Enter The Dragon, by Theo Paphitis (2008)
11 Rules for business success
“My way of running a business is being on the shop floor, allowing people
to make decisions, listening to junior member of staff as well as the people
at head office, and taking on board what they’ve got to say. I think it’s
important to drive the business in a hands-on way, as opposed to expecting it
to function just because there’s a hierarchy or a structure in place that
says it should, or because some accountant or somebody who who’s got a
university degree has read some theoretical book that says if you do this and
this, the outcome will be that. It doesn’t work like that as far as I’m
concerned and as far as my businesses are concerned.”
Rule One: Reduce the risk
“I’m a great believer that the risk should reflect the reward. If
it’s a high-risk strategy, then I want a high reward. (...) My whole business
philosophy is based on a risk-reward ratio. But it’s got to stack up.
If it doesn’t, don’t do it. You might as well go to a casino. You
might strike it lucky, but in the end, you’ll lose the lot. That’s
guaranteed.
Businessmen don’t become successful by taking unnecessary risks (...)
but by taking calculated risks. People often say to me that I take huge risks.
But I don’t. They are absolutely wrong. I never take ridiculous risks.
I am the most conservative person you will ever come across, and that’s
because I’m good at reducing risks while leaving the potential rewards
high.
The trick is in how to lower the risk factor. When you have a proposition in
front of you, that’s when you have to weigh up the risk-reward ratio.
Then you look at how you can stack the cards in your favour. Do that in a casino
and you get barred. (...) If you use inside information when you’re dealing
in stocks and shares, you go to prison. If you know more about a business than
anyone else because you’ve done a lot more research, you don’t go
to prison – you make money. So it’s about knowing the business and
making sure that when you get involved you have done your homework and know
exactly how you intend to turn it round. Of course, you don’t want to
share that knowledge with anyone else until you have control.”
Rule Two: Don’t fool yourself
“You are the easiest person to fool. You can always fool yourself.
I spend lots of time in the bathroom. It’s my thinking time. If a project
has gone wrong I have to look at myself in the shaving mirror and say, ‘I
did my best but it didn’t work out’. If I know I didn’t do
my best, took silly risks, didn’t work hard enough or let my heart rule
my head then I give myself a good kicking. I blame myself. No matter who’s
involved with you in the project, in the end it’s down to you.
People say they believe in their ideas. That’s because they have conditioned
themselves to believe in them. (...) You have got to be honest with yourself
about what you are doing.
Then you must ask yourself how commercial it is. It might be a good idea, a
fantastic idea, but you have to work out how you are going to make money from
it.”
Rule Three: Learn to let go
“It’s very difficult for an entrepreneur to let go. It’s very
hard to sell a successful business. People hold on and hold on until sometimes
the business has no value at all. Sell it! It’s the hardest thing to do,
but it’s the hallmark of a top-class entrepreneur.
You must be able to create something and then sell it at exactly the right time.
(...) You’ve put so much of your life, your body and soul, into something
you have created and nurtured – and then you have to let go (...). And
there is always a right time to sell, because any business goes through ups
and downs.”
Rule Four: Know that cash is king
“Cash flow is king. Profit is sanity. Turnover is vanity.
A lack of profit is like a cancer. If it carries on for a long time it will
eventually kill you. But a lack of cash is like a heart attack. If you can’t
pay the rent you shut down just like you would if your heart packed up. (...)
If you can’t pay the wages, it’s all over. Don’t be without
cash. You can live without profit, but not without cash. It’s very basic
and simple advice.”
Rule Five: Embrace change
“The retail environment is changing very rapidly at the moment, partly
because of the internet, which opens up a vast world at the touch of a button.
(...) Because of this, I believe that to stand still is to go backwards, and
I am not afraid to move on. If you don’t adapt, your business will die,
I can assure you.
Don’t be scared of all this change, however. I have switched directions
so many times and done so many different things. I am excited about what the
next move it. I am not scared about what’s out there. When I throw up
the shackles of a particular business it frees me up to do something else, even
if I’m not immediately clear what that will be; I know it’s out
there and I will find it.
There has never been a better time to make a success of business. Money is cheap;
technology is cheap; knowledge is cheap. Consumers have got an insatiable appetite.
And if you can satisfy that appetite, slake that thirst, you can make money.”
Rule Six: Use common sense
“(...) business is 90 per cent common sense. (...) I apply common sense
in all my business dealings.
But common sense is not common. If it were, everyone would have it and everyone
would be able to do what I do. And I wouldn’t want that!”
Rule Seven: Make decisions
“The biggest problem for any business is when the people in charge are
not running the business... they’re running scared in case they make a
decision and it turns out to be the wrong one. One of the things I preach to
all my staff is never be frightened to make a decision. Of course, you’ll
get some wrong. But if you get more right than wrong then you’re doing
OK.
