What mistakes I learnt from in my first business:

Over the years of running businesses and now investing in them I guess the things I got wrong in the early days and what I see now in a lot of businesses that are going wrong is it boils down to people, process, cashflow/financial control, mindset and marketing. Generally these are the things that go wrong - I actually wrote a book on the subject .

So if you hire the wrong people or you hire the right people but don’t give them the tools, resources or motivation to do the job properly causes problems.

The wholly grail as I see it is you make yourself redundant from the business so it runs effectively with or without you - you need to when running a business be working on your business not in it - if you are too consumed in the day to day it will not grow much and become too reliant on you. Take Sir Richard Branson - do you think his businesses still function if he doesn’t show up - of course they do because he is a master at recruiting the best people to run his businesses - for me this is what sets Uber successful companies from poor ones is the owners ability to bring the right people to the table.

Process - if you have the wrong sales, operational, manufacturing processes in place your business won’t grow

Cashflow - understanding cashflow is my biggest learn and distinguishing it from profit . I will give an example - a company I was going to invest in sold training globally they had a ￡5m revenue company and about 800k profit. One of its major contracts was to a Middle East company - the contract was worth about ￡1m was going to cost about ￡600k to deliver so would make a ￡400k profit. So it would take about 6 months to deliver the training so it had to pay flights, accommodation, wages of the trainers etc. However the company negotiated really long payment terms about 12 months (dumb I know!) - so this company paid the 600k to deliver the training it sent its invoice for 1m and it’s profit and loss account showed 400k profit from this one contract. However it wasn’t going to get paid for a year - so it had incurred the 600k costs which is paid for and left it short of cash because it’s invoice wasn’t getting paid for a year. Revenue is vanity profit is sanity cash is king . Having robust cashflow management in place is one of the biggest things any company should have - I have one outlined in my book.

Mindset is important you have to be focused and determined to achieve your plan

If you don’t have a plan or the right mindset the business will probably fail

Marketing - you may have the best product or service but if no one knows about it it won’t sell - marketing to quote Deborah Meaden UK angel investor and dragons den panelllist - marketing is about telling your potential customers what you do, why you are better and you need to keep telling them ! Marketing has probably been my second biggest learn after cashflow.

In the UK and it’s similar statistics in most western countries is that 94% of small businesses fail in five years … only 1% reach ￡1m in revenue and then only 1% of them reach ￡10m revenue.

So of 10,000 businesses only 600 are still going after five years, only 100 make more than ￡1m revenue and only 1 makes ￡10m - that’s revenue not profit - the profit figures are even more shocking !

I work with business owners to help them grow and scale and become one of those 1% of those 1% businesses .

About Paul

Paul Seabridge is a Cypriot/UK based Business Investor & Owner of Private Equity, Mergers & Acquisitions Firm Kleinsman Global LLC. He is sector agnostic buys, sells, invests in & merges SMEs in the US, UK & Europe. He also works runs a 3 day experiential training event for business owners were you can learn how to grow your business significantly, stably & quickly. You here from people that have been there, done it (sometimes more than once) and share their skills & expertise. The event also puts you in front of high net worth investors who are looking to invest in great businesses that want to scale. You can learn more at www.paulseabridge.com and www.paulseabridge.com/growth-summit/