A poor negotiator will never become a
successful entrepreneur. It’s that simple. So if you buckle too easily
you need to fix it – and fast. It doesn’t matter if you’re negotiating
with a customer, a supplier or a potential employee. The key is to
remember you’re taking part in a conversation, not a high-stakes battle
of wills. Let’s take an example. Asking for more money from a client can
be difficult – no one wants to overpay – but it becomes much easier
when you frame it in the right way. Do this by explaining it’s
the amount you need in order to provide the best possible service. If
you don’t get that you can’t do the job to the high standards you set
yourself or deliver the service your customers have a right to expect.
That is the basis for a constructive discussion. And while you’re
negotiating, keep reminding yourself that if a competitor is offering a
lower price than you they are either doing something you’re not or (more
likely) they are losing money.

If I get an email from an unhappy customer
and they’ve put their telephone number on there I will phone them
literally within five minutes. They are often amazed to hear from me.
Find out what went wrong and why it went wrong. It’s not true that the
customer is always right, but it is true that you have to deal with the
customer in the right way. Listen to what they tell you and respond by
saying: “I’m sorry you’ve had this experience”. The real problems always
start when people hide things. Tell them the truth. Be honest with
them. If you turn an unhappy customer into a happy one, they are far
more likely to recommend you than a customer who has never had cause to
complain. If you deal with them respectfully, they can become one of
your most effective salespeople.

Supplier Negotiation

I’ve already set out how to negotiate with
customers. When the shoe is on the other foot and I’m trying to
negotiate a better price from suppliers, I have a structure I always
follow. First of all, remind the supplier about the vision you have for
your company and get them excited about it. This is something too many
business people overlook. If a supplier buys in
to your idea and
believes you will achieve it, they are far more likely to be supportive.
That is the first thing you need to get across. A lot of the time
a supplier will say something like this: “OK, because you’re new we are
going to start you at this price. But as you do more we’ll charge you a
different price”. In other words: the more business you put our way, the
less we’ll charge you. It sounds reasonable enough, doesn’t it? It
isn’t. Ultimately, people are buying their product through your company.
So if they are supplying someone else at a lower price they’re putting
you at a competitive disadvantage. It is fine to point this out as I’ve
done so many times. After thirty years in business, I now know the most
effective line to use with suppliers. I always start by asking a simple
question: “If I was your biggest customer; what is the best deal you
could possibly do? What’s the best price? Give me a range – best price
to worst price”. Politely insist on an answer. And when it comes, say:
“The only way I can do this is if you give me the first price”. It
sounds straightforward. But I’ve done this so many times – and it works.

The one thing I hate hearing in business is: “We’ve only got a limited marketing budget”. And I hear it all the time. It’s ridiculous. Why would you limit the amount of customers you have? Every form of marketing you do will have a return. That’s one of the key reasons my insurance company Staysure has grown so quickly. OK, so you haven’t got a million quid to spend on marketing. Have you got £3000? Then spend it. Test every channel that’s available. Technology means you can measure the impact and effectiveness of a campaign far more accurately than ever before. When you’ve found a channel that works for you spend as much as you can. Experiment with different approaches. Something as simple as using a new colour in your marketing material can resonate in way a previous campaign didn’t.

Scrap the Budget

All my businesses have been cash flow positive. That sounds like something your accountant would tell you, so let my put in plain English. In simple terms, if I’m paid by my customers before I have to pay my suppliers, I’m in a “cash flow positive business”. If your business is the same, you can use your customers’ money to market your own business – and win new clients who will give you even more money so you can do the same again. It’s a self- propagating process. That is when you really start going forward as a business. It means you don’t need to borrow money from the bank or bring in outside investors to grow – and grow fast. Just make sure you have the infrastructure in place to cope with the extra business. There’s no point winning another 100 customers if you haven’t hired enough staff to answer the phones or reply to all those emails.

I read a lot of business books but one that has really shaped the way I do business is Measure What Matters by John Doerr. He’s a venture capitalist who invested at a very early state in Silicon Valley companies including Google and Amazon. That’s not a bad track record. You can apply his methodology to any area of your life (and I’m trying to). But it really comes into its own when you adapt it for your business in the way I’ve done for mine. Start with a simple statement of intent. But think big. You should be shooting for the stars. Write down the single most important objective you need to meet over the next three months in order to achieve it. Then add a few more – up to a maximum of five in total – so you have one major objective and three or four minor objectives. Every Sunday I look at the week ahead and I set out the tasks I need to tick off in order to achieve my ‘major’ and ‘minors’. Results are measured with a simple ‘yes’ or ‘no’ against each of those tasks. Setting out a vision, choosing objectives and measuring key results is a simple but effective way to hold yourself to account. But don’t take just take my word for it; the original idea was developed at Intel and used by Google.

