At Merlin, we’re at our best when we’re helping clients reach their life goals. ‘Keeping the books’ is only part of the picture. Every business is really about people, and every business owner has their own hopes, dreams and fears. Some want to work hard now to retire early. Others want to give their children the education they never had, or leave a nest egg for the next generation.
We thought it would be interesting to learn what some famous business-people have to say about this. How did they get really clear on what they wanted? How did they ensure that they got their fair share of the rewards? What about their mistakes?
Here are five stories – and some valuable lessons – from some entrepreneurs in the public eye…
Cherish your most valuable asset
James Dyson has developed and sold successful products all over the world. But one of his earliest ventures taught him a painful lesson about ownership. In the 1970s he came up with a revolutionary wheelbarrow with a plastic ball instead of a traditional metal or rubber wheel – the Ballbarrow. Needing investment, he chipped in his design and patent while investors provided cash. The product’s patent was assigned to the company, not licensed to it.
As the business needed more money, the investors’ shareholding increased. In time, he lost control of the company and was forced out. Dyson described this as losing five years of work because he had failed to value and protect his own creation.
What’s the lesson here? You need to understand what your genuinely valuable assets are. This could be intellectual property, a clever technology, a brand or even a special location – and structure investment accordingly. Raising money can feel like the priority. But what you give away may actually be more valuable than the cash.
Bored? Don’t lose focus
Our next lesson comes from entrepreneur Nick Wheeler. He founded Charles Tyrwhitt and grew it into a large, popular clothing business. He says loss of focus was one of his biggest mistakes. In 1994, Wheeler got a bit bored with the company and decided to branch out. He launched a chain of children’s clothing shops, despite the original business already working well.
He lost more money in three months than he’d made from Charles Tyrwhitt in the previous three years. The lesson became even more painful because he did it again. About a decade later, when the company was doing £40m in sales, he brought in a new CEO who restarted the children’s clothing operation. It failed again.
The lesson? If you find something that works, focus on doing that one thing really well. Often the opportunity isn’t the new idea – it’s getting better at the business you already have.
Is the customer need genuine? Really?
Richard Branson is the most famous of our entrepreneurs. He built Virgin from a student magazine and mail-order record business into a group spanning several industries. But he knows that his attempt to take on Coca-Cola with Virgin Cola was a wrong ’un.
His company didn’t see how aggressively Coca-Cola would increase their marketing spend and put pressure on distributors. Branson soon realised that Virgin had been over-confident.
They had failed to follow one of their own rules: identify a genuine gap in the market and fill it. Virgin Cola wasn’t different enough from existing soft drinks to give people a compelling reason to switch. The lesson isn’t, ‘don’t challenge the market leader’. But if you do, make sure there is a genuine customer need or market gap before committing your resources.
Count to ten before saying yes
Julian Richer started Richer Sounds as a teenager and built it into a major UK hi-fi retailer. We have one of his stores around the corner in Exeter, and it’s been going strong for many years. Early in the company’s life, however, he made several foolish mistakes.
Some of these sins included using an unqualified bookkeeper (!), an unsuitable auditing firm and margins that he set too low. He also failed to put proper controls in place to prevent staff theft. The financial consequences were serious, but he did recognise and fix the problems. It dawned on him that selling at low margins wasn’t compatible with providing a high-quality service.
The most revealing lesson was his admission that he was impulsive and sometimes jumped at opportunities too quickly. It’s a useful reminder that mistakes don’t have to involve dramatic failures. Sometimes your business’ growth is undermined by neglecting the basics: financial controls, pricing, and cost management.
Want more control? Stay small.
In the 1980s, Anita Roddick and The Body Shop seemed to be everywhere. The company was founded in Brighton and built around ethical sourcing, environmental concerns and a distinctive brand. But Roddick later described taking the company public as a serious mistake.
Once The Body Shop was publicly listed, she felt the business was being judged only on measures of growth, profits and shareholder value. That created pressure to expand faster than she wanted to. She wished the company had stayed smaller and stayed closer to her vision.
Roddick also spoke about another operational mistake: hiring the wrong people. She said the company hadn’t defined the type of people it needed before relying on headhunters to find them. Together, these examples teach us an important lesson. The way a business is structured can pull it away from the values and strategy that made it successful in the first place.
Our five lessons
- Dyson: Protect the assets that make your business valuable.
- Wheeler: Don’t lose focus simply just you’re bored.
- Branson: Don’t enter a market without a compelling point of difference.
- Richer: Don’t neglect the basics.
- Roddick: Make sure your ownership structure supports your vision.
How Merlin can help
To find out more about our approach to financial and management accounts, please contact us. Our clients say that it’s useful to have a numerate friend prodding their thinking, especially one who understands the issues. If you’re not already a client, please get in touch here. You’ll find us a good fit if you’re looking for an accountant as an investment – rather than just a cost.
