In my younger years (40 this week!), I used to enjoy listening to Billy Bragg; the title of this blog comes from one of his songs (quoting Thomas Paine). It has long been recognised that we need to understand that different cultures mean we need to be sensitive about imposing solutions which appear sound. There are massive differences across Europe in terms of cultural attitudes towards management, leadership, accumulation of wealth and entrepreneurship. Something that works in the UK, may not work in France.

One of the interesting experiences I had about five years ago was trying to help a high flyer in the corporate world try and get involved in the ‘entrepreneurial scene’. It just did not work out for him; he could not get adjusted to the mentality of working in the SME sector and could not understand why as he did have a glittering career behind him. He eventually gave up and returned to the corporate world.

Equally, many high fliers in small companies do struggle when they join large companies. In my career, I did enjoy going from a start up (which was a total disaster) to Pricewaterhouse Coopers. Everything was different but I loved the atmosphere there and thrived (till I got bored with the internal promotion protocols).

Last week the government appointed Sir Phillip Green to an advisory position to help find savings in government expenditure. On paper, no one is better qualified than Sir Phillip to do this. He is one of the business people I really do admire for his business acumen, skill and judgment. However, he has walked into an area where culturally the fit could not be worse.

Sir Phillip, despite being one of the wealthiest men in the UK avoids paying any capital gains tax through virtue of being a Non-Domiciled person. There is nothing illegal or even suspect about that. He has organised his tax affairs like most people to minimise his tax bill. But that seems incompatible with a government agenda that is about maximising tax receipts and minimising expenses. For example, the government has just launched a big crack down on welfare ‘cheats’. The amount that is lost through this is less than could have been collected if Sir Phillip had paid UK taxes on his capital gains.

In business, owners can drive through changes just by issuing directives. Things happen when they want them to happen. The culture in government is very different and I think Sir Phillip will struggle with that different culture. I am still struggling to see why such a successful businessman would want to put himself under that spotlight.

The lesson here for Entrepreneurs is that sometimes when recruiting people (and more so with consultants – a whole different blog on that!) make sure they understand your culture. All cultures are not the same!

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In the last few weeks the new government has decided to cull the Film Council and all of the RDA’s (Regional Development Agencies). I think this is a case of throwing the baby out with the bathwater.

Thriving dynamic economies often have thriving state sectors as well. The lesson from the Pacific economies for me is how the role of the state can play a significant role in ensuring dynamic conditions for the private sector. Many business ventures require scale and market development which would only be possible through government action.

McDonalds benefited from the development of the Highways in the US in the 1950s and 1960s. They were able to acquire cheap sites on Highways and develop the notion of fast food. The internet started as a way of government computers being able to talk to each other. Which private organization would have invested in developing the Internet as governments would not have allowed this to remain the property of one company?

My problem with the Con Dem government at the moment is that it is pursuing ideological objectives (nothing wrong with that) but using the current state of our finances to justify these actions. Under President Obama, the US has used the same state of the economy to justify the massive expansion of the state. So it is not a matter of the state of the economy but about your own beliefs.

I am not sad to see RDAs and Business Link in particular go. The interaction I had with Business Link was extremely poor and I felt that they did an extremely poor job. However, that does not mean there is not a role for a state funded and run business support agency. Many RDAs were also extremely poor but some as NWDA (North West Development Agency) did do a great job in trying to create the right conditions for private companies to prosper and grow.

I have come to the conclusion that we in the UK do public sector business support really badly. But that is an argument for reform not axing. The Film Council did a great job in promoting the UK film Industry and in supporting an industry that does need infrastructure investments. It is hard to accept that this was not ideologically driven when the film industry was one of the few areas to demonstrate a strong return on investment. Culture was the only industry to show growth every quarter of the 64 quarters of GDP growth we had!