How To Get Structured

For the system to work you have to achieve 100 per cent of what you set out to do. It’s hard to keep on top of it and you have to be disciplined. At Google, anyone who scored under 100 per cent would be told they weren’t pushing themselves enough. I would never be that tough on my colleagues, but I have asked everyone in my business to start using the 90 day system. But it only works if staff set their own objectives. All of us are far more motivated to achieve tasks that have been set by us rather than for us. When everyone signs up it creates transparency across the company. I have so much faith in the 90 day system I’m building software so I can implement it at every business I own.

What’s your number? That’s the question I was asked when I first thought about selling my company. Let me explain what that means. Imagine you could sell your business tomorrow. What price would you need to get in order to finance the lifestyle you have now – or the one you aspire to? If you sold a business for £1m and invested that money, you’d be doing well to get a return of around 5% a year on that sum. So you’re looking at £50,000 a year. Or you could be patient, take your time, build you business and hope to sell in five or ten years time for many times that amount. If you invested £10m wisely the annual interest could be around £500,000, for example. The point is to know your number – and then work back from there. And remember – the number is the annual amount you need to live the lifestyle you want.

Never feel embarrassed to say it’s the money that motivates you if that’s why you get out of bed in the morning. It’s OK to know that about yourself. I enjoy building businesses and going to work and because of that I didn’t sell up. But everyone’s different. When you’re working late into the night to get a business off the ground, using a desk you’ve borrowed from a mate, selling up for a huge amount can seem like a pipedream. But knowing your number from the outset helps to give you a clear idea about where you want to get to. It also means you are pursuing the same aim as your partners in the business, if you have them. If your partner has a different number from you it can spell disaster. It means you want very different things – and that means you will almost inevitably fall out at some stage about when to sell, how much to sell for or whether to sell at all.

You need to create an open culture at your company because it’s good for business. You make more money when people are happy. It’s not about creating a touchy-feely atmosphere or putting a table tennis table in the corner of the office. It’s about making sure people know exactly what’s expected of them – and creating a workplace where they feel they can tell you when they think something’s wrong. Every business leader has to motivate people and get them excited about what they’re doing. But they also need to make clear to staff what is expected of them. It’s not easy to get it right. I tend to pick up on mistakes. I’m quite direct, I can be hard on people and I don’t praise people enough. It’s something I’m working on. It’s also important to listen.

Who Makes Your Company?

Every company has ‘A’ players, ‘B’ players and employees who you regard as a ‘C’ or ‘D’. Not everyone can be an ‘A’ player – that’s not how life works – but if someone’s a “C” or a “D”, you’ve got to build them up. Why aren’t they performing? Is it something the company has got wrong? You might have the wrong strategy. Remember that not everyone works long hours. Treat your employees with respect and make sure your managers to do the same. Technology has transformed the workplace over the last decade, but I still can’t remember ever calling any of my employees after 7pm. I will send emails after office hours but I don’t expect a reply until the next day. And if you want to know what people really think about the company they work for make sure you stay sober at the office Christmas party and let everyone sound off about what they really think. Everyone speaks the truth after they’ve had a skinfull.

The biggest mistake I ever made was not being honest enough about the unforeseen risks that can wreck a business. Just over a decade ago I had a very successful travel business selling Spanish holidays to Brits. But I didn’t take steps to insure the company against the risk of the pound falling against the Euro. I took some steps to mitigate against the risk of a fall in the pound. I “hedged” a little bit – but not enough. Then the financial crash of 2008 happened.

Learning the Hard Way..

The way my business worked was simple. I took money from customers in advance and booked hotels further down the line. If I’d paid the suppliers – in this case, hotel owners in Spain – as soon as I’d received my customer’s money the business would probably have been fine. But as the pound started to slide, I realised my margin was going down fast. My customers had paid me in sterling that was worth 10% less by the time we had to pay for the thousands of hotel rooms we needed. We ended up closing the business and I worked day and night to make sure customers had places to stay. It was the right thing to do but if we’d spent more money offsetting the risk of currency fluctuations it would still be trading today. We’d already survived a difficult few months when a volcano erupted in Iceland in 2010, spewing a cloud of ash over northern Europe, grounding flights and bringing the travel industry to a virtual standstill. No one could have predicted that and our insurance policy didn’t cover it. The point is that understanding what can go wrong in a business is very important. If the worst happens what are you going to do?

How to Mitigate Your Risks

You should always have enough money in the bank to pay all your outgoing for a least three months – and ideally for twelve months. And never, ever sign a personal guarantee if you’re asked to. A personal guarantee is a written promise from a business owner or executive that you will pay a supplier or a bank loan if the company goes under. If the worst happens, the creditor can then go after your personal assets. If you make yourself personally liable for your company’s debts, you could end up losing your home and, if that doesn’t cover the amount owed, you’ll be paying off debts for years to come.