The only thing I ask my executives to do is to make decisions. If one of those
decisions turns out to be wrong, then identify it quickly. Deal with it if you
can. Stop the bleeding. Don’t let that bad decision cause the business
to bleed to death. And if you can’t deal with it yourself, scream as loud
as you can so that your colleagues can hear you and realise you’re in
trouble, and ride to your rescue. There’s no shame in asking others to
help you. The shame is in keeping it quiet, trying to cover up your bad decision.
Rest assured, it will come back to haunt you. Helping each other is what teamwork
is all about. And that’s a principle I stick to in every company I own.”
Rule Eight: Weigh up the opposition – and yourself
“In business, just like (...) any sport for that matter, you must never
underestimate the strength of the opposition. (...) No matter how good it seems
your organisation is doing, never underestimate the lengths to which other people
will go to stop you being successful. And at some stage the competition [could]
have the edge over you to such an extent that your business might go into reverse
or even terminal decline.
You only have to look around the high street, where some of the biggest names
– household names at one time – are no longer with us. One of the
problems for these high-street giants is the nature of their tiered system of
management, where strategy and communication often get misinterpreted and lost
en route to their rightful recipient (...).
For a small entrepreneurial business, which is usually operated by the owner,
it's a lot easier to apply the common sense principle without the hindrance
of a corporate structure and all the inherent inefficiencies it brings with
it.
(...) you should be open with people working in the business and give them the
whole picture, not half the picture. It's about explaining to people their part
in the equation and explaining what the whole equation is and why their role
is so important. If people do things in isolation, it's very hard for them to
understand why if they don't so something exactly as you want them to do it,
it won't then all fit together. If you involve people in the whole process,
there are always some gems of ideas that come from those on the shop floor.
I work with some absolutely outstanding individuals who have risen to the top
because I've allowed them to express themselves.
And technology has made that a lot easier. We have an intranet within my organisation
that provides lots of information about the businesses. Sometimes people wonder
why I'm giving that sort of information to shop assistants. It's because a shop
assistant that's really interested in the business can actually take that on
board, look at the wider picture, and it allows them, if they're driven and
have ambition and ability, to progress within the organisation. They can get
involved in things properly, outside their sphere of responsibility. (...)
Employees may send me an email and say, for example, that..."
Rule Nine: Get your staff on board
"It's only when you take on your first member of staff that you're more
likely to encounter other problems. All of a sudden you're managing the people
as well as the business. But remember, just because you had a good business
idea that looks like it's going to work, it doesn't mean you've suddenly acquired
staff-management skills. (...) Basically, this means keeping [the employees]
as happy and as motivated as you can. But you do have a head start – people
want to belong. It's human nature. (...)
My job is to make their working environment as stress-free as possible. I want
them to feel they are valued and will be listened to. If I am able to achieve
this I can guarantee the customer will get the best possible service. (...)
Motivating staff is not just about making them feel wanted. Tangible rewards
are equally as important if not more so. Incentives go a long way to help staff
focus on the work they do. For instance, we always put in place weekly bonuses
instead of the monthly ones that many companies have. Why? Very simply, if someone
has a bad week in any particular month the motivational tool is transformed
into a demotivational tool because they know it is going to be impossible to
hit their monthly bonus. By having weekly bonus schemes you are allowing someone
who has a bad week to start afresh the following week with the real possibility
that they can achieve their target."
Rule Ten: Capitalise on other people’s ideas
"(...) despite having made a fantastic living from my business ventures,
I've never had an original idea in my life. But I have [modified] a few from
other people (...) worked on them a little and adapted them. (...)
Normally I start by scribbling words and diagrams on a piece of paper and seeing
if I can translate that idea into a money-making scheme.
Always remember that because something is innovative or uses leading-edge technology
doesn't necessarily mean it's going to make pots of money. (...) Just as the
road to hell is paved with good intentions, so the road to bankruptcy is paved
with good ideas. (...) There is always the danger in business of making ourselves
into what I call 'busy fools' – taking a project, devoting time and resources
to it, and ending up with no financial reward. But when I do find an idea –
always someone else's – that I think will work, I get off my backside
and do something about it. That's the difference between me and so many other
people."
Rule Eleven: Turn your dreams into reality
"There's not much difference between a fantasist and a visionary. We all
have dreams and without dreams in business I don't believe you can be successful.
The trick is to turn those dreams into reality. (...) And you have to have passion
for that dream. It's got to be something you're going to enjoy, otherwise it's
highly unlikely that you will achieve your goal.
You must not, however, fall into the trap of ignoring the facts and deficiencies
in your idea. That's where a lot of people trip up – they lose sight of
the bigger picture and ignore the failings of the idea. (...) There is absolutely
nothing wrong with aborting a project when your analysis and market research
show that it is not going to be the next big thing. (...)
(...) you have to be absolutely determined you can make it work. But if you
don't attempt to do it, it will never happen."
