Jeremy Hall – Confessions of a serial entrepreneur

110% effort

The third Dragons’ book I am reading is Common Sense Rules by Deborah Meaden. I am only up to page 61 and I have to say it is a fantastic book. Deborah has some great advice and ideas. She has a different refreshing approach to business.

Whilst one business mentor will say you have to give 110% effort, she simple notes this is a mathematical impossibility. Even when discussing 100% effort, she caveats it by saying you cannot run at 100% for long periods of time. She is right, and most of business gurus who say you have got to give it 110% are talking rubbish.

So, two key things here.

1. Buy Deborah’s book and read it
2. Take time out, down tools for a bit, relax, switch off, recharge the batteries – like me today – hence I have moved on no further with regards to documenting the plan on buying the company I viewed on Friday.

The Running Man

8:00am                 Write up Friday’s diary entry

9:00am                 Football training               (kids not me)

11:30am               Tennis lesson                     (kids not me, again)

1:00pm                 Swimming lesson             (yes, kids again!)

3:00pm                 Shopping for goal keeper gloves and football boots. Add to this running around in and out of a car, I have spent an hour looking for a lost wallet (still not found), so alas, I have had no time to even start writing the plan for the company acquisition.

4:00pm                 Helped my eldest boy to understand the art of persuasion. I need a new pair of football boots as I am refereeing a match tomorrow. Seeing me buy a new pair of Nike boots, my eldest says, “Dad, can I have a new pair of Nike boots please?”

“Why do you need a new pair?” I ask.

“Because my ones are not as good as the Nike 2010 turbo charged super fantastic £100 pair that have just come out that my friend has.”

“No”

… normal answer you will get from a 10 year old boy…

“George, think about what you are asking, you already have a perfectly good pair of boots. If you had said the original pair did not fit anymore, then we would have to buy you a new pair.”

I do not want my son to tell lies, but I would like him to learn how to get things in life.

Under the microscope

Prelude

Started the day at 8:00am for a two hour strategy meeting at CoCredo. This is now to be a weekly occurrence, the same date and place every week for the next three and a half months – 100 days. We started off looking at the basics, a SWOT analysis on the business.

Brains then came to the table with the three year financial analysis showing how we could achieve a company value of £1m. I hope they do it, they deserve it – just a pity I am no longer a shareholder. I  know though if I surround myself with people who have the same objective and beliefs as me – build a sell a company in three years for £1m – then I will stand a much higher chance of achieving my personal goal.

I drove onto my next meeting which lasted the whole day. Running late in the evening, I went straight to the cinema for the 9:00pm performance, returning home 11:30pm. Tired and worn out – definitely not. It had been a full on exciting day. I have been doing what I like doing, what I am good at, and most importantly, another step forward in achieving my three year plan.

A few days prior, I e-mailed to the business owner an agenda. Rather than going heavy and calling the document “Due Diligence Reporting Requirements”, I simply called the document a “Meeting Review.”

For larger acquisitions you would normally take in a team of accountants, solicitors and people with technical skills. This is a small company with a handful of staff so I set out a simple agenda and went on my own.

Key areas to review:

1. Financial
2. Compliance & legal
3. The team
4. Reoccurring revenue, customer base
5. Sales & marketing
6. IT
7. Suppliers
8. Deal completion

One of the most important things is not to rubbish the company you are reviewing. Clearly there are problems in the company, inefficient systems, bad practices. However, there has also been a tremendous amount of good things done. When you review a business it is all too easy to get tied up in the negative aspects. I also know that anyone could spend a day in one of my companies and pick holes in it.

My key objective is to find the pot of gold. Most companies have one in the corner somewhere. It’s just that they cannot see it, all they see is a pot of metal. Most people buying companies will talk about cost savings, economies of scale or may be how to bolt together a few customer bases. Yes, I look at that, but what I am after is the greater opportunity from the pot of gold.

My basic research undertaken makes me feel it is very difficult to value this company. If they do nothing, I think they will continue to make small losses and drift along. Ultimately it could self destruct.  If I low ball a financial offer, they will think I am insulting them, if I offer too much, potentially it could be a bad investment.

