Some of Britain’s most successful businessmen and women admitto ANITA RODDICK the best – and worst – mistakes they made while setting up their companies.
It is a myth that entrepreneurs never make mistakes. The ability to make mistakes and learn from them too, of course, is what marks out the most successful entrepreneurs in business.
I asked a handful of my friends who have set up successful businesses,all people I have worked with as partner or customer, and found that –actually – their best decisions and the worst decisions were often very alike.
The lesson is to look for the critical areas.
Authenticity versus business-as-usual My daughter Sam Roddick (erotic emporium Coco de Mer) said her best decision was ‘Making the products I couldn’t find and to handcraft them rather than manufacture them’, because ‘people will pay for unique quality’.
It was the same story with Richard Reed (Innocent Drinks). His best decision was ‘to call it Innocent and use everything that the namesuggests – purity, freshness, unadulterated, guilt-free – to try to inform every bit of our business from the products we make to the principles we run our business by’.
For Tony Cook (story and poetry website ABCtales.com) and Justin Francis (ResponsibleTravel.com), it was similar: to put social inclusion or social and environmental values at the core of the business.
‘It made the long nights seem a little more worthwhile and attracted some remarkable people to join the business,’ says Justin, ‘even when in the early days we couldn’t afford to pay them.’
Reed Paget (Belu Water) said his best decision was to give away 100 per cent of their net profits to fund clean water projects around the world. But he also claimed this was his worst decision, which shows what a close-run thing these critical decisions can be.
Your instincts versus outside experts Always listen to your instincts, says Susie Adams (The Susie Adams Rights Agency): ‘It’s tempting when struggling to get things up andrunning, to take whatever bits of business comes one’s way – what starts off not right, won’t come right.’
‘My best decision when starting out,’ says Ed Haddon (Napiers Herbal Healthcare), ‘was to think big and not limit myself to previous ideas of the opinions of other people.’
In fact, the best decisions named by a number of the people I asked were about not paying for the usual experts.
‘The experts and the home-growns ended up at loggerheads, the power of the culture became temporarily diluted. This was expensive and eroded morale.’
The worst ever made decision by Gus Colquhoun (of video production company Jacaranda Productions) was also to take on marketing consultants. ‘Over the years, we’ve paid a number of people large amounts of money to market our company and our services to clients,’he says. ‘They have all been a complete disaster. It’s taken us 18 years to realise that the only people who can effectively market the company is us, the owners.’
I can certainly agree with that, from my own experience. The trick is to know precisely where you need outside help.
Rory Steer (Freeplay Energy, suppliers of self-sufficient energy products) says his best decision was to hang on to their in-house research and development team.
But then, you have to remember you can’t do everything. Rory says his worst decision was to attempt to try to build the company into a ‘large, vertically integrated organisation’.
Then the decision is about which partners to choose.
Expert partners versus friendly ones Ed Haddon (Napiers Herbal Healthcare) says his worst mistake was tryingto do everything himself. ‘Now I have a great number two, I realise how much more effectively the business is run. It is very rare that the founder has a great attention to detail, and so having a number two who can make sure everything is done and that all the checks and balances are in place, is incredibly important.’
Rob Robinson (design and advertising agency Wheelhouse Creative) recommends going into business with a trusted friend and colleague with everything shared 50/50 down the line.
‘It is important to have someone who understands all of the issues involved in what you are trying to do,’ he says, ‘so that you can bounce ideas off them when required, to help you get to where you want to be.’
But it isn’t an easy decision. Robin Hutson (Hotel du Vin) says his best decision was to line up a ‘heavyweight’ non-executive director with excellent complementary skills. ‘He not only helped us to structure the business but critically imposed a discipline on us with regard to corporate governance right from the start,’ he says.
Edward Perry (of food company cookfood.net) lists as his worst decision delegating too much responsibility to a trusted non-executive financial adviser.
