The Blog of an Entrepreneur

Earlier this week my salesman for E-filing Limited was calling through a number of company formation agents doing his job, selling the services of E-filing. He was doing a pretty good job too.

He did hit a problem with one company, a problem which I had anticipated but I would never have guessed it would happen with this company in question. To understand why I’ll give you a bit of history.

When I started Quick Formations in 2002 the Pay-Per-Click market was pretty new in the UK, and at the start there was only myself and one other company formation agent bidding for key positions on the likes of Yahoo!, MSN, etc for our industry’s main search terms. It reached a point where we were trying to outbid each other and the end result was that we were paying way over the odds per click on our main search terms costing us both a fortune. It was a rediculous situation and needed to be sorted, so I gave the other company owner a call. We agreed to alternate weekly who would hold 1st place and the other would sit in second place. We had a gentlemans agreement between competitors and it worked very well… until the competition in the industry increased and then it just didn’t work because there was too many people. Whilst it was working though it saved us both a small fortune, a simple example of competitors working together.

So this company owner having experienced us working together, I was most surprised when he said he wouldn’t deal with E-filing because we are the “competition”. As a side note, the two companies are actually run and handled independantly at arms length .. just clarifying that point for the readers :-).

As a business owner I spent a lot of time talking with my competitors. We share knowledge about our industry with each other, industry gossip, and market trends. Some of them I have become friends with and often enjoy a round of golf or good long ol’ chat over the phone or lunch with. I have learnt a lot from their strengths and they have learnt a lot from my strengths. The end result is that each of our businesses have become stronger and more profitable.

That is not that you should run off and become all buddy with all your competitors and give away all your trade secrets, because I have also been bitten quite badly by someone who after a year of chatting on the phone at least weekly double crossed me quite badly. So you must tread carefully when getting into contact with competitors and building these relationships, because some of them will be just out for the take, but there are others who are genuine professional business people. They are the intelligent ones who share a common goal where everyone wins, and these are the ones you need to seek out and work with. Share and share alike, you help them and they will help you. It’s all about give and take.

This is where E-filing Ltd works so well in that when I speak to my customers of E-filing I share knowledge I have gained from Quick Formations with competitors of Quick Formations, we all bounce ideas off of each other. The results speak for themselves, QFL wouldn’t be doing as well as it is today if I thought I knew everything and did everything based on my own opinion alone. It is good to bounce ideas off someone not only in the same situation as you, going through the same experiences as you, but in the same industry as you.

My advice for today, if you want to move your business forward at a significant rate work with your competition. By doing this both businesses will benefit, and you need to be willing to help the competitor(s) you work with. If you are not willing to do this then don’t bother even considering it.

In the day to day activities of my Quick Formations business we frequently deal with people who are setting up a business with a friend or family member, or even an old work colleague. These people are always keen to work together, they have a shared vision or dream, and know they are going to be successful.

Unfortunately for 50% of these people, their relationship is going to break down and their business is going to suffer significantly as a result. The meeting I had this morning is no exception.

We have two married couples setting up in business with their business owned 25% by each person. Everything straight down the middle, it couldn’t be fairer. They were all very keen to get started, and really motivated to make a success of their new business venture.

You only have to look through some of the posts in the Legal section of the UK Business Forums to see exactly how many people find themselves stuck in a situation with a business partner they no longer want. It’s a sad story, but one that could so easily be resolved by spending some time working out how to deal with all sorts of situations before they arise. How will each person be rewarded, salaries and bonuses. What about if someone wants to break from the partnership? You agree all this at the start, whilst you are still talking to each other and not through solicitors!

I’ve recently got involved in a new business venture with someone else called UK Golf Forum, and acquired a stake in another business venture called Calltracks. One of the first things I ensured was done in both instances was have a shareholders agreement drafted and signed, because I was one of those unfurtunate people through bitter experience lost hundreds of thousands of pounds through a bad business experience. I had no shareholders agreement in place, and did not take proper legal advice. I’ve since learnt from that experience, and found the experience a valuable learning curve - although I was pretty upset at the time as I’m sure you can imagine.

I used two firms to write my shareholders agreement for me. The first for UK Golf Forum was written by a gentleman called Ian Mason from Mason Bullock Solicitors, and the one for Calltracks I had written by a lady called Andrea Wyld from Franklins Solicitors. I received an excellent service from both firms and can highly recommend both, my advice is call both and deal with the one you feel that grasps a better understanding of your business. This will be important when drafting your shareholders agreement for you.

Last week I was asked by a nice chap called Robin Neighbour from Young Enterprise to be a judge for the Daventry and Northampton Young Enterprise Awards. Of course I was more than happy to do so, and am happy to say I will be happy to do so again.

I found this event extremely valuable to be involved in, and gave me a great insight into the minds of our future generation of Entrepreneurs. I also enjoyed the fun debates with the other judges, who me being me I often disagreed with. Particularily because they generally came from a corporate background and I came from a more Entrepreneurial background, and this is part of the problem with the UK’s economy when the Government base their budgets on corporate policy.

