Multimillionaire James Caan has run dozens of businesses including Alexander Mann, the first business he built from scratch and sold at its peak with a turnover of £130 million. He went on to set up Humana International, a headhunting company that grew to become 147 offices in 30 countries and sold his stake in that before setting up private equity company Hamilton Bradshaw 12 years ago, which doubled in size year on year from 2012-2014 and is still on the up. What he doesn’t know about business and building them from the ground up isn’t worth knowing. Here are his answers to key entrepreneur questions.
Will my idea really make a business?
Your first idea does not have to be your best, it is only your first. Concentrate on finding the right one. Don’t worry if it’s not workable. Move on. Learn from the experience and concentrate on finding the right idea. The question to ask is not what is unique about your idea but what is compelling about it?
If you have an idea, you need to get feedback, and not just from family and friends. Part of the skill in being an entrepreneur is a willingness to seek out feedback, which can be negative, critical and disheartening – although you’ll need to recognise which is the most honest and useful.
Should I go out and get an order?
There is no reason why, whether you are selling a product or a service, you shouldn’t go out straight away and get an order right from the off. What is the one thing that you need to do to attract investment? It’s getting that first order! However exciting the feeling of landing your first order is, if you can’t deliver it and make a profit, it’s a false dawn. But don’t cheat the costs just to keep the deal and your dream alive.
'YOU LEARN MORE FROM YOUR MISTAKES THAN YOUR SUCCESSES'
Do my costings add up? You don’t have to be a spreadsheet genius to work out the costs of your business. Anyone with a calculator can do costings. It’s the most basic process of adding up and taking away. Remember to value your own time too, so include your own salary in projections. You’re not going to work the rest of your life for free! Not including the cost of your time distorts your selling price. Whenever you don’t add your cost in, the selling price, whether it’s for a product or service, appears to be cheaper so don’t start off with artificially low prices. Double check the costings. Then double check them again. And then get somebody else to check them. If your costings survive that level of scrutiny you can feel confident you’re on the right track. Does my idea work? Crystallization is that moment when your idea starts ticking the boxes, answering all the basic questions. The question today is: does your idea work? Avoid getting caught up in all the micro detail and focus on the key elements. Are you fulfilling a genuine customer need? If so, does the pricing make sense for that customer? Have you researched every aspect of the market in depth so you understand what makes it tick? And are you ready to embrace your idea, name it, and see where the journey may take you? If the answer is no, you need to be prepared to go back to the drawing board and start again. If the answer is yes… welcome aboard the entrepreneurial journey.
What have I missed? The further you travel along this journey, the more self-critical you need to be. This is the time you need to look even harder for that one thing you might have forgotten that could mean your idea doesn’t work. Then find the solution that will make it work. Even if you believe you have ticked all the boxes in the process, even if you have a real business idea that customers are genuinely going to want, one that you can secure an order for, with costings that work and a team in place to deliver it, then you must double and triple check just to be sure you haven’t missed anything. You should never be afraid of finding weaknesses or problems with your business idea because acquiring that knowledge will give you power to correct any errors, adjust the model and make your idea more bankable in the long term. You always learn more from your mistakes than your successes.
Have I put together the right team? Usually one person cannot be the ideas genius, the financial wizard and the salesman rolled into one. Genuinely multi-talented business people are few and far between. Setting up your own business doesn’t have to be a lonely and solitary journey. You may have the heart of an entrepreneur but you’ll need help along the way to assist with the key roles such as finance. The financial role is critical so ensure you have the right financial team on board to help you do all the basics if your idea takes off. They need to look after registering the company, sorting out PAYE, putting together a cashflow forecast and so on. If you understand what each constituent part of your particular business does, you can easily do a mental checklist of what you need. Who’s going to do the selling? Who’s going to execute and deliver the product or service?