Too many people interview on gut feel and hire in the same way. I’ve done it myself: You think: “I like him or her”. That’s a mistake. Now, I have a system. But before you start the interview you need to build the job up. Sell your vision of where the company is headed and how they will fit in to what you’re trying to achieve. Tell them: “This is what we’re going to do and this is how we’re going to get there”. Give them a reason to want the job more than they’ve every wanted any job before.

Avoid Hiring Mistakes

To avoid hiring on a hunch, create a scorecard based on the role. What does in involve? How would a successful candidate carry it out? What attributes do you need from this person in that role? Then interview against those attributes. Start by asking them about what they are good at. That’s the easy bit, but you also need to find out where they are going to fall over. You do that by posing the following question: “When we ask your ex-boss what you’re going to struggle with, what do you think they’ll say”. It’s a tough question – and it’s designed to be. A lot of the time candidates will say: ‘I put too much pressure on myself’ or ‘I work a bit too hard’. So ask for an example and keep on digging. You have to push them to the point where they are very uncomfortable. It can be hard to do, but it’s far harder to hire someone who can’t do the job – and then have to find the money to replace them in three months time.

Knowing when to Let Go

Hiring the right people is important, but so is getting rid of the wrong ones. If you’ve made a decision that they are not right for your company you need to exit them as soon as possible. If someone’s not puling his or her weight or everyone else suffers. And why should they? It’s amazing how often there’s a collective sigh of relief in the workplace when you get rid of someone like that. No one enjoys firing staff, but there is an elegant way of doing it. Sit them down, point out what it is they are doing wrong and wish them luck. Stay calm and be reasonable. But never feel guilty. If they aren’t up to the job then letting them go is the right thing for your business – and ultimately it’s the right thing for them.

Be patient, stay focused and execute one idea well. That’s what I’d tell myself if could go back to 1991 and have a conversation with the 20 year-old me. At that age, I was always trying to rush to get there. I wanted to get rich quick – this month or next year. I was so driven to do it fast that I didn’t take the time to think and I didn’t have enough patience to realise that things can take time. I had a million ideas. I’d get something to a certain level and then I’d lose interest and start on something else. It meant I was never bored, but business is about turning a profit and when I look back now, I wish I’d done it differently. I’ve won a few awards over the last few years and I’ve met a lot other entrepreneurs as a result. Very few of them are as good as me. That might sound arrogant but in a way it’s a criticism of myself.

Keep Going

Nearly every one those people had one idea and they kept going. They may have tweaked or modified it along the way, but they persevered. If I’d stuck with a single one of my ideas and really mastered it I would have been far more successful, far earlier. I’m 53 now and I spent money as a 20 year-old that at a rate I wouldn’t dream of doing now. I’d get some cash and I’d spend the cash. In one year I bought 13 cars. I owned two Porches but I had very little understanding of how money works. Today, a brand new Porsche Boxster will set you back about £45,000. If you put that money into a Yorkshire Bank savings account that pays a (very modest) 1.15% interest it will be worth £45,520.24 in a year’s time. If you managed to get a return of 3.5% a year, that cash would be worth £63,825 in ten years. That’s interest of £18,825. Over thirty years at the same rate that £45,000 would become £128,397. How much would the two Porsches I bought nearly 30 years ago be worth now? A few grand. The sooner you can start putting money into stuff that earns compound interest, the better. It’s not very complicated: take a small amount of money and never touch it. Would I have listened to that advice when I was 25? Perhaps not. But I hope you will.

Over the last 30 years, I’ve had a lot of fun starting and running businesses and I’ve made a lot of money in the process. Staysure, the insurance firm I founded, is now a multimillion-pound company with six million customers and over 500 employees. But I’ve also made mistakes, lost cash and had to start all over again.

About me

I’m a normal guy from Sheffield who dreamed of being a professional golfer as a kid. I got a job selling double-glazing door to door to fund my ambition, stayed in the sales business and became wealthy very quickly. By the time I was in my early 20s I was managing people nearly twice my age. I owned a portfolio of properties and a fleet of cars. As long as you’ve got the drive, I believe anyone can become an entrepreneur, regardless of where they are from or the start they had in life – providing they are willing to learn and work hard. So I want to give you some simple advice about how to succeed in business. I don’t do jargon and I hate management speak. And I always tell it like it is – not how you wish it was or how you’d like it to be. I know how to build and grow businesses and deal with the challenges every entrepreneur will face. I’ve done it all – selling burglar alarms, running a successful travel business, creating a loyalty card for young clubbers and building an award-winning financial services company.

How to Grow a Business

It’s not easy. It takes perseverance, application and drive. But there are rules to follow and mistakes to avoid. Over the next few months, I’ll set out everything you need to know to start your own company, grow your business, hire staff, negotiate with suppliers, deal with difficult customers and become successful. The rest is up to you.