James Caan, the new player in the BBC 2 series Dragon's Den, believes
that successful entrepreneurs are rarely one-man businesses and that
exceptional communication skills are vital to success.
That may indeed be true but many successful businesses begin life as a one-man
operation, with all the challenges that brings.
Jonathan Straight, founded Straight, which is now the UK’s largest supplier of
kerbside recycling boxes, in 1993 when it was, as he says, “just me, a desk,
computer, telephone and fax machine in an office the size of a cupboard,
which cost less to rent than my parking space”.
He adds: “I ran the business like that for about two to three years, which
meant that lots of regulations didn’t really hit me. But then in around
about 1996 I needed more space and took on a chap to do sales support.
“The business model effectively changed at that point because all the
processes beyond sales were handled by someone else.” But rather than
feeling protective of his business, Straight admits to feeling relief at
delegating.
“I didn’t find it difficult at all to delegate, and then I started to employ
other people, such as a bookkeeper and a financial controller, and build a
management team.”
For Straight and other entrepreneurs, the process of actually running a
business can get in the way of the creativity necessary to grow it. Building
a management team can actually free up time to do this.
“As an entrepreneur, you need time to feed the business creatively and to
generate ideas and strategic objectives,” he explains. ‘But you also have to
accept that when you employ, say, 30 people, you can probably have a
personal relationship with everybody but once a business gets beyond that
sort of size it is not viable that you will know everybody.”
Emma Kane, founder of City PR agency Redleaf, believes that when entrepreneurs
first set up a business, they have to sell themselves.
Chris Mottershead agrees. After quitting his job as managing director of
Airtours to found Travelzest, he found the biggest challenge was to persuade
people he was serious. “I had had all the benefits of people all around me,
but when I set up Travelzest it was just me,” he recalls. “I had to persuade
people that I was absolutely 100% committed and see it through. You have to
sell yourself and your concept, and demonstrate to clients that you don’t
intend to fail.”
But as a business grows it becomes vital to grow its brand value rather than
that of the individual otherwise clients will only ever want to deal with
the founder.
“You have to hire high calibre people to support you and drive the growth of
the business,” explains Kane. “Attracting the right people has its own
challenges. I think it is rare that you get it right in the early days. It
can also be hard to get people to leave the comfort of a long established
employer.”
“As a business grows, there is no way you can control every level of detail,”
says Straight. “And people can get annoyed if you tell them that they have
to work the way that you do.” Indeed, often they have better or different
ideas for implementing systems and processes that can help to grow the
business.
Timothy Grey, founder of corporate advisory firm Milbrook Partnership,
experienced rapid growth within his first year of business and ended with
seven employees.
“Delegating wasn’t too hard,” he says. “But it is the complexity of all the
other stuff, such as payroll, being compliant with health and safety,
stakeholder pensions, NI and healthcare and other benefits, that comes as a
shock.”
Grey advises hiring “very high grade advisers, such as a large chartered
accountancy firm, rather than one man on a bicycle” to give advice on
growing the business and putting in the requisite processes.
He adds: “You need the infrastructure they have - the shareholder agreements,
employment contracts, accountancy services and software templates –
otherwise you can waste a lot of time focussing on things that you are
personally not very good at.
“Most people are probably really good at three things, so you need the right
people who are good at the right three things.”
Much of Straight’s early business came from local authorities, which required
evidence of compliance with regulations. “We drafted and created policy
documents, such as on the environment and quality control, but it was not
really until we bought a rival in 2005 that we had proper processes in
place.” Straight merely introduced its rival’s processes and templates into
his business.
He adds: “Many people who found and run a business don’t actually want it to
expand, because size brings with it a whole range of other problems and
increased demands on your time.”
