What I learned from my adventures
Here's what I've learned in the last few years with Boost:
Don't skimp on marketing. Often when a business is in trouble the owners or managers look for areas where they can save money — the worst area to take from is marketing. During our downturn, we added $1 million to the marketing budget.
People can manifest their reality from either fear or love. In a franchise network, if the sentiment is negative, it spreads like a disease. When you can inspire and get people to believe in something positive, people will follow you and you can work through the challenges of growing a brand.
Problems are part of all businesses — how you deal with the problems is where the power lies. Solving individual problems may take time but a ‘never give up' attitude will mean you will find a solution — you just have to stick at it.
Keep important business areas in-house. Over the years, we have tried to outsource some of Boost's departments; however, in the end, there is nothing like working with a team of people who are passionate about only your business. When you outsource, you are one of many; I feel these providers often lack the enthusiasm needed. Keeping as much as you can in-house means everyone is on the same page and working together.
8
SHOW ME THE MONEY!
I see starting a business as a very maternal process. Just like you can't be half-pregnant, you can't be half-hearted about starting a business; you have to go all the way! A business can be very consuming, and it will take all your time, all your money and your entire soul to make it work. Sometimes the main thing that stands between the winners and losers is simply the ability to keep going. If you are serious about achieving success in your field, you can't just shove your business on the backburner every time you want to take an overseas holiday or when you've just had a big weekend and want to sleep in the next day. You've got to put your business first. It's your new baby and it needs you. Many people are simply not willing to make the necessary sacrifices to allow their business to succeed. As you read earlier, Boost nearly took my marriage, but this type of obsessiveness, for me, was the only way to make the business work.
People are often attracted to the Branson and Zuckerberg success stories, and are keen to reach dizzying heights of success as fast as possible — along with all the trappings. I have seen people who start a business with a flashy office, pay themselves a top wage and simply burn money. We're living in an era of ‘NOW'. Everybody wants to have everything immediately and nobody wants to wait. But these businesses are often in the four out of five businesses that fail in the first five years. The reason for this failure is that businesses are hungry for cash and they need every cent to be spent on growth and on things that make a difference to the customer. When you prioritise your own needs, inevitably you run out of cash. Remember — many a good idea has failed due to lack of funding. New businesses are not about you and your needs; they are always about the business. So if you want the sports car and the corner office, maybe you would be better working for a big corporate. The reality of starting a business is likely that you will be living with your parents, or on the floor of your friend's apartment, working 100 hours a week (to not work a 40-hour week).
Keep it in your pocket
If you're starting a business and living by the mantra, ‘You have to spend money to make money' — you're wrong! This mentality will kill your businesses before it has a chance to grow. People look at Boost and they see an overnight success story, but nobody ever sees the hard slog behind that ‘overnight' success. The reality is, I worked from my rental house for two years, didn't take a salary for three years and we didn't take a cent out of the business for five years! We even had to take the agonising risk of selling our family home in year two to fund growth — and that wasn't easy. There was no guarantee the gamble would pay off, but we were all in.
If you want to attract an investor into your business, the first thing you need to do is demonstrate that you are a good steward of your own finances. If you're not putting your business first and carefully measuring every dollar you spend to make sure you're maximising the value of that dollar, what faith can an investor have that you are going to show any greater respect for the funds they give you? If I sat down for a business meeting with a start-up company and saw the founders drive up in a flashy new car and hand me an expensive business card as they straighten a designer tie, I would start to question why they were meeting with me at all. If you can afford all that personal expenditure, why do you need an investor? The first place your investment should come from is yourself because if you're not serious enough about your business to sink your own hard-earned funds into it, why should anyone else be?
The smartest thing you can do as a new business owner is put your wallet away. Sit down and take a good look at your budget. When you really analyse it, you quickly start to realise how much money you simply waste on things you really don't need. How you feel about an ‘essential' item right now is going to change over time. The more pressing your business needs become, the more it becomes like a hungry child. When that baby is crying for food and you have nothing to feed it, you're going to be thinking, Why did I spend $150 getting my hair done? Why did I get the expensive wine? Why did I get takeaway four nights a week for the past six months? Your whole priority system around spending will shift towards your business — as it should if you're serious about making it work. Suddenly a lot of the things you've been spending money on will make you sit back and think, Really? This is what you wanted to do with the advertising budget this week?
