13 things only successful entrepreneurs can tell you about business
NET-A-Porter's Natalie Massenet, Made.com's Brent Hoberman, and Cobra Beer's Lord Karan Bilimoria share the stories behind their success
When starting a business, you're likely to seek out advice from just about anyone that can help you on your business journey.
So then, who better to get business advice from then the founders of some of Britain's biggest success stories?
Here, Natalie Massenet; founder of Net-A-Porter and chairman of the British Fashion Council, Brent Hoberman CBE; co-founder of Lastminute.com, MADE.com, and Founders Factory, and Lord Karan Bilimoira; founder of Cobra Beer, share honest and effective tips on how best to start, run and grow a business.
From insights on picking a business partner (Massenet advises to never go into business with a friend) to the challenges of raising finance, if you're a budding business owner then you don't want to miss these 13 essential business learnings to take your start-up to the next level…
On starting up
1. You don't need business qualifications or an MBA to start a business
Natalie Massenet: “In 1999 with an English degree and absolutely no experience, I started Net-A-Porter.com and 15 years later I'm giving advice to people who are coming to see me about businesses they're starting because those 15 years turned out to be my MBA.
“[Just] get down and do it. If I could have studied at business school before starting Net-A-Porter I'm sure I would have made half the mistakes but if you're going to start a business that is disrupting rules sometimes not knowing anything and being naive is better.”
2. You're going to face adversity and you're going to have to be prepared for it
Karan Bilimoria: “Everyone tells you that you don’t stand a chance. Your family will be the first; I would visit my father and would say ‘Hey dad isn’t this great? I’m starting my own business’ and he was like ‘What are you doing? All this education and you’re becoming an import/export wallah, get a proper job!'.
“I came over here in the 1980’s as a 19 year-old student and I tell you now that in those days, this country was called the ‘sick man of Europe’. This country looked down upon entrepreneurship, they conjured up images of second hand car salesman and ‘Del Boy’. I’ll be absolutely frank, I was told by my friends and family that if I decided to stay in the UK and work after my studies I would never be able to get to the top because there was a glass ceiling.
“Three decades ago they were absolutely right but today look at how things have changed. Today it’s cool to be an entrepreneur. We have one of the most open markets and economies in the world.”
Massenet: “Starting and running your own business is an extraordinary journey, it's all-consuming. Hopefully you like [your business] because it's a tremendous amount of your time. It's also filled with many mistakes and challenges […] you're going to lie awake at night thinking about things like how you're going to do payroll at the very early stages of your business.”
3. You have to be ambitious
Brent Hoberman: “Don't obsess about the short term and try to have huge ambition. Consider that famous Wayne Gretzky (former professional hockey player) quote: ‘Skate to where the puck's going and not where it is now'.”
Massenet: “I'm a really big believer in creative visualisation – it works in sports, it works in life and it works in business. Set a big, ambitious goal and then communicate it to anyone that you come into contact with. Say ‘This is where we're going, This is what we're going to do, it's going to be the most amazing [x] business in the history of [x] business'. Make sure that your team knows it, your partners know it, and your consumers know it.”
Bilimoria: “There’s one word that sets apart successful entrepreneurs from others: guts. You have to have the guts to start a business in the first place and the guts to still do it when others would give up. I’ve nearly lost my business three times. You’re up against all the odds when you start, you’re up against huge competition. I just did a course at business school where we were told to be humble but ambitious so ‘humbitious'!”
4. You need to ensure that there's a market for your business
Hoberman: “Is the market big enough? Is it a lifestyle business or is this something that can really be big enough? That's pretty obvious but key. [With Made.com] I thought there was another part of the industry that was broken. Ideas start by finding the parts of the industry that are broken, the pain points. For me, one thing was just buying a sofa; the price and transparency wasn't there and I thought this was an industry that could be disrupted. Made.com [has] ended up raising about $80m; so far so good.”
Bilimoria: “Business ideas often come from you as the consumer, when you spot a pain point and are dissatisfied with a product or service. I hated fizzy lagers, I couldn't stand them. I loved Indian food and missed it, I would go to curry houses in the UK and the favourite drink for Indian meals was chilled lager beer. The problem is that lager beer is fizzy, bland, gassy and harsh and bloating – the combination with spicy food is uncomfortable.
“An English friend then introduced me to ale which I absolutely loved but I found that I could drink ale happily at a pub but with an Indian meal it was too bitter. So I thought why don’t I produce a beer that had the refreshment of a lager, and the smoothness of an ale combined that appeals to men and women alike and goes well with all Indian food. It was a simple idea – why didn't anyone think of it before?”
5. Your customer should come first, always
Massenet: “Everything you do should follow your consumer, whether you're B2B or B2C. It's very easy to get sidetracked from gearing your business around how you want to work. Every time you make a decision around the boardroom, always ask ‘How is this pushing forward my consumer business?' ‘Is my consumer going to like this?' If the answer is ‘Well it's not really about the consumer, we're just trying to drop some money into the bottom line because we're going to cut some corners' then you better go back and say ‘Okay, if dropping some money onto the bottom is important and cutting corners is what we have to do, how can I re-engineer that so that actually it will make my consumer happy?'. If, in the end, you can't make your consumer happy – don't do what you're discussing and think of something else.”