Of course it is difficult for my politics to not come out – but I worry that by attacking organizations like the BBC and the Film Council the new government is throwing the baby out with the bathwater. We should go back to basics and ask the question; “why do these organizations exist in the first place and do they deliver?” The RDAs and Business Link did not so they should be replaced by something that does work. The Film Council did deliver.

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One of the interesting things about having lived in both the UK and India (I was there from the ages of 9-11) was you do get to appreciate different cultures and you see how things are different. From the trivial example of restaurants where if you want to have a meat dish you would ask for the Non-Veg option! In the UK, meat eaters are still the norm.

The thing that seems very different in outlook in the West is the need to have an investigation into something or an enquiry and of course a scapegoat. In India, and I suspect other Eastern countries as well, fate is seen as playing a role in many things.

These thoughts were prompted this morning by learning that BP have ‘changed’ the role for their CEO Tony Hayward – he is being served up as the scapegoat. Everyone knows this, but yet it is seen as the right thing to do.

My concern with this and with all the enquiries we in the West seem to be obsessed about is that we take false comfort from their findings. There are some landmark enquires which can alter the face of organizations. Lord Scarman’s report in 1981 looking at the riots that took place in Brixton (South London) changed the way policing was carried out in the UK in a very extensive manner and has I think professionalized the police much more.

But then there are lots of enquiries where people are simply seeking vindication for their views. And I think many businesses fall into this trap of hiring consultants at great expense to tell them what they already know.

Watching Dragons Den last night made me realize as well that too many entrepreneurs ‘outsource’ the learning of their business to outsiders who write great business plans. This is why I will NEVER invest in a business where the management team do not own the business plan. I am highly skeptical of great looking business plans that are written purely for the purposes of raising money.

Of course that is a very important reason – but it would be even better if you learned about your business at the same time. And of course be careful to avoid hearing and seeing and what you want to hear and see.

As for me, I blame the scapegoat.

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Every now and then I get someone posting a comment on this blog that does get me thinking about an issue. One such comment came last week from an Entrepreneur who questioned what you could learn from Angels.

The sad truth is that yes, most ‘training’ consists of how to pitch. And the point the commentator makes is a valid one – how valuable is this training? After all, if a business is fundamentally flawed – the best presentation will not save it!

I hope the training most would be pitchers get is better and more comprehensive than this (please do let me hear your comments). So what value do I think I can bring to Entrepreneurs looking for Angel investment?

Most Angels have some business experience. They may not have sector specific experience but with all businesses the objective should be the same; to make money. And angels normally want to learn exactly how the business will make a profit – and how they will get their money out. But even then it can be a bit more complicated than that. I think that if Google pitched to me I would have said no. They solved a real problem at the start of the internet – how do you find things on the world wide web? But initially, they did not have a revenue model. They are now one of the largest companies on the planet.

And in the same way, many angels would not have understood the Skype business model (and wow to those that did!) Most angels will want to invest in “this is how we make money” rather than “if we build this, I am sure it will have value”.

For many businesses looking to raise money, I have found that the best training they can get is in the area of sales. Specifically, why would someone want to buy their offering and how would that place a value on it? Once you have convinced Angels that x, y and z want to buy your solution, you then need to have a plan of why you can supply this at a profit – it really is as simple as that. It is amazing though how many pitchers don’t get these truths.

If, as has happened, I have to ask you at the end of your presentation “why would someone want to buy your product” or “how do you make money”, you have probably blown it.

So here is my guide for what you should focus on

1. What problem do you solve? (Evidence of the value of the problem please)

2. How do you solve it? (Does it work?)

3. Who are your clients and how much will they pay for the solution?

4. Can you make a profit from engaging in this?

5. How can you really grow the business so that in 5 years (used to be 3 years – but time for Angels to get real!) my investment is worth 10x what it is today?

6. Who are the team? And why should I believe that they can deliver on the above?

7. Tell me all the things that can go wrong with the plan – and what contingencies do you have in place to cope with these?

