand how to buy currencies because remember all my factories were in China, so I was paying for everything in American dollars and then I was getting paid by my stockists in sterling.

So I was constantly exchanging money and I just didn’t understand how to do it properly. I didn’t understand forwards, I didn’t understand how to hedge, I would just buy on-spot. How stupid was that? It went from 2.05 to 1.37 almost overnight. I didn’t understand it so I lost a lot of money, so I never made that mistake again.

Anna: Of course, because you have to wear all the hats, as they say, when you’re a business owner but there are some things you just don’t have a natural knack for.

Caprice: No, and you know what I did? I did research and there’s some great, great Government funding and you have to go and research it. And there are people out there who will help you. This country encourages small business. There’s so much help out there – it’s really, really impressive, actually.   

Anna: Was it a combination of the money you made from modelling plus Government investment?

Caprice: Yeah, it was my savings, which I lost a lot, so I was hurting. Yet my brand was doing really really well.  By the way, everyone, I pay all my taxes and I’ve paid a lot of taxes for the last 500 years. I have the right to access this and I was smart enough to do this, otherwise I would’ve lost my business.

Anna: It can be so volatile.

Caprice: Oh, you just don’t know. Not only that, I had to completely readjust my business plan. But thank goodness, one thing that was really important to me was the people who worked for me – I’m quite loyal. So, I wanted that to be the last port of call to get rid of any employees. You’re supporting families, for goodness sakes. So I was fortunate enough to keep my employees but I had to readjust my whole business plan.   

Anna: What kind of adjustments did you have to make?

Caprice: Well, I had to cut back, even my collections, I had to cut back. I couldn’t take any risk anymore. Before, I was buying a lot of extra stock because I knew the buying patterns of my stockists and my stockists were buying differently. They were much more cautious. And they weren’t buying enough – I knew they weren’t buying enough. So I would take that risk and I would buy deeper at my own risk. I had to stop doing that.

So it did impact because I would run out of stock and that’s not good for a business as well – if you’re selling two months later then you have ‘out of stock’ all over the place, it’s a disaster, but I couldn’t take that risk anymore.  

I think for people starting out, understanding cash flow, because normally when you start a business you don’t see a return for three to five years – know that. And passion – you’ve got to be obsessed with what you’re doing because you live it.

Anna: Great. Well, that’s it from me unless there’s anything you’d like to add or any other wisdom.

Caprice: Honey, we killed it – ten times over!

Anna: Ha! Thanks for coming on the show.

You can find out more about Caprice at capricebourret.com. You can also visit SmallBusiness.co.uk for entrepreneur Q&As and other advice to help you start your own business.

Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case.

Until next time, thank you for listening.

Anna Jordan chats to Penny Power OBE, an author, public speaker, mentor and business owner. She tells us how a mental breakdown led her to realise her strengths as an entrepreneur.

Be sure to visit SmallBusiness.co.uk for more articles about looking after mental health and wellbeing in the workplace.

Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case.