Monday, 28 July 2014

See things for what they are - tips for startung a business

Ever wondered why some people get on and others don't? Last night I was listening to BBC London and there was an interview with Mike Oldfield. Mike had a massive hit album in the 1970's with tubular bells. Mike spoke about how he owed Richard Branson a massive debt of gratitude for his faith and support. Richard Bransons Virgin label released Tubular bells, which was what we may consider a slighty niche album. I was rather amused to hear Oldfields comments. Tubular Bells was the first album released on Virgin and for a few years was the only major hit. Many people in the music business at the time used to have a little dig at Virgin as a "One Hit Wonder" label. As it transpired the label was the launching pad for the Branson Virgin Empire. Had Oldfield not had the hit, would we ever have had the other Virgin products, the planes, trains and wedding planners?

Listening to Oldfield I was struck by his humbleness and his ability to see the world as it really is. In some ways I believe this is also the reason for the success of Branson and his fellow self made entrepreneurs. I believe that the best and most successful people like Branson see things for what they are and spot where there is something missing. Bransons Virgin Label was a rather odd label. It's fist hit was the intrumental Tubular bells, its next major claim to fame was "Never Mind the Bollocks" by the Sex Pistols, who no one else would touch at the time. Branson also set up  Frontline Records, to champion Jamaican Reggae music. Branson figured that if he liked something, then there must be some kind of market for it, with the right backing. The genius of Virgin is to make their products seem special and different (the ads for the airline with the air crew is a great example).

The reason most of us don't succeed, I believe is down to the fact that we allow ourselves to be distracted by all of the things which don't matter, to the extent that we don't see the things that do. Take my home town Mill Hill. The area has a great demographic for those willing to take a risk with a business idea and provide great product and service. We have a few examples of such businesses. The El Vaquero restaurant is one such example. Opened in the height of the recession, it is packed all the time. Another example is Mill Hill Wines, which is a superb specialist supplier. Whilst many chain off licenses have gone to the wall, Mill Hill Wines has moved up market and done even better. Recently I went  in to get some wines and wanted a four pack of carlsberg to go with it. Laurence, the proprieter told me they'd stopped doing cheap lager as they didn't see themselves in the same marketplace as the cheap convenience stores. They just wanted to do wine well.

Due to the economic situation, more and more people are starting their own businesses. Often people get a redundancy payoff and use this as seed money to fulfill a lifelong dream and run their own business. My dream business, Mill Hill Music Complex has been running for 35 years. I've always based my business on what I would like to find at a local studio, rather than worrying how everyone else runs their business. We don't always get it right but we always try and learn. We've grown to be North West Londons largest independent studio. We have some absolutely superb artists using us and the story keeps getting better. We  try and make everyone feel welcome and we try and support the other businesses in and around our neck of the woods. We use our studio twitter to promote other Mill Hill businesses and events.

In the time I've been running the studio I've seen all manner of competitors come and go. What is interesting is that the ones that fail usually make the same mistake and those that succeed tend to have figured out the same things as us. The key is to try and understand your particular market. We find that people who like our package are less keen on the way our competition do business. We also find that some people prefer our competitions business model and only visit us when they can't get in elsewhere. We gave up being all things to all men years ago and so if a customer says "We usually go to ****** studios, why don't you do this the same as they do" we weigh up what they have suggested against the way our model operates. Sometimes you miss the obvious, so if it improves the way we do business, then we take it on board. Often though, it would not suit the majority of our customers. Being able to see which suggestions work for us and which ones don't is the most difficult thing.

We've brought in many things which our competition copy. You have to take it on the chin that if you do something right, sooner or later the competition catch up. Then you have to spot other ways. I set a date in my diary every six months to look at the competitions web marketing. Are we missing a trick in our offering. It is interesting to note that the best studios clearly do the same, as we notice that innovations will be picked up as soon as we introduce them.

If you are thinking of starting a business, aim to be the best. If there is someone down the road doing the job better than you can, then you will fail, unless you can differentiate and get a unique feature (I hate the term USP "Unique Selling Point"). Realise that yur customers are all individuals. You won't satisfy all of them. It is better to be a Master of your trade than a jack of all trades. As an example, think of your favourite band. You love them but I'm sure you know someone who hates them. There are many bands who you find unlistenable, but who have their own Niche following and make a tidy living. That is why Mill Hill Wines thrive, even though Marks and Spencers are down the road, who do a fine range themselves. Mill Hill Wines know that there are people who wil always want something better and more special than the Marks range could ever hope to match. In factM&S probably helps Mill Hill Wines, because they draw the right demographic to Mill Hill.

Many people who haven't studied biology thing that Darwinian Evolution means "The Strongest survive". This couldn't be more misleading. In actual fact it is the most adaptable. The same is true of businesses. When things are going well, the strongest do thrive, but when times get hard, being the biggest and perhaps a little slower to turn around is not an advantage.

I'd caution everyone planning to run a business to realise that it can take over your life. I am lucky in as much as I'm married so I have a partner who I trust, who runs the show day to day. We discuss the business every day and it is a huge commitment. We are also lucky to have a great workforce, who we've built up over many years. Don't expect it to fall into place at once. The general rule is that it takes three years to know if your business is going to make it.

The most difficult thing to take is the fact that the Government and the council often seems hell bent on shafting those of us mad enough to start our own business. Recently in Barnet, the council has had a very anti business parking policy, imposed bang in the middle of a recession, The previous Labour Government banned smoking ip pubs, which has lead to decimation of the pub trade. These are just two instances of adminstrations not being sensitive to the people who pay taxes.

It must be galling to have a great business ruined by the stroke of a bureacrats pen. I've read many rather ignorant comments from commentators who don't really understand what it's like to run businesses, criticising those that have the guts to put their money where there mouths are. It is all part of job, but if I had a pound for everyone who has told me how I could make millions from my business by doing things I tried years ago, I'd be a rich man. It is always worth listening to your customers when they are asking for something you aren't doing, which you could do easily. Ultimately though, when I invest I do it based on how much money we can afford to spend. We then make a list of everything we could spend it on and try and work out which of the options will most improve the service we deliver. Let me give you an example. If we have £1,000 to spend and we have the choice between repainting the studio toilets or stocking a new brand of guitar strings, we have to weigh up the two very carefully. Whilst the £1,000 spent on new stock could deliver £5-6,000 profit over the year and is tangible, if our toilets are not clean and we start losing regular customers, that could cost us ten times that. Word of mouth is the most powerful marketing tool and the best way to destroy your business. In recent months we've picked up a huge swathe of female artists. The reason? One of our competetors have stopped cleaning their loos properly and ours are kept pretty spotless. Not something you see on any marketing literature.

So see things for what they are. It is often the hidden, less obvious things like the toilets in your establishment that are making or breaking you and you don't even realise.

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