That’s about it – I hope this is useful. Of course, a lot will go into each point – and perhaps I should write a blog about each point in greater detail?

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As you can probably gather from the title of this blog, I am in Halifax Canada at the moment. I am at my best here (and my next Blog – Momentum looks at what drives this). About six weeks ago, I ran the second “From Mind to Market” course for around 12 businesses. An innovation on this course was that after the course, each business would get one hour of coaching. This week I visited the companies to do this. One of the CEO’s said that he thought I had the best job in the world – I agree!

I thought it might be interesting to share some of the key learnings from the coaching for other entrepreneurs. The interesting thing was that each business had very different issues and different personalities – but were all looking for high growth.

1. If you are in a declining business or a sector where margins are being eroded, look at a niche within that sector that is growing. (Sounds nonsense but just try it – what is growing within your industry?)

2. Always ensure you have the skills to deliver in your chosen space. Profitable business is always about repeat business (you rarely make money in a product or service offering on the first sale – doing a great job is necessary)

3. Stick to Marketing/ Selling your solution – don’t try and sell your industry. (Let the association do that and support them)

4. Don’t do market research which is costly unless there is a significant capital outlay required before you can commence business. It does not make sense to spend time and money on this – if you can “just do it”

5. If you are a start up – don’t engage in channel or distribution partner strategies. The effort and skills required to motivate partners is not feasible for a start up

6. Price your solutions to make a profit! (obvious but how many times do we have pricing which reflects industry ‘norms’ rather than this truth?)

7. Control your costs – profit is sales less costs.

8. When you are growing fast – remember it is really draining on cash. Growth brings a difficult cash flow situation. Most businesses that go bust do so when they are growing! FACT

9. Borrow ideas unashamedly

10. Look at what employment solutions are available through the public sector (in every country there is bound to something to that encourages employers to employ people) Use these schemes. Especially if you are looking to engage a new skill set – or you are a service business heavily reliant on labour

11. Really understand what your customers are buying – not just what you are selling

There were some more key learnings as well – but they were a bit too specific to go into here.

I do hope you find this useful.

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Every so often it is nice to be able to help out some of my companies with a quick plug.

This is a short film that was made for AngelsDen by one of the creatives on Wooshii, (a company I have invested in and of which I am currently Chairman) .

A few characters you may recognise within…

For more information on AngelsDen head to angelsden.co.uk Where entrepreneurs and investors meet

Video and Rich Media powered by Wooshii.com

Plug - If you want an online video, animation, presentation etc then head over to Wooshii where they will match you up with a ton of creatives, from all over the world, that can help you out. wooshii.com

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I have now made 24 investments. 20 of these could be described as a pure Angel investment, where I simply wrote a cheque to the company and that was the end of my involvement. The returns show that my investments in these companies have been very poor. (As in I have lost a lot of money). The most successful investment I have made to date is Flight & Partners. This is a business I co-founded and own a 25% stake in. What is the one key difference between all of these investments; People.

What I have learned from Flight & Partners is that the reason for the company’s success is the quality and experience of people. A key thing though is the relevance of the experience. I have been involved in many enterprises that have not been successful but I would like to believe I am good. The reason why I think Flight & Partners worked (and is working) is it allowed talent to focus on what they are specifically good at.

The key to Fund Management is the ability to raise Funds and the ability to manage them. My contribution to the Fund Management was limited to bringing the key parties together. It was the ability of each of the other three partners in their particular fields that made the business happen.

In many other businesses, you see talent being recruited and deployed and yet the results are often disappointing. With hindsight, using my own personal experience it is because talent is being used in a field which is not the area of expertise or relevance. I do believe very strongly that you can train business managers to become better general business managers. But at the start up phase (first year at least) you need people with strong credibility in their chosen field.

