The Entrepreneurial Journey - From Wedding to Divorce

01 Nov 2016

Today, Oliver Everett, (pictured 2nd from the right), CEO of the Commonwealth Enterprise and Investment Council visited LSBM to have a chat to our students about entrepreneurship.

Oliver is also currently a Sloan Fellow at London Business School, and has run several businesses, including one designing and selling wedding shoes, which he spoke about at length during the talk.

So he has real-world experience of what is involved in setting up and growing your own business venture.


He began by outlining seven scenarios’ where someone may decide to become an entrepreneur:

1/ They don’t like the corporate career path and are looking to make a change.

2/ Someone who finds themselves with all the responsibility and stress in a job, but without enough potential upsides to make them feel good about continuing.

3/ Those suffering from 2nd or 3rd job syndrome – Where they all start looking the same and nothing seems to be changing (for the better anyway!)

4/ Because (potentially) a business that you own could offer a pathway to freedom (both financially and time-wise - though probably not for a while!)

5/ People in their 40’s or 50’s who may have a wealth of experience, but who upon being made redundant have a hard time finding a new job.

6/ Women who have had a baby (or fathers) who want more flexibility over their working hours to fit in with their families.

7/ People who have a burning idea or who believe that they can make a difference in some particular sphere.

 

He also outlined several characteristics that might help an entrepreneur to succeed:

  • Keeping the burning reasons why you are in business in the first place in mind, and having a vision for how the business will develop and grow in the future.
  • Having a clear planning focus on the practicalities of the operational delivery of the business. An idea will get you so far. A plan will get you further!
  • Cash (probably from the ‘Bank of Friends and Family’ until you get going and have a track record to show a real bank)
  • Resilience – Starting up a business is difficult. The road of success is paved with good intentions. But you need more than that. You need to be able to battle and keep going when things are tough and find solutions to problems that will inevitably arise.


The Wedding Shoe Business...

Oliver outlined the story of one of his own businesses to highlight some of the challenges that entrepreneurship brings.

He had been made redundant in his mid-30’s from his corporate career and found himself sitting in an office in Birmingham waiting to be interviewed for a new corporate job.

He found himself thinking, ‘I can’t do this’. As he got that sinking feeling that many people get when they are considering embarking on a new career path they feel no passion for.

Instead he chose to take a new direction.

His wife designed shoes, and so, while writing business plans for other entrepreneurs (to pay the bills), they decided to set up a business that would design and sell wedding shoes.

He began by writing a business plan for the new venture, but made the observation that sometimes there is a disconnect between the technical exercise of writing out a business plan, and the reality of really buying into what it represents.

In Oliver’s case he said that he didn’t believe the numbers he was writing down.

This is a classic case of entrepreneurial disconnect. He had the numbers down, so he had the facts. But he chose to gloss over some of the realities when he was taking the business forward.

In his case, Oliver said that he basically ignored his own numbers, because he didn’t really believe that they would need the amount of stock and cash outlays that they ended up needing.

For wedding shoes for example this involved £50,000 for stock. £50,000 for satisfying repeat business (even though he had to order the stock – because of lead times from his Chinese manufacturer – BEFORE he knew what his customers would re-order!) As well as another £100,000 of capital outlay to keep ‘normal’ stock levels at a point where they could satisfy orders.

So, what seemed like a fairly simple business. Sell wedding shoes. Actually required considerable capital outlays and sunk cost investments of over £200,000.

In some ways these sound like ‘quality’ problems! After all you have to be selling stuff in order to need to carry stock. Until you realise that the profit margins are not always stellar on many fashion items, and that even when they are, the raw materials and the manufacturing is only one small part of the costs.

You also need to factor in labour, storage, shipping, affiliate costs (for example selling through Amazon – one of their distribution channels later on - carries a hefty commission) marketing and all the many other outlays. And even then, there is often a considerable lag time between selling the item and receiving the money. And finally, there is tax to pay on any profits!

This sounds very doom and gloom! But the message was clear.

Business is often more complicated then it seems on the surface. The best laid plans may not always work as you hope they will, and there may well be unexpected twists and turns that will complicate how things turn out.

You will also face unexpected costs and hurdles that you won’t have planned for.