My biggest challenge is time. I know I can fix the business but it will burn up a lot of my time. Is it worth getting involved in the first place?

Over the weekend I will review the files and write up my findings, in effect documenting a business plan and undertaking a SWOT analysis. If I go for the deal, then this document will provide the basis of any offer to the shareholders.

Sales rep

My salesman days were about doing deals, digging up an opportunity, speaking to the customer then closing the deal. I do not seem to do much of that now. My days are full, we have a lot on the go, but I do not spend much time speaking to customers.

Saying that, today I have been arranging finance for an x-ray machine and a robotic arm for two customers. Do you need fabulous selling skills to make this happen? – well not really. The two key elements are the ability to find a bank to finance the transaction and secondly to provide a competitive rate.  If you add in a few more important ingredients of selling such as always getting back to the customer and making the telephone calls / field visits in the first place, you are half way there to making a success.

Over time, a lack of practice and you do get rusty, you do forget the basics so I would advise anyone in business or any budding entrepreneur to put aside some time for selling and speaking to customers – every month.

Cost per hour

I take myself back to when I was a sales person on a salary of £25,000, plus a car, expenses, commission, not to mention company NI. Add just a few thousand extra for internal support and you are looking at £60,000 per year. Divide that by 225 working days and you get to £266 per day. In my field sales role, I had to average three meeting per day so we got to a cost per meeting of £88 – round this up to £100 per meeting.

With a target of £120,000 gross profit, that would mean on average every meeting needs to create £200 of revenue. This process I have gone through myself, and more importantly, ensured that every sales person who worked for me also went through.

My challenge now is what is my cost and revenue generation per hour?

£1/3m of new wealth per year equates to generating £1500 every day (before company expenses), assuming 225 working days. The other way of looking at this is to say I want to earn £120,000 per year. That is £533 per day or £66 per hour. Keeping the numbers simple, every minute I need to earn £1.00.

This clearly needs more thought and I do not have time to do it now. The point is, I need to put a monetary value on my time and to be able to see how the value of the company is rising, outside of reading a set of monthly management accounts.

How much do I charge per hour?

Two hours in the car first thing helped me consider the throw away comment made yesterday, “decision made on gut instinct.” My gut instinct tells me the idea will work but what is the upside and most importantly, downside risk?

The downside is less than £5,000 in costs, legal, accounting and other associated expenses. There will be reputational issues if the idea does not get momentum or just does not work. It will take time to put together, time that could otherwise be spent speaking to customers. Overall, the downside is small, the investment will not break the bank, with regards to reputation, it will be classified as a bad idea as opposed to a failed company.

However, time is a finite commodity and it is imperative that we do not waste time on projects that have no real chance of success. I do need to add the cost of my time into the project. As I sit and write my diary, I think of one major issue, I have not worked out my cost per hour. In all my days running a sales business, I always knew the financial value of every hour of my time – and that of sales people.

 I have just set myself a new task, work out this number – as a matter of urgency

Road test

Have been taking my business idea on a road test today, speaking to industry experts, obtaining feedback. My perfect plan pitched to some people does not seem all that perfect.

Now we have a very interesting predicament.  James Caan would say listen to people then do the opposite whilst other eminent business entrepreneurs would follow the same theme and take note of negative comments but form their own opinion and go for it anyway. Conversely, the other argument is that if lots of people say the idea is flawed, it probably is.

So here I am, time and money invested in an idea that is now being hacked apart by people whos judgment I trust and respect. However, in the spirit of being an entrepreneur, I have to make a quick decision and my gut instinct is that this idea has legs and I will push forward with it, regardless.

Mother’s Day

Aged 26, a couple of years into Wyse Leasing, I remember a conversation I had with my Mum, asking for her advice. Business was going well, cash was coming in, but it was 1991 and we were in the middle of a recession – well a little blip compared to 2009/10. “I am thinking about going on holiday to Kenya, a week on safari and the second week at Mombasa . What shall I do, it’s a lot of money?” “Go Jeremy” came the reply, “You only live once.”

