I moved into finance very early on because I was good at maths and so you get shuffled into a career path you don’t really give too much thought to. Looking back I would like to say that I did it because financial skills underpin so much of modern business, but I don’t think I had that in my mind when I started out as an undergraduate at Price Waterhouse at the age of 17.
You have to be the visionary, you have to be the motivator, you have to be a good staff manager, you have to keep a lid on costs, you have to manage your investors, you have to look out for the competition and ultimately you have to deliver a product and service that somebody wants to buy. We are not all perfectly formed in our skills base. I think good entrepreneurs surround themselves with good people.
I think it was just naked ambition which got me going along an entrepreneurial route! In my mid-twenties I’d progressed quite quickly through a more traditional career path in chartered accountancy and then moved from the professional to commercial world, becoming a financial controller and running my own team. I remember thinking I really have to build my own business one day. It’s a control freak thing to be honest and I do think this is more nature than nurture.
Some people have an absolute determination and stubbornness to be entrepreneurial whatever that means. They just really want to run their own business and I don’t know why that is but you do have to have that as an entrepreneur. You have to really, really, really want it because once you start on that path of building an entrepreneurial business everything else goes by the wayside.
One of the things I see with businesses is that they grow to the point where they have some revenue but they’re not at the point of profitability. That’s a very, very risky point in a business’s lifecycle. That’s when control is necessary. Entrepreneurs, at that point, often don’t fully understand their own businesses. They lose control of their costs, they lose control of product quality, they forget to keep an eye on the competitor or there’s some fatal flaw which ultimately deals a blow to them. Another point of potential business failure is where you have entrepreneurs who can’t let go.
As a non-executive on a board, the biggest role is to act as a sounding board, coach or mentor whatever you want to call it. Typically, I come in once a month for board meetings and a couple of times during the month to speak to the founder to help build the business and spot the risks. Having been through it myself, being the founder or the entrepreneur myself and in other businesses being the non-executive director, I see that regardless of sector all businesses go through the same broad things. Obviously you do get challenges that pertain to particular industries but typically the market moves around you and you have to respond to that. You run out of cash, a key staff member goes AWOL, these management problems crop up again and again in business. My role is really to help the CEO, guide them, making sure they’re on the path towards the business objectives but also try and lift their head a little bit above the day-to-day and look at these more strategic issues.
Money is a motivation. People say, I put five years of my life into this and I really want to be able to get to a certain figure. All entrepreneurs seem to have a figure in their mind. It might be £1 million or £5 million but it is a figure which would make it all worthwhile for them.
If you have a good idea and you have customers that say it’s a good idea then okay your business model might not be quite right or maybe the staff that you’ve got aren’t the best or the technology needs tweaking, but you just keep reshaping and remodelling things until you get it right. Good entrepreneurs are incredibly resourceful.
I look for businesses that are unique and address a need. The second thing is really about the entrepreneur. Entrepreneurs have to pass the Australia test. If you’re at Heathrow sitting happily in your seat waiting to take off for Australia and someone walks down the aisle and sits next to you and introduces themselves what’s your immediate reaction? Do you think, ‘I’ve got 23 hours with this person’ or do you think, ‘They sound interesting, I’m interested to learn more about her or him.’? We all go through ups and downs with our entrepreneurs and so if the entrepreneur passes the Australia test then you’re pretty sure you can live the next six to eight years with them.
People used to say three to four years to exit but it’s more like six to eight years before exit. The worst piece of advice I got was from a business angel who invested in my business. When we hit profitability, he advised us to sell the business quickly and go on to start our next business. And my co-founder, who was burned out at the time, thought ‘Oh yes, that’s a great idea, we’ll do that’ and that became the focus. I went with it but your ambition to build a business again quickly becomes very, very muted.
I just love business. I am most comfortable in a meeting room or a board room just talking to other people and thrashing out ideas and talking about the mechanics of the business model and how are we going to commercialise something. That’s where I love to be and that’s what gets me out of bed.
“What it takes” can be read in full in vol 22/issue 1 of Business Strategy Review.