On personal brand
6. Remember that, as founder, you need to be the face of the business
Hoberman: “You have to have a founder that's a salesman. Yes, there have been some famous busts recently where there has been too much salesmanship but, actually, when you think of that entrepreneurial team and the early days of your business, you are selling to everyone when you've got pretty much nothing. You're selling the dream to suppliers, you're selling the dream to your clients, and most importantly, you're selling it to your team or future team to get people on board.”
7. You're going to need to scrub up on your storytelling skills
Massenet: “I never really liked public speaking in school and another top tip is to learn how to speak in public because from the minute you are in the business environment, you have to motivate everyone around you and you have to be articulate. After taking many calming pills and many speeches, I finally got over it! You'll be doing a lot of public speaking, you'll think you're starting a business but you're actually in the speech business.”
8. You need to pick your business partner wisely
Massenet: “Avoid setting up businesses with friends; this was sort of rule number one in every [business] book I picked up [when I started] and I ignored it. There's a reason why somethings are personal and somethings are business. The only exception to the rule is if you're say 50/50 partners and you have got a very clear delineation of responsibilities.
“The number of people who walk into see me now, who are side by side saying ‘We're starting a business together' and I'll ask them ‘What's your relationship?' ‘Have you talked about what's going to happen when the day comes where you want to do A and the other wants to do B? How are you going to divide your equity up?' These are conversations that you cannot avoid, you have to have them upfront and it will help avoid a lot of mistakes down the line.”
Bilimoria: “I started with a partner and couldn't have done it on my own. You should also partner with everybody, not just who you start a business with, but your suppliers, and your customers. Some of your competitors in the early days can even become your partners later on.”
9. You should hire people that can do what you can't
Massenet: “From the get-go if you don't know how to do every single thing in your business – those people don't actually exist in this world! – then it's important that you hire to compliment your skill-set. We tend to hire people that are like us but you'll get a lot further if you hire the opposite. I think it's very important as a woman to hire women […] but I also think it's very important that you have feminine energy and masculine energy around the boardroom table; you need to have systematic thinking, vigour, customer service-thinking, and risk-taking. When you start getting to know your team members, you'll see that some will veer towards risk-taking, there'll be the ones pushing through new ideas, and there'll be the others who say ‘prove it to me'.”
Hoberman: “I'm often really looking at what the composition of that early team is going to be. Is it exciting enough that top people are going to want to work for it? Is it appealing to the new millennials – a trend which I believe is real? Are there intoxicating areas of the business that will attract talent? Is the founder somebody who I would want to work for, if I was say 25 years-old?”
10. You will need to look at staff incentives and ways of motivating your team
Massenet: “The quicker you can set up a [share] option plan and tie in your key employees and team members and incentivise them to be owners alongside you [the better]. This is worth so much more than a competitive market rate salary.”
On finding investment
11. You need to consider your funding options VERY carefully
Massenet: “When you're funding your business and looking to raise money, try and raise as much money up front as possible. It doesn't necessarily have to be by going and talking to impressive people like Brent [Hoberman], it can also be by calling everyone that you know. I called 30 people and I asked them for £10,000 each in order to get my seed round funded, it's a lot easier for people to say yes to £10,000 then to £1m. Once we had a little bit of money, we were able to prove that we had traction and then the bigger money came. Having said that we built a billion-pound business on a total investment of £11m which I'm extraordinarily proud of.
“Please do not take on strategic investors until you're ready to exit. What is a strategic investor? Someone who would like to buy your business in the end. So, even though it sounds really nice that a big name is coming to call and [saying] we want to invest in 10% of your company, you should say ‘No, come back in 10 years time when you're going to buy me for £20bn!' It will sound tempting, you'll get your head turned by all these people who are interested in your business but they're just trying to get in at the early-stage.
“In this order: take money from friends and family, take loans from banks; you have to show that you're able to pay it back, and then venture capital (VC) firms, and then strategic investors but don't let them actually get a seat around the table until they're willing to pay for it.”
12. …And you should focus on the bigger picture when it comes to funding
Massenet: “Raise more than you need. Don't be afraid to be diluted. It's better to have 17% of a big multi-billion dollar business then it is to have 100% of a much smaller business. Obviously the money you raise will help you build your dreams.”
On business values
13. Whatever happens, always stick to your principles and don't put profits ahead of ethics
Bilimoria: “The one word that stands out for me is ‘integrity’ – do the right thing, be true to your word, be honest, be trustworthy. The best definition for me comes from the latin ‘Integral’ which means wholeness. You cannot practice integrity unless you are whole, you can’t do it if your business is fragmented.
“And, lastly, there’s no point doing this unless you absolutely love it. Follow your passion not your pension!”
Massenet, Hoberman, and Bilimoria were speaking at the nationwide Entrepreneurs Exchange event at the British Library in May.