I have the privilege to serve on a board with two guys that started their own business and grew it to the point where it’s knocking on the door of the FTSE 100. Start-ups don’t get much more successful than that and they’re collectively worth more than a billion pounds.
At the heart of their approach, it seems to me, lie two principles: doing right by the customer and only doing things that make a profit. Their business is in financial services and it can be argued that this philosophy is one that hasn’t always prevailed in that industry.
In my opinion, these are two principles that underpin every successful and sustainable business:
- Focusing on what’s good for the customer is pretty obvious. If you’re selling something that gives no value to customers, your business is essentially a confidence trick. It means that you won’t get any recommendations, you won’t get any repeat business, and you may even get tangled up by being sued, being investigated by Trading Standards and the like. Since these are all extremely damaging and time wasting, you are very unlikely to build a valuable business.
- Doing things that are profitable is a second objective. Even if your primary motive in starting up isn’t to get rich, profit is vital. You can think of profit as oxygen – without it, the patient (the business) won’t survive. As someone who has had to lay off staff when the company I was working for at the time wasn’t profitable, I have a compelling desire to stay profitable. The danger lies in being ultra sales-driven at any cost. This can turn your business into a charity. We need to be constantly reminded that anyone can sell £10 notes for £9. It has been pithily summarised in the phrase “Sales are vanity, profit is sanity”.
While everything that I’ve said is true, there is much more to success than simply following these principles. Having strategic vision, being a good manager, negotiating well, organising the management of operations and many other attributes are also needed. However, taking hold of the core principles of customer focus and doing profitable business underpins everything else. Grasping this can only improve your chances of fulfilling Del Boy Trotter’s dream - next year we’re going to be billionaires.