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From pizzas to haute cuisine, from high street fashion to mainstream television, Luke Johnson’s entrepreneurial spirit has touched most areas of British life for the last three decades. This is the man who knows more than most about start-ups, corporate expansion, and how companies can ride through a recession.
Here, Johnson who is a supporter of the Thinking Entrepreneurship initiative* talks candidly about the current issues facing entrepreneurs and offers more insight into his own reactions and responses to the challenges he has faced.
As one of the UK’s foremost cheerleaders for entrepreneurs, what’s the biggest block facing start-up owner managers in businesses right now?
In some respects, I think it’s internal in that it’s having the courage of your beliefs; the confidence, and I guess the self-discipline to make it work. It’s down to each of us to be sufficiently optimistic and have sufficient faith in our own abilities to say, ‘I can do this’. Given the circumstances many people are in, that may be difficult, but it’s also things like finding the right partner, the right idea and raising the capital to fund it.
Despite the current economic problems, do you think today’s environment is any better or worse than it’s been in previous business cycles?
I think in some ways it’s an improvement because there are many more role models out there. There’s much more external support. I would argue there is much more funding of different sorts around. I think the culture has changed dramatically.
When I first left university in 1983, very few people with a university education thought about starting their own business. Now, it’s considered much more of a serious option and so there are many more people who have trailblazed and that’s very encouraging.
For example, there are something like 60 university societies dedicated to entrepreneurship, such things never existed 25 years ago, and that’s all to the good.
You’ve also achieved success as a TV chairman and columnist. This contradicts the belief that success is all about being single-minded. What is your secret?
In recent years I’ve been a non-executive so I’ve not been a full-time chief executive of business for some years. However, I think what I’ve been able to do is cross-fertilise experience from one industry and company and use it in other instances.
For example, how to prepare management accounts; recruiting senior staff; building a great website; where to acquire procurement skills. And, although each industry’s market is different, nevertheless there are common features to many businesses where you can apply lessons learned elsewhere.
It’s not always easy for an entrepreneur to balance passion for an idea and the practicalities of making tough business decisions. How can this be achieved?
I generally advise people who are looking to start something to consider taking a partner or two. I definitely think that helps because then you have someone to bounce ideas off, someone who will give you a reality check. I think also advisers help in these areas, so it might be your accountant, it might be a lawyer, it might be a banker, who knows... a supplier, customer, competitor.
I think trade bodies and trade networks are important to taking soundings from people in the same industry. And, I think the best entrepreneurs have a fair measure of arrogance, conceit and belief in their vision, but they also have the pragmatism to realise that blind belief is often very dangerous and, therefore, you need to listen to feedback and you can’t just ignore the critics completely.
In your book you talk about a lot of successful entrepreneurs who have failed. Does experience of failure allow you to be a more realistic businessman or woman?
I think failure teaches us all to be more humble, which is a good thing. It makes people generally more bearable. I also think, ideally, you learn from it. I think it makes you more realistic, more practical. Basically, if you try a lot in business then there is an increased chance you will fail, but you may well also succeed more.
I just think it’s a part of life. But if you go through your life petrified of failure then it’s a pretty miserable journey. Much better if you experience setbacks, overcome them, move forward and on to the next. This is all part of the experience.
You’ve invested and been involved with a wide range of businesses. Has there ever been a best business idea that just slipped through your grasp?
There was a company I almost invested in, I could have invested in, called Transform, which was the market leader in cosmetic surgery. I got cold feet for various reasons at the last minute and didn’t do the deal. Within a matter of weeks, the then owner sold it and did extremely well out of it. I’ve only myself to blame as there was a deal set up and ready to go, but I got worried about the ethics of it and the risk of litigation and so didn’t do the deal.
Do you regret it?
I think on one level I don’t because I think the industry does have issues about ethics. But, undeniably, the industry has grown dramatically and those sorts of companies have expanded commensurately and are profitable.
How do you measure whether you’ve personally done a good job? Is there anybody you look to say, ‘Yes, that’s a job well done’?
I don’t want to come across as smug, but I suppose I don’t generally feel I need that sort of reassurance. The best thing I can do is to identify a good investment, structure the deal properly, partner up with the right individuals, and motivate them to do a good job. And, they do the heavy lifting - I’m merely there to occasionally steward, give a little bit of supervision, guidance and encouragement.
My job is the easy one in some respects. It’s the full-time, hands-on executives who are running the show day in, day out that are the heroes and they’re ones that deserve and really should have the applause.
Luke Johnson has recently launched a book called Start It Up: Why Running Your Own Business is Easier Than You Think.
*Thinking Entrepreneurship is an initiative aimed at helping entrepreneurs and owner managers in the UK internationally harness and develop their entrepreneurial ambitions. The initiative was launched in 2010 between Mazars and Warwick Business School’s Enterprise Hub. As a supporter of the initiative, Luke Johnson was one of the speakers at a Thinking Entrepreneurship event in March 2011, which showcased the skills and knowledge of established entrepreneurs, business leaders, advisers and academics to give a rare opportunity for shared learning based on real life success stories.
“Good businesses that are worth owning and have real potential are very rare and hard to find. It often depends on the sector and on your resources. Clearly, we all want growth. We all want businesses we can understand.
"We want businesses that are on a multiple of profits that you can feel comfortable living with. Look for businesses that have competent people running them. I think investing in eight great businesses over the three decades, would be doing pretty well, I’d say.”
“I’m not sure it’s the best advice, but it has worked for me! It’s to sell early. For example, I’ve had a number of winners that I’ve sold, like Integrated Dental Holdings and Strada, that although they went on to be worth more after I’ve sold them I take the view that it’s hard to time when companies hit their peak.
"If you hold on too long, as I’ve done occasionally, the risk is then it turns down and you miss the peak. It’s also so much easier to sell a rising business; one that’s growing and successful and has further potential, than one that is on the slide. Those sort of companies are almost impossible to sell.”