As part of Global Entrepreneurship Week, the British Library put on a great event on Monday night allowing the audience to quiz some successful entrepreneurs in their own Question Time addition. On the panel appeared the likes of Orla Kiely, the renowned fashion designer, Sam Hargreaves, the 20 year old founder of Gadgets4Everyone, and Stephen Fear, the British Library’s Entrepreneur in Residence. Urban Times had the opportunity to interview Fear who made his first million from a public phone box on a Bristol council estate. Since then, Stephen and his son now run The Fear Group, incorporating over 70 companies with interests in everything from hotels to manufacturing. Speaking to Urban Times, Stephen shared some insight on the keys to making a successful company, while giving some very good advice for businesses seeking investment:
What makes a successful entrepreneur?
A good idea, determination, the ability to learn, think of new things and get on with people.
In your speed-mentoring sessions, what common mistakes are you seeing small businesses making?
One of the big mistakes is taking on too much overhead too quickly. I advise people to be slow in taking on debt. People think they need flash offices, a better car or that they must have the latest apple technology, so they go out and over-invest early on when it may be perfectly well to carry on by running it from home, staying with your banger than you’ve got rather than going out and taking a lease on a flashy BMW. The problem here is that they are investing money into things that will not produce sales rather than investing money in things that will produce sales. In business, the only thing that matters is sales. You have to get sales or you have no business.
Being Britain’s first entrepreneur to make a million pounds from a phone box, what advice would you give to others with little resources to achieve big goals?
These days, the good thing is that most people have access to the internet, mobile technology and smart phones. Therefore, once you have the ability to access the internet you can use this to access information anywhere. The web offers massive opportunities but people have to remember you still have to supply something that’s worthwhile so that people will buy it. It’s not just about money, it’s about making your business the right way because if you do then the money will come. Find something you think will sell and always consider what you think someone else would like to buy. No one is going to become a millionaire overnight- unless they’re lucky!
It can be quite hard for online businesses to monetize as information online is commonly ‘free’. What advice do you have in this case?
I’ve given this a lot of thought … the problem with selling information these days is that someone can look something up on the web and find the same information for nothing. If you’re a web business, you need to build subscription lists. You need to build, what I call, loyal fans. You need to make your information a no-brainer. If you make it too expensive, then people will go out looking for it for free. But if you make it tailored and present it to a niche market, and build a subscription list then there’s your chance.
If we take Urban Times as an example; if the information you’re giving is relevant; up to the minute; state of the art; there’s good people that you’ve interviewed – then you’re building a subscription list. People will subscribe if they believe they’re getting good information that is truthful and balanced. The problem with online businesses is that there is information overload. You can get information from Google at the drop of a hat, but a lot of the information that’s free isn’t always factual …
It’s a vital element. Without new business people and entrepreneurs, wanting to create, then where are the jobs of the future? In excess of 60% of the UK economy depends on small businesses.
Running your own business with the same employee-owned status as John Lewis, what benefits does this model have?
Massive benefits: much lower absenteeism rates, because they’re sharing in the profit in some way; people wanting to stay late and come in early; people not leaving to go elsewhere because they feel like part of the family. People don’t leave their family very often do they? The way we work is that a Chief Executive in one of our businesses would obviously earn more than a truck driver, but at the end of the year whenever the bonuses are paid out, they both get the same percentage of their wage, pro rata, as a bonus.
I’ve got to say: pay them well, treat them well and people don’t leave. I don’t need to police it because other people in the business will do this. If someone doesn’t come into work, I don’t have to moan because the co-workers are moaning!
So how important do you think it is to introduce a triple bottom line approach into a businesses infrastructure; with a focus on people, planet and profit?
It’s a vital thing. We all live on the planet, we are all people and we all need profit. This planet needs looking after so I’m hugely in favour, and all 3 are equally important.
What are your 3 top tips for a business seeking investment?
- Ask for more than you need. Because you will need more than you think you need today, and it’s better not to go back and ask for more later. It’s worth adding a contingency amount into what you’re asking for, and this shouldn’t be below 15%.
- If you receive £20,000, put a portion of it straight away into a building society account- do not think of it as being in your business account; keep it in reserve. Put, 40% into a separate account and pretend it doesn’t exist. That way, when you get short on founds you can think, “Aha! I’ve got that extra bit there.”
- Your investors need to believe that you’re working in and on the business, and if they don’t they won’t invest. There’s no point turning up saying you need all these flashy items – they want to know you’re investing in the business and that you’re building the business from the bottom-up rather than from the top-down.
So is asking an investor to pay for your own salary inadvisable?
No, because obviously you need to live. If you’re asking an investor to put £100,000 in and then you’re telling the investor you’re paying yourself £60,000 they’re not going to be happy! But you have to tell the investor that you’re putting your labour in and ask for an amount that you can live and scrape by on. Be truthful. If I was investing, I’d want to know that the business I’m investing in is going to be there. I don’t really want you working in another job elsewhere in order to make ends meet and pay the mortgage. I want you working in the business. That’s why you must ask for enough and give a good business case as to why you should have it.