And even then, if you have a proper plan, BELIEVE IT! Don’t discount it or gloss over difficulties. Plan how to deal with them.

One of the issues that Oliver picked up on for example was in the way that the staff dynamic of a business changes as new employees get hired.

Your first employee is clearly a key hire. In Oliver’s case they grew the business by hiring a sales executive to grow the sales, which, at the time, was mainly driven by selling to independent wedding outlets around the UK, and later, in the US.

But be aware that as you add staff there will become a clearer demarcation between the ‘owners’ of the business, and the staff, and this is something that you will have to manage.

In the case of Oliver’s wedding shoe business, most of the sales of the business were in the UK and the US. So the Commonwealth didn’t play much part.

 

Benefits of Trading with the Commonwealth

He did however stress that there are several advantages of trading with the Commonwealth that can (potentially) give a new business from the UK certain advantages, as follows:

1/ English is commonly spoken.

2/ Because 49 of the 52 Commonwealth countries have historical links to Great Britain as either Crown Territories, colonies, or have long-standing trading agreements in place, many of the legal systems have much in common with our own, so there is less legal-friction when trading.

3/ In addition, for much the same reasons, there are also common financial structures in place.

Oliver stressed that because of these historical and cultural synergies that this could potentially feed into the bottom line and make selling easier.

This is perhaps most clearly illustrated by the existence of such bodies as the Commonwealth Enterprise and Investment Council, of which Oliver is the CEO.

 

Planning, De-risking and Taking Action

In reality though, Oliver was keen to emphasise that the real-focus of a start-up business is fundamentally about de-risking.

By ‘de-risking’ he was saying that the name of the game wasn’t to run the business on a wing and a prayer. But rather that preparation was essential to pursue strategies that ran the highest chance of success.

The best laid plans can go wrong. But planning is essential.

(It shouldn’t however be an excuse for not taking action! ‘No-one is going to do it for you’, Oliver was keen to stress. If it’s going to happen, YOU will have to do it.)

So, for example, not all products or businesses will work well in every market. In the case of Oliver’s business for example, they focused on the UK and US, and despite his current job, the Commonwealth really didn’t play much part in active sales.

For another business however, that could be totally different, and so it is important to not be dogmatic about where you pursue sales, but rather act from the perspective of where the biggest potential opportunities lie.

Be that in the UK only at the start. The US, the Commonwealth, or elsewhere.

It depends on the business.

 

The Congenial Divorce...

A good example of where the best laid plans don’t always work out was in fact in the end of the story about how Oliver’s business finished in 2008.

In his own words he said that after seven years of operation the, ‘Business was in the land of the living dead. Neither succeeding or failing’.

In other words, it was at a crossroads.

The market for selling through independent wedding shops was shrinking, by as much as 50%. The internet was becoming more important and changes would need to be made if the business was to move forward, rather than stagnate.

In the end Oliver and his wife chose to licence out the wedding shoe brand to another company. A relationship that had been forged earlier for mutual benefit, and which in the end allowed Oliver to basically sell his business and move on.

(Another example of where fortune often favours both the bold, and those who network! Because leveraging that existing relationship allowed for a relatively easy (and paid!) exit from the business, when otherwise, without other active suitors for his business, he may have been faced with a more difficult choice of whether to just walk away or invest more time, energy and capital to improve its prospects)

 

Lessons Learned

The lesson from the talk is perhaps summed up as, the course of entrepreneurship (like true love!) does not always run smoothly, but it can still be a passionate, consuming, and worthwhile pursuit.

Oliver’s own advice was that he would:

‘Encourage anyone to go for it. But check with yourself whether the idea is good enough.’

The fact is that your venture may not end up where you hoped. It may end up better. But engagement with taking action, and not getting caught up in endless thoughts about action, is the true mark of an entrepreneur.

 

Stuart Brown
Media and Content Manager

Pictured: (From left to right)
Arif Zaman (LSBM Lecturer, Risk Management)
Ramin Esfahani (Former LSBM Student President)
Eleonora Affronte (BA (Hons) Business Management (1 Year Top-up)) - (Gave Oliver the gold wrapped parcel as a gift from LSBM!)
Oliver Everett - CEO Commonwealth Enterprise and Investment Council
Usha Mistry - (LSBM, Head of Programme Development)

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