Cobra Beer’s Lord Bilimoria on business mistakes and lessons

The founder behind one of the UK’s fastest growing beer brands shares tips on raising finance, the importance of a good team and mentor, and surviving tough times with integrity...

Even if you’re not a big beer drinker, Cobra is a brand you’ll have heard of. Stocked in 98% of the UK’s Indian restaurants and worth an estimated £54m, the business has come a long way since 1989 when founder Lord Karan Bilimoria was creating his business plan on the tube and delivering beer door-to-door in a beaten-up 2CV.

After nearly losing his business three times – with the most recent near-miss involving a rather messy pre-pack administration – Bilimoria’s journey has been one of definite highs and lows. Having openly admitted that the company initially focused too much on growth (and not enough on profits), the resilient entrepreneur has learnt a number of sharp lessons over the years that have taught him success means “having the guts not to give up”.

Following an inspirational talk at the Business Connections seminar in London, Startups got the opportunity to sit down with the famously well-spoken business man to find out his fundamental lessons for business success, including advice on raising finance, the importance of a good team and mentor and why keeping your integrity is crucial…

Cobra has accelerated its growth in recent years and boasts multi-million turnovers, what has been your formula for success?

My formula for success is like many business owners: have a great idea; have the right attitude; have the guts not to give up and go after your idea; and then build the right team around you and follow the basic principles.

I have built my company upon fundamental foundations, my ‘eight Ps plus one’: product, price, place, promotion, people, passion, finance (spelled with a ph – you can’t do anything without the money), profit, and the plus one – principles.   

These are all important. Having a great and innovative product – I didn’t invent beer but I made an original (and great tasting) version of it; having the best price and being in the right place that matches it (for us premium price and Indian restaurants).

You must promote your business and you have to have passion and build a team with the same passion. You need to raise money and then make a profit. And then finally, you have to do it the right way and keep your integrity – you must keep your principles.

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You mentioned that when launching Cobra you were £20,000 in debt, what advice would you give to start-ups in the same situation?

My advice is to be prepared to start with nothing and try to get initial finance from as many sources without giving away too much of your business. Of course there are some businesses who need huge capital and who will have to give away a lot of their equity but try to minimise this as much as possible.

There is also a balance; I would say that one of my mistakes was that we were in too much debt at the beginning and, although you need the money to grow, try to balance growing with borrowing and retaining equity. Profitability is key here.

At the start it will not be easy to demonstrate profitability but once you can, you will be able to control your costs and then at any stage reinvest for growth. Our mistake was that instead of focusing on profit, we focused on growth and getting the critical mass but in the last five years we have focused on solid profits.

To summarise, don’t give away equity unless essential in the early days; be prepared to get in debt but manage it, and finally demonstrate profitability as soon as you can.

What is your take on the UK’s funding opportunities? Should the government do more to support the growth of new businesses?

I believe businesses need a simpler tax system; and that there needs to be both greater funding to enable companies to grow and incentives for small businesses to employ more staff. These are all things I advocate.

Given the success of the recent Cobra – The Boss – ad campaign, what advice do you have for budding entrepreneurs looking to market their business?

Yes, marketing is key. In the early days we went door-to-door selling, going to both restaurants and off licences. You have to be out there in your market to understand how to speak to it. So you need to be out serving your customers, meeting them, working in trade shows… all the things you can do to make people aware of your product.

Advertisement and promotion gets you out there into your market. We did this from the offset and even when I couldn’t afford anything, I still did it in the best way I could in order to communicate my brand in a clever, unique and creative way. And now with the internet, start-ups have so many options and it is so much easier to get your brand noticed.

As chairman of UK-India Business Council and champion of several entrepreneurship councils, such as the National Council for Entrepreneurship, what is the value of mentoring to entrepreneurs and new businesses? Should start-ups actively seek mentors?

Yes I believe they should as mentoring is crucial for new businesses; however start-ups do not need to enlist the advice of huge entrepreneurs – when Cobra initially started my business partner’s uncle, a retired businessman, was our mentor.

And we were so lucky to have him as he offered us essential business advice from the offset. We would see him at least once a month and tell all our problems to him. He would then pick up the phone and make introductions for us – one of which was our first bank manager.

Furthermore, it was my business partner’s uncle who introduced us to our brewery in India. He knew a company importing seafood and it happened to be a subsidiary of India’s largest independent brewery.

So you can see how essential they are, not only does a mentor offer you advice and encouragement but they will often introduce you to connections that will become fundamental to your business.

What is the hardest thing you have ever done in business?

The hardest and toughest times were getting through the crisis and nearly losing my business on three separate occasions. During these periods I could see the equity nearly collapse before my very eyes. But even though it was difficult all three times and people’s attitudes were awful – I got through it.

All businesses will go through similar periods and some will nearly lose their business as well but what you need to get through it – and what I had – is the right team behind you and your family. This support plus having your principles and keeping your integrity can get you through anything.


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