The past year was one of the toughest I can remember for business. Confidence fell off a cliff, and fear and gloom seemed to dominate the financial world. Now at the start of 2010, the first signs of confidence are coming back. China, Brazil, India and Australia are growing again and the world’s stock markets have bounced back in the main.
Sometimes I’m accused of being too optimistic—the natural entrepreneur’s enthusiasm often gets the better of me! But at Virgin, we have seen some of those signs: People are booking plane and train tickets earlier; they are reserving this summer holidays; customers are upgrading their cable accounts, and our health-club business is growing around the world.
So what do I think will happen this year and what opportunities are there for budding entrepreneurs?
Frustratingly for those looking for an easy answer or formula, there isn’t one. There is no substitute in business for actually running a business. Throughout my career, I have made decisions using my instinct, but I have also worked very hard at making those decisions work. As I look back, a few key patterns keep re-emerging.
First, you need to surround yourself with trusted and talented people. Setting up businesses takes an enormous amount of time and energy. It is easier to make the big commitments when you are surrounded by people you trust and like. Keeping my many good chief executive officers and managing directors happy—and finding new ones to start the next ventures—is one of my full-time jobs.
Then you need to ensure that your business or idea has a place in the market and a product or service that is different enough to attract customers. At Virgin we stick to a simple checklist. Our businesses need to be innovative, maintain a certain quality, be value for money and have a sense of fun. They also tend to focus on customer service, and we like to be the customer’s champion, bringing simplicity and transparency to many businesses.
Timing is also important. If I could start again, I would set up more businesses during recessions when almost everything costs 50-90% less than it’s worth during the good times. Often a lot of highly skilled staff are on the market and the competition—existing big businesses—have their eyes focused internally, on their own operations and issues. Such a climate is the perfect time for young, enthusiastic and nimble companies to set themselves up and thrive. This is one of those times.
During the recession of the 1970s, we expanded Virgin Records. In the early 1990s, we expanded Virgin Atlantic, as established rival airlines were recovering from recession and the Gulf War. Without the legacy issues of a large existing operation and high cost base, Atlantic was able to buy new and more efficient planes and open exciting routes.
Similar opportunities exist today for new businesses in sectors as diverse as food manufacturing and recruitment, renewable energy and even space.
People often blame economic conditions or the lack of finance from the banks as the key reasons for the failure of more small businesses to thrive. Surely, banks need to keep credit flowing to emerging companies and governments need to hold down the bureaucracy and red tape—but, mainly, entrepreneurs need to take responsibility and keep driving their businesses on. A good business idea needs hard work, determination (and a little luck) to succeed.
Many would-be entrepreneurs give up too soon. You have to overcome early adversity. The inaugural flight of Virgin Atlantic almost brought the group down. We had worked like mad for six months to get the first flight off from London to Newark and it had been a resounding success—fuelled in part by 70 crates of champagne. On my return to London, I was met by our then bank manager sitting on the steps of my house. He had come to tell me that my bank was not able to extend my overdraft to help finance the new airline.
Instead, if we went over our overdraft limit of £3 million (around Rs22.5 crore), the bank would have bounced our cheques. This was almost certain doom for an airline. As soon as people heard that we had no credit, they would stop supplying food and fuel. Passengers wouldn’t buy tickets. I had to move fast. Over the weekend, I pulled in money from our overseas businesses to shore up the bank account and, as soon as I could, I changed banks.
It was a sobering lesson. It taught me that a good entrepreneur looks for solutions, not excuses. We’ve been doing that as a group ever since. You always have to protect the downside of your ventures.
So get out there and start up those businesses in 2010. As the old Chinese adage goes, fortunes are made in good times; empires are built out of tough times.
By NYT Syndicate ©2010/Richard Branson
Richard Branson is the founder of the Virgin Group and companies such as Virgin Atlantic and Virgin Mobile. He maintains a blog at www.virgin.com/richard-branson/blog. You can follow him on Twitter at http://twitter.com/richardbranson. Your comments and queries on this column, which will run every week, are welcome at email@example.com