The journey to turnover in the high millions is one Duncan Cheatle has witnessed over and over. He shares his insights into the patterns of entrepreneurialism that create real success
Duncan Cheatle has been championing UK enterprise for a decade and has worked with over 1,000 entrepreneurs to boot. In 2003, he founded The Supper Club, a group of Britain’s most innovative, high growth entrepreneurs. So what has he learnt about the less-than-obvious factors really create super-succes, and about entrepreneurship in the UK?
What is the Supper Club?
We are less of a networking club and more about peer-to-peer learning. The club is about attracting a peer group of some of the best entrepreneurs around – it’s got just over 250 members now. We started with a mantra of no accountants, lawyers, PR agencies, life coaches, bankers. Our main focus is growing businesses of more than 10 staff and more than £1m turnover – but typical turnover [of a member company]is £11m. We have regular events with high-profile entrepreneurs and our members, then we take the insights from those and share them with businesses that want to emulate their success.
As a result of what we’ve done we’ve added [on average]10 to 20 per cent of revenue to our member companies, according to surveys we’ve run. But it’s not about telling them how to sell more – it’s the mechanics of how to run a business. It’s stuff that helps you grow, beyond the start-up stage.
What’s the parent Prelude Group all about?
Our mission is to make Britain the most enterprising nation in the world. We don’t do stuff with immediate startups, except on a personal note – I’m one of the co-founders of Startup Britain. But we’ve done things like getting over half our [Supper Club] members to put in their time to mentor earlier-stage businesses. We set up RiseTo, a pretty radical way of training young people in business – training them in ways that are attractive to employers. We also run programmes like the Growth Partner Programme for businesses that aren’t quite at the Supper Club level yet – it’s a practical course on scaling your business, for those turning over £500,000 upwards.
What’s your turnover?
We don’t talk about turnover, because that’s not the aim of this. If turnover had been my focus and obsession, well, this is probably about the hardest business to make work! You’re competing with a lot of networking events that are sponsored by accountant, lawyers, and so on. And because it’s a club, all of our members talk to each other – not like customers in a normal business.
It’s more about reputation. We meet face to face with everyone before they join. It’s been a real labour of love over the years to get the club where it is, but we’re now able to have these really valuable round table discussions and share insights from them.
Talking of insights, how have your Supper Club members been affected by the recession and the current economic situation?
Most of them think it’s irrelevant. The macro picture of GDP is just a sum of everybody’s turnover, and what relevance is that to you as a growing business?
There are obviously consequences, like the banks not lending as easily as before, but the better businesses – and our members absolutely represent that – are not in the same league as other businesses out there.
A downturn gives fantastic opportunity for start-ups to cause disruption. Nimble, innovative SMEs can develop entirely new markets. [Potential customers] are open for value, so they’re looking to procure from new suppliers. If you can offer something different or of better value in any stage of the supply chain, then you’ve got a great opportunity.
Of course, some businesses will go under, and that’s a real shame. I’m very fortunate in that I don’t see much of that.
So what patterns of success do you see among successful, established companies? What are the commonalities among businesses that grow healthily?
What I see in all successful businesses comes down to five golden rules. If you get these right, assuming you have a product or service that sells, you’re building a robust business.
1. Focus – not getting distracted or blinkered, but still keeping alert to the market. You have to have a clear vision of your ambition and where you want to go. Most entrepreneurs are creative and they are excited by lots of different things, but if you make sure you have a very clear ambition it means that as opportunities arise you can see if they fit with your ambition, rather than getting distracted. I’ve worked with over a thousand entrepreneurs, and I doubt there’s more than five that have really had great success by having fingers in multiple pies (although obviously that’s different if you’re an investor).
2. Communication. Ending ambiguity. Most entrepreneurs think they’ve said something to staff or suppliers very coherently, but actually the other party has misunderstood. If you could eradicate all of those ambiguities you could save a lot of time.
3. Delegation. There is a type of businesses that will never get beyond 10, 15 staff and over £1m turnover, and I can tell the type when I meet them. It’s down to the entrepreneur’s inability to delegate. As a CEO, you should always be aiming to make yourself redundant. It allows you to get away from the coal face, out the office, and see what’s going on. If you don’t do that, you miss that the market has changed, or a new regulation has come in, and your business goes under. Too many CEOs don’t create the time to look around and see what’s going on.
If you get those three right you’re well on your way. Then you’ve got to…
4. Calibrate to make sure you’re doing things the right way. Many businesses don’t measure the right things. They call things KPIs that aren’t really KPIs. It’s not just measuring, it’s adjusting, and seeing how you can build that into a continuous improvement.
5. The last one is de-risking. I’ve seen a lot of businesses go under because even though they have a disaster recovery plan, they’ve never actually tested it. So when their warehouse burns down, their insurance has elapsed. Or your IT going down… there’s this assumption that once it’s in the cloud everything’s all right – well, what a load of nonsense. We’ve seen Amazon go down and .NET. You need to take control of these things and you need to test them.
Can you tell what kind of entrepreneur is likely to plateau around the £1m, £2m, £3m turnover mark compared with the ones destined for great success?
Well, it’s definitely not about personality. People assume that entrepreneurs are all extroverts, but I’m amazed at how many entrepreneurs are qualified accountants, which is not thought of as the traditional route into becoming an entrepreneur. Sometimes the quietest people have the most incredible businesses.
One of the things I see often [in those who go on to great success rather than plateauing], though not always, is an innate sureness about where they’re going. Things might happen, but there’s absolutely no doubt that when they talk, it comes across as: “What I’m describing, about where this business is going, will happen.”
If they tend to have clear, concise answers to your questions then there’s generally a robustness to their thinking.
If I was coming at it from an investor’s point of view, I would look at the team around them, the circumstances at which they’ve built their business already, at whether they’re comfortable letting their colleagues talk in meetings. Do they let them talk or are they control freaks? They’ll never be able to scale a business if they can’t let go and delegate.
I wouldn’t look at the business plan [as a guarantor of success]because you can pay someone else to write it. It’s meaningless. It get
s looked at once then stuck in a desk drawer.
What do you think of the state of entrepreneurialism in the UK?
We’ve got a history of being an incredibly inventive nation. We led the world 200, 250 years ago with invention. Entrepreneurialism is playing to our strengths. We have the best advertising, the best TV in the world. If you look at the art we create, the music – for a little island off the coast of Europe we are incredibly creative.
If we want to compete, seeing as we don’t have a low cost manufacturing base, we need to do it by innovation. We can export more if we can become more entrepreneurial and innovative.
It starts in education. But our whole education system now is about rules. We like to stand in queues!
There’s also a sense of self-defeat [in the UK]– there’s entrepreneurs who sell out too early.
Also, we like to build people up and knock them down, when we should be supporting entrepreneurs.
Do you think the UK is anti-wealth, or even anti-entrepreneur?
The UK is absolutely anti-wealth in a way that the US isn’t. Just as an example, look at some people’s attitude towards Jamie Oliver. I was with a friend recently who poured out so much vitriol towards him, having never met the guy – but Jamie Oliver is someone who’s built an amazing business!
There are lots of people who are too quick to criticise, ridicule, and knock other people down. But [entrepreneurs]contribute enormous amounts of tax, not just through [income tax]but through NI, PAYE, VAT.
What we have seen is that “entrepreneur” used to be a word people didn’t understand. And that’s different now. We now have programmes like Dragons’ Den and The Apprentice – there’s much more awareness of entrepreneurs. We’ve got a long way to go though – we’ve still got Phil Mitchell on EastEnders, who’s a businessman and virtually a criminal!