My parents have been and still are a fantastic support mechanism in my business life. They lent me the £10,000 I needed to buy out Mr. Big, my business partner back in 1991 – by coincidence – the same year I wanted to go on safari. They have helped answer the phones and with general administration, and even now in their 80’s, have the official task of packing all Who’s Who book orders.

Having a positive support mechanism around you is vitally important. If you do not have one, get one immediately from friends, family, even customers or suppliers. Business mentors are also a great form of positive support, so if necessary, prostitute yourself and buy the support in.

Duncan Bannatyne, in his book worthy of a read, “From an Ice Cream Van to Dragons’ Den, Anyone Can Do It”, tells a very funny story of a lady who asked his advice. “My boyfriend is not support of my business idea.”” Dump him then” came back the reply. We can’t do that with our parents so I just take it I am one of the lucky ones.

Parents may not be supportive because your business idea is poor. Alternatively, it may be their personal experiences or outlook on life is completely different. The most important thing is to always listen to them and secondly, always love them, and even more on Mother’s Day!

100-day plan

Peter Jones writes in his publication “Tycoon” about a 100-day plan. When he is starting group IT projects or incorporating a new business, he details every task that needs to be completed in the next 100 days, splitting functions into finance, sales, marketing etc. It is a brilliant, straight forward and simple idea and one I have never used before.

Having formed an abundance of companies, bought business’s and set up new initiatives, I just wished we had a 100 day plan in each situation. Yes, we all document the list of tasks, who takes ownership and the date they need to be done by, but I have never written a plan and said this is where we are to be on day 100. Well there is one exception, and that is I have a 100 day plan for this diary – purely by coincidence I must add.

Yesterday in the Cocredo board meeting I presented an idea for growth. The idea is nothing new, it is a model that has been tried and tested – and failed – many times by companies across the world. Brains (one of  the most intelligent person I have ever met) and I did not share the same view on speed. We both spoke our views in this formal meeting in a controlled way. It is very healthy for a board when tortoise meets hare and optimistic meets pessimistic. As we all know an optimistic hare does not always come first or even win the race.

We did agree to meet weekly to map out our idea. Having never used this 100-day plan, I would like to road test Peter Jones idea in CoCredo and see for myself the results. This could be a solution to the long established challenge of controlling the speed of growth. I will put it to the board the next time we meet.

Flying around meeting the pilot

I started the day with a strategy meeting to discuss Project Pilot. The project champion had spent some time evaluating the opportunity, researching the competition, undertaking the financial analysis and creating the basis of a business plan. I was impressed, the information was clear, to the point and covered all the areas from shareholding to roll out. My gut feel is this is a great business opportunity for us at Who’s Who. We have access to successful entrepreneurs (the mentors) and individuals will desire to be mentored by one of Britain’s business elite – we hope!

 Not only should this be a profitable department, the cash flow will be positive and overheads low.  The next stage is to present the idea to my colleague who is in charge of Who’s Who. She will be able to add the magic to the plan – or throw it out – and if we are all in agreement, can test the proposition with our customer base.

Moving two miles down the road to my next meeting, I met up with my contact with the £1bn vision. Our meeting was very positive and if we can get the idea of the ground, the results would be amazing. The challenge is debt finance, or to be fair, lack of it. We can only go to the private equity firm when we have an acquisition target. The PE team would then be able to provide their funds. However, the deal will only happen if a bank provides debt finance which even with the other two elements in place, will not happen in today’s market.

Flying around the M25 running behind schedule, I was late for the CoCredo board meeting. Brains and MB (Mont Blanc) the two directors and business owners have just moved into their new offices in a converted abbey. I sold out of this business last July but remained as a director to offer advice and business support. They have done an excellent job to date; the company has improved its profitability, changed brand and relocated offices – much better than the crap job I did.

I question my motives for selling my 40% shareholding last year. My passion for the business is still there, I have a burning desire to see sales quadruple in the next three years.  In the car on the way back I ask myself how an unpaid role in a company where I have no shareholding will help me on my journey. Is it just a waste of a few hours precious time, an egotistical hangover from wasteland?

No – it provides a release for ideas, if I can add real value there will be yet more successful people to surround myself with and lastly, I want them to get an excellent return on their investment – they deserve it.