With coaching, training etc you can become a much better business person. That is you can be trained into making better decisions. It does not mean that you will always get it right; it just means you give yourself a better chance to get the decision right. It is like going to University. Very few graduates ever use their subject knowledge in their career but the degree has hopefully taught them how to organise their thoughts better and make a judgment on a sound and logical basis.

There is a lot more to say on this subject and I will of course come back to this. What I have learned though that simply backing a business idea – no matter how good it is, does not work. It is always about the people. So questions to ask yourself when launching a business include;

1. Do I have highly relevant skills in the chosen field of business?
2. Do I have a team who have shined in this particular field?
3. Have I demonstrated an ability to be a general manager rather than a functional manager? (as in being a project manager rather than just an IT/ Sales/ Finance specialist)
4. Do the team bring together all the skills and experience needed to manage the challenges of a start up situation?
5. If not, is there a pool of Non-Executive but motivated talent available?

Best of luck.

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Many of you will not know who Brian Clough is. He was one of the best football managers ever and achieved something which I sadly think will not be achieved again – (unless someone like Wenger can do it with Arsenal). That is to achieve greatness without spending a King’s ransom. One of his quotes was that he would only tell someone they were great – if they were. It was cruel in his opinion to tell someone that they could excel as a player when they did not have it in them to be great.

It comes down to honesty and clarity. People like to know where they stand and what is expected of them. It is amazing that we accept this as a rule when it comes to the way we manage and communicate with employees, but not when it comes to business relationships.

Last week a good friend of mine told me of a story that is all too familiar to me.

They were running a great business with real promise and I for one fully expected the business to do very well. They got into negotiations with a Business Angel and the Angel was very enthusiastic about investing. He spent a lot of time with the business and even went on a lot of customer visits. He made it clear before Christmas that he wanted to invest in the business. The entrepreneur was also very clear that failure to get investment by January would have a serious impact on the business. The angel reassured the business that investment would be forthcoming.

You know how the story will go. Earlier this week the investor pulled the rug on the investment. The business is now in a serious position and will probably have to either close down or go into extended hibernation.

There is a school of thought that believes that all is fair in love and war and business. I have never believed this. The ‘strategy’ (if it can be called this) is to say yes to a deal and then wait till the last minute to change your mind. The idea is that at that time, the business will be so desperate that they will do a much better deal (for the funder).

I am old fashioned and I still believe that your word is your bond. Do not say yes unless that is your intention. I have said yes and then said no. But this is because of something I have learned through the due diligence process or basically being told a lie. Simply changing your mind is not an option.

So my advice to anyone looking for finance is to always do your due diligence on the investor. I will write the next blog about questions you should ask potential investors.

But till then remember “trust is good, but contracts are better”. Very sad but true.

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As I mentioned in a recent blog, I ran a three day course in Halifax recently from St Mary’s University called From Mind to Market. Given the last blog was all about looking for an idea – it seems to be appropriate to talk about what to do next.

Thank you for the emails requesting more information about the course, given the interest, I thought it made sense for me to write a blog. I would appreciate your feedback on this blog as I am seriously thinking about writing a book called “From Mind to market” – if your feedback is positive, I will start writing it, if it is not so good, perhaps the book can wait! Furthermore, I am running the course again at the end of March and am thinking of filming it. If you are interested, please do let me know if you would like a DVD or web access to the course.

The course was split into five courses over three days;

1. Is the Market Ready?
2. Writing and Financing a Business Plan
3. Sales
4. Planning for High Growth
5. Planning for the very long term

I trust the sequence of the courses makes sense. The first stage is to ensure your idea is validated. There are many ways of doing this and electronic media makes it possible to dry run an idea at a very cheap cost. Twitter/ Facebook and especially Linked-In, make it very easy for you to test out the appetite of your idea at a fraction of the cost associated with proving old ideas. I am very sceptical about market research – be careful that the results do not tell you what you effectively were paying someone to come back and tell you. We have all seen episodes of Dragons Den where we all know the idea is stupid. However, someone else has convinced, the would be entrepreneur that they have a good idea!