The best example came about when trying to decide who the final three should be. I wont go into any more detail than that because it wouldn’t be fair to expand any further.

We had narrowed the decision down to 4 companies. Two were unanimous, but the last two I thought one and the other two judges thought another. They felt company C should be in the final three because they had made a lot of profit exploiting a small market in their school, but I felt company D should be shortlisted because they had a niche market and a more sustainable business model. However company D had not made as much profit as company C.

Tough call perhaps, but do we award people for making a quick buck without considering the long term consequences? Is this the sort of Entrepreneurial culture we want to develop? Personally I do not think so, I believe we should develop a more calculated and thought out economy where long term consequences are considered where businesses, and our environment, are more sustainable. We don’t want our future run by a load of fly-by-nights. We want job security. We want stability. We want a future that will last, even if the profit margins aren’t as high as perhaps they could be, so long as it is sustainable.

I’m pleased to say I argued my case well and the other judges agreed with me!

Last week I made one of the most difficult decisions of my Entrepreneurial Career, I changed my accountant. I’ll tell you a little bit more about that another time, but for now I want to tell you about a disagreement I had with my new accountant .. and why I think he is wrong, although right in many ways.

The case is this, I am in the process of developing a member of my staff to take over the reigns of one of my businesses. This project is likely to take 5 years to complete, by which time she’ll have an equity stake in the business, and received all the training and support she will need to do a great job. She will be loyal, she’ll know the business inside and out, and she’ll share the ethos and ethics of the business to run it successfully whilst maintaining the company image and reputation as I have built it.

My new accountants argument was that I should have recruited a Managing Director to come in at the top to take over the business almost immediately. This would free me up immediately to focus on my other business interests, which is something I don’t have a lot of time to do at the moment but wish that I did.

So why is he wrong? He is wrong because this new MD will be monetarily focused, and will more than likely leave as soon as someone offers more money. This new MD won’t know my business the way someone who has worked in it for a few a years will, and want to make their mark. More importantly for me though, this new person coming in above my staff who have always reported direct to me will upset the balance and probably put a few noses out of joint. I could end up losing some important staff in the process.

However, why is my new accountant right? He is right because in the cold hard world of business when the core focus is profit his method is the right thing to do. If I want to be extremely wealthy, and my businesses are just a way to make myself more money, then I should not be so focused on keeping people happy but more focused in building my wealth.

Unfortunately for my accountant though, that just isn’t me. I make a nice living, I am happy with my lifestyle, so I’m happy to put myself out to further the career of my staff who are loyal and supportive of me. If that means I have to work a few extra hours, if I don’t have the time I’d like to devote to new business projects, I don’t mind because I know in the long run it will pay dividends! My new MD will be a lot more loyal than someone I could poach from another business.

So what kind of Entrepreneur are you? There is no right or wrong decision to make in a situation like this, just a right or wrong decision for you as an individual. Would you bring in a new director to run your business, or would you identify a hungry individual within the business to train and promote?

Those who know me personally, or have read this blog for a while, will know that I firmly believe that our economy is a small business economy and to keep our economy afloat we should all be encouraging the next generation of Entrepreneurs from a young age.

So imagine my surprise after a young lad, Ben, interviewed me on Thursday as part of his dissertation to be told that out of a list of Entrepreneurs he’d already interviewed at 40 minutes my interview lasted the longest. I’d shared with him more insight, stories and information than anyone else, and he even commented that one interview lasted 10 minutes with the “Entrepreneur” answering most questions with “I dunno”! How on earth is that person still in business?

Ben asked me whether I felt that Entrepreneurialsim can be taught, and hoping I didn’t knock the University course he is doing, but I said no I don’t believe it can. I believe Entrepreneurialism is born out of an event that triggers the person to make a decision for themself and make a future for themself. I do, however, strongly believe it can encouraged. To inpire young people of the challenges, the highs, the lows and wonders of running your own business and being in charge of your own destiny.

He also asked me whether I was taught the skills to be an Entrepreneur at school. To be honest I do not believe so. I don’t believe I became a true Entrepreneur until my daughter was born and my first business started to go horribly pear shaped. It was the need to secure a future for my child that drove me to become an Entrepreneur, where failure was not an option. That was my event, my trigger, and if you look through the past of any Entrepreneur and read any autobiography you’ll find similar triggers.

I’m not saying I wasn’t hungry for success before then, because I was. In my working career and childhood I’ve always been competitive and determined to succeed, but it was that one trigger that flicked a switch inside of me and gave me that extra push to take things more seriously. I had a dependant, and her future relied on me.

It is these stories that Ben wanted to know, not big trade secrets to rip you off. So if you are an Entrepreneur don’t treat it like some big secret, don’t be afraid to share your experiences with the next generation of Entrepreneurs. They are our future, the future of our economy, and it is extremely rewarding to feel their enthusiasm as they talk with you about your experiences. Further more, you can also learn a lot from them too.