When I look back I think, sure I could have taken more holidays, spent more money on clothes, driven a nicer car — all those things. But if I hadn't sacrificed then, I wouldn't be part of the Boost phenomenon today. These are the sacrifices you'll have to weigh up if you're serious about going into business. Those small decisions about not taking holidays, going for weekends away, dining in fancy restaurants or spending money on nice clothes in those early years are the reason Boost is open in more countries than any other juice bar in the world, earning over $2 billion in global sales since inception. So if I have one piece of financial advice for new businesses just starting out, it's this: put your wallet away. Your future self will thank you for it!
Attracting an investor
So, other than being smart with your budgeting, how can you catch the eye of an investor? You need to consider five critical things — and not all of them are about spreadsheets! Consider these points:
Do your homework. You should know your market well. Understand the competitive landscape and make sure there is actually a need for your product. One of the saddest moments I witnessed on Shark Tank was when we had to break it to a man, who had invested a huge amount of time, money and energy in developing a product, that the product actually had no market demand. He'd spent a fortune on something that nobody actually needed or wanted. I really felt for him as he walked away empty-handed and with his dreams crushed. He'd worked so hard for nothing. You also need to research and understand your customers. Meeting their need isn't enough — you also need to make sure your product is targeting them effectively and that they will like the way you present it.
Know your numbers. That means understanding every detail of your operation. How much does it cost to run? What are your overheads? How much does your product cost? What's your margin? Where can you make savings? Are there potential economies of scale if you grow? How are you going to realise the necessary growth to ensure that your investor will get a return on the money they are putting in? How long will it take?
Be smart about timing. Is your business actually ready to scale up? Do you have the systems in place to manage sudden growth or will the whole operation fall over? What do you need to do to make your operation scalable? It could be something as simple as making sure you understand your payroll obligations if you need to hire staff. Do you know how much tax, superannuation and other entitlements you need to pay them? Is there a way you ca
n outsource any aspect of your operation and is that practical? Are you investing in the right part of your business?
Be passionate about your project. I've often said that I'm at least as interested in the person as I am in the product when I invest. That's not to say I'll invest in something that doesn't interest me. There was more than one occasion on Shark Tank when I saw a really impressive pitch but had no interest in the product and so didn't invest. But a really great person can turn an average product into a fantastic business; whereas, even with a brilliant idea, the wrong person can turn it into a disaster. If you're really passionate about your idea, that reassures an investor that you will stick with your business through thick and thin because it's your baby. Someone who is in it for the cash will be easily disappointed and quickly look for an easier way to make money. Passion for the project is always a very attractive characteristic in a potential business partner.
Think win–win. While on Shark Tank, I had the opportunity to see dozens of pitches from hopeful businesspeople desperate to take their operation to the next level. Similar to the way I felt in the early days of Boost, they simply expected their business to be worth a fortune just because they had spent years on the project. But at the end of the day, the business is only worth what an investor believes they will get a return on. I often tell people in start-up businesses that they need to look at not only what they need, but also what the investor is looking for. The pitches that are flawed are the ones that only consider what they want without considering what they have to offer to the investor.
Connecting with investors
Starting a business involves many challenges, and one of the ones that makes many a good idea fail is lack of capital; or simply put — you run out of money. Young businesses are super-hungry for cash, and you may need to look not only for money to start the business but also money to grow the business. As I said earlier in this chapter, you need to use every dollar in the business to return a profit, but sometimes no matter how careful you are, more is needed to grow. We sold our family home and I was lucky that we had a great deal of interest in the business so investors were not a problem in the early days. But getting the right investor was the challenge. At the start, when all I had was a document with the title of Business Plan, it was a bit different. These days there is crowd funding and many business angels who are looking at investing. But even with these, potential investors would like to see some ‘proof of concept'. What I mean by this is that the investor knows that the consumer wants the product. This may mean that you have to start on your own or with the support of your family, which in itself can be difficult. But you do need to get your business to a point where it is actually a business before you take it to the market.
Beware the ‘Bank of Mum and Dad'
I have seen and heard some horrible examples of parents lending their kids money for their business and then, for whatever reason, it all goes horribly wrong and the parents are left in a terrible situation, often without their super or any financial security. Some parents are in a position to lend money and if they lose it, it's not the end of the world; other parents lend or guarantee their children with their super, or use the equity in their home as security to fund their children's dreams. This is, of course, completely understandable because these parents want to support their children in their dreams. But, if it doesn't work out, the parents can be left with nothing and some of them are retired so they are not in a positon to make the money back.
Remember: four out of five businesses fail in the first five years, so if you approach your parents, understand what it would mean to them if the business does not succeed. And they should only lend you what they can afford to lose. This may all sound dark and depressing but I have seen the worst happen, and seeing a 60-year-old who has just lost their life savings on their children's dreams is no fun at all.