Once you have established that there is a market for your product/ solution, you will probably need some sort of financing. There are lots of sources to consider. Depending on the nature of your business, different sources may be more or less attractive. Remember that as a general rule, debt is cheaper than equity. Debt though is hard to get and especially in the current business climate. Make sure you clearly understand what the different providers of finance are looking for.

Sales is the lifeline of any business and once you have raised the money the best thing you can do is make sure you get selling and get selling quickly. If everything is not quite ready, let the customers be the ones to tell you what further hoops you have to jump through to get their business; let them co-author your final offering. Too many times I see companies develop solutions which are perfect for them but not the customer! You don’t get a second chance to make a first impression – so really put a lot of work into your sales process and execution.

High Growth sounds great, but it brings with it a whole heap of issues that you need to plan for. Critical to this is your ability to manage cashflow. As a high growth coach and as a manager of a turnaround fund, I see many businesses run into predictable problems – that could easily be avoided by managing cash.

Finally, once you are at a stage where you are confident that you have a good business in shape, you need to ensure that the business is equipped to deal with long term issues. For example, global warming means that weather extremes are more likely to occur with greater frequency. Does your business have a plan to cope with at this? (I was recently surprised to learn that some cheques I had paid into a HSBC branch were delayed by a week for clearing because the snow had meant that the cheques were not picked up by the delivery van on time! I am amazed to see even now how many retail businesses in the UK, don’t have plans to clear the entrance to their store when there is snow!

I hope this snapshot – and it is just that is useful. The course went for a full three days – so of course is much, much more. You can help me conduct my own cheap market research and let me know if yes you are interested in either

1. Attending such a course if it was run near you
2. Buying access to a video of the course
3. Buying a book

It is good to practice what you preach!

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I was watching some old TV footage of ‘alternative’ comedy in the late 1980s. The comedy was seen as alternative at the time (although it is mainstream now). The comedy was based on simple observation and finding the stuff that is funny and unusual about our everday routines. It was groundbreaking as it wasn’t telling jokes or finding a victim – the victim in this humour was us – we were being encouraged to laugh at ourselves rather than at a minority.

I know some very funny people and their ability is not based upon their ability to tell jokes but rather to just observe and make witty comments in any given situation. I could not help but think that the Entrepreneur has a similar ability.

They look at everyday situations and see opportunity. They see that things could be done better and that there is value to be provided in making things better. All of us are ideapreneurs – but some of us have an additional ability to take things beyond an observation and do something about what we observe.

Again, like comedians, it is about recognising the skills you have. Many comedians have a team of script writers providing the jokes and they practice the ability to deliver a performance. The script writers create the content – but perhaps lack the ability to perform (or more importantly, perhaps don’t want to) on a stage.

I always thought that Angus Deaton (former presenter of Have I got news for you) was hilarious and then I saw him in other programs and realised he was fantastic at reading scripts (a skill not to dismissed). In a similar vein, I was disappointed to learn that Elvis did not write any of his ‘songs’. Neither did most of the Motown legends. Does this diminish the power of some of their music? (It was actually The Beatles that were one of the first music acts to write and perform their own material). Scarily, you could argue therefore that Simon Cowell is taking music back to where it was pre-Beatles!

Back to the main point, we need to recognise that not everyone is a John Lennon and that the best businesses are all about a team effort and approach. I tend to have a good business idea at least once a week, but there is very little if any value in that. An idea is not a business. As one entrepreneur said to me – “until you have a customer, all you are is an idea”. But making the idea ‘happen’ is for another blog and is a course in its own right. (Cheeky plug here – I do run a three day course called “From Mind to Market” – if you are interested, please contact me for more information).

If you are looking for ideas – just be an observational comedian for a week or two. You will be surprised at the wealth of opportunities that are just waiting for you to make them happen.

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