Sam Roddick (Coco de Mer) also lists as the worst decision: ‘Goinginto partnership with my friends. I was warned but I didn’t listen – big mistake.’
So in the end, it looks like a matter of taking Susie Adams’ advice about listening to your instincts.
Involving staff versus involving staff ‘To honestly reward employees for their sweat equity by allowingeveryone to co-own the company.’ That is how Andy Law (global business network Law & Kenneth Worldwide) describes his best decision.
‘This is because I believe creative companies should move from profit motivations to human (humane) motivations. Most people in work today are denied the basic rights given to any citizen in any democratic workplace.’
But he warns that you must remember that ‘every individual has different abilities and these need to be taken into account and rewarded, even in a co-owned company’.
On the other hand, Keith Abel (organic home delivery service Abel & Cole) lists something similar as his worst decision. There was no reasonto give shares away to get people to join his team. ‘Why? Because it was fun, and they had nothing else to do anyway, and they were taking no risks.’
Yet both agree on the vital importance of inspiring staff, and treating them as individuals, in both cases because that is what makes their workeffective. How you do it best – well, that’s what decisions are all about.
Borrowing money versus seizing opportunities Omer-Li Cohen (Omer-Li Cohen PR) says his best decision was to avoid borrowing money to start the business.
‘I was fresh, determined and gobby, so several investors – as well asmy bank – offered to lend me money to get the business going,’ he says. ‘I had a gut feeling that I wanted to do this at my own pace and be answerable to no one. I watched while other young PR entrepreneurs set up offices in the West End swanning around London in new BMWs, and with new Filofaxes and heavy rolexes. I had enough
savings to live on for three months and I knew I had to get clients in fast.’
The decision helped him ride out the recession in 1989-90. It is a feeling echoed by Sara Tye (Redhead PR): ‘My best decision was to start as frugally as possible and take as many calculated risks as I could,’ she says. ‘This meant working from my kitchen with four staff for the first six months.’
On the other hand, Robin Hutson (Hotel du Vin) blamed himself for being overcautious and not investing in a number of good property deals for conversion into additional hotels.
Simplicity versus control Rory Steer (Freeplay Energy) warns against taking control of every aspect of the business. ‘We ended up with an extraordinarily complex business that was very difficult to manage and exactly counter to the entrepreneurial spirit,’ he says.
‘Entrepreneurs are not necessarily very good managers and Freeplay in its initial format was actually a great idea, poorly executed and badly managed.’
Yet Diane and Shaun Lyndon-Smith (Crowns Hairdressers, Chichester) believe their best decision was to keep training their stylistsin-house. ‘This decision has enabled us to grow our business from within and train our stylists in such a way that they learn how to "grow" themselves and understand from early on that you have to keep stepping out of your comfort zone to reach greater heights,’ theysay.
‘It also gave (and still gives) us the opportunity to ensure thateverybody in our team understands that for us – and therefore for them – to be successful, the whole team is responsible for providing excellent customer service.’
Diane and Shaun also provided me with one of my favourite ‘worstmistakes’ – deciding to repaint their first salon fluorescent green and orange.
‘We thought it was trendy,’ they tell me. ‘Why was it our worst decision? Clients coming wanting sun-kissed beautiful blonde golden locks were in fact leaving with an added tinge of mushy peas. This didnothing for our customer service. The salon was repainted a few months later.’
But my award for the best good advice goes to Gus Colquhoun (Jacaranda Productions): ‘Always be friendly to absolutely everyone when you’retrying to set up a new business – because you never know who they might turn out to be.’
That is good advice. But what lessons are there from this?
The answer is that your most critical decisions in business – the bestand the worst – are likely to be in these very sensitive areas: how much money to borrow, what kind of partnerships and what the core values for the company should be.
Maybe when you decide what to do in these areas, you’ll be lucky enough to find they were your best decisions. But either way, you’ll remember what you decided.
"Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations." Steve Jobs