Mentors: you don't have to learn the hard way!
One thing I can't recommend highly enough is getting a mentor. Everybody needs guidance — yes, even you! As the journey of Boost continued and I was trying to manage the incredible growth, I discovered that there were things I didn't know. More correctly — everything I was doing was for the first time! Fortunately, I had help along the way, and still have a number of business mentors.
The mentor I mentioned earlier was Geoff Harris. We were the perfect pair: he received enormous joy out of teaching and I was a sponge that took everything in.
Geoff's message on culture fit was also loud and clear — in any meeting when we spoke about acquisition, the first topic that was discussed was always whether the possible acquisition was the right cultural fit for our business. One thing Geoff, Jeff and I agreed on was that we wanted to do business with people we liked and who had the same integrity and honesty in business that we had. If people did not get the tick, we would put a line through the business and move on.
I am thrilled to call this man my friend.
The others are people who may not be long-term mentors but who have been generous with their time and advice — people such as James Fitzgerald from Muffin Break, and Lesley Gillespie from Bakers Delight.
All these people have given me a wealth of invaluable knowledge. I've found that those who have been in business for many years are often very open about sharing their experience. It's refreshing when this happens, and it has always encouraged me to make sure I help other people where possible.
Is it any wonder that I firmly believe everyone should have a mentor? After all, nobody has all the answers all the time. Sometimes you just need help from someone who has been there before.
Ask someone you respect to be your mentor, your personal sounding board, but don't have too many expectations. As with all things, the timing must be right. The person you approach must be in the right circumstances to give you their time. Geoff Harris, for instance, was looking for an opportunity to help someone. Be incredibly respectful of that person's time. You should realise that you're encroaching upon this person's space. If the person you approach agrees to be your mentor, you must allow them to set up the means of communicating and amount of time given. Hopefully over time, your mentor may be happy to increase dealings with you. Always respect your mentor by following through on any advice provided.
If the person you admire doesn't have time for mentoring at the moment, look at other ways to study this person's success. Read about them, and read any books they may have recommended — there is always a lot to learn.
Pro tips
Keep in mind the following about mentors:
A mentor can be an invaluable source of experience and wisdom. Sometimes the best thing a mentor can offer is a pair of objective ears.
Be respectful in your approach if you're seeking someone's mentorship. Understand that a ‘no' is probably not a rejection of you personally, but rather a reflection of the person's time constraints.
If the person does agree to mentor you, don't expect too much in the beginning. Allow the relationship to develop over time. Also, prepare well for each meeting so you maximise your and your mentor's time.
There are professional mentoring networks in place. By contacting one of these, you might be paired up with a suitable person who has decided they have the time to give something back.
The best compliment you can give your mentor is to follow their advice — whether that is what book to read or what system worked for them. And always take notes.
Avoiding business pitfalls
When your business is becoming more established and successful, you may start to feel pretty pleased with yourself. The business may be on track, investors are taking an interest and life seems to be moving into the fast track but beware: there are dangers lurking to trip you up. Whether you work in an office environment, a retail outlet or a work site, the traps can be the same, even if they wear different disguises. They're not always the most obvious problems — some of them may be considered assets under different circumstances. This section is all about knowing how to
recognise problems — and overcome them.
Remember to harness your positive energy and there will be no such thing as an obstacle — it becomes just another lesson in business!
The following sections also outline what I have learned from being an employee and how to progress in your working life. One day (perhaps not too far away) you may be the business owner with many staff; in the meantime, learn as much as you can from being the best employee you can. Doing so will be so beneficial when you are the owner of the business.
Handling conflict
At Boost and Retail Zoo, we place an enormous emphasis on ‘cultural fit' during employment interviews — and for good reason. It's not just to save us the hassle of employing a person who won't fit in; it's also to save that person the unhappiness of being a square peg in a round hole.
Dealing with people will always be your toughest challenge, and you need to make sure that you never settle for mediocrity. But sometimes you need to look in the mirror and ask yourself if you have provided all the tools and the right environments for staff to be successful. At times, we can inadvertently set someone up for failure by promoting them far too quickly.
Often the best outcome is to put yourself in the seat of the employee and realise that the best outcome for you both is that they are no longer working for you.
If you find yourself in an environment that isn't right for you, you will feel isolated. You'll never know what's going on, you'll never hear about the best opportunities for advancement and going to work will be an absolute chore. If you're the kind of person who likes peace and quiet, for example, and you find yourself in an open-plan office, full of creative types who like to bandy about ideas, you'll never be able to show your full potential.
The Accidental Entrepreneur Page 17
