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The Bannatyne way, or the Osborne way?

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The Bannatyne way, or the Osborne way?

I read Duncan Bannatyne’s autobiography last year, and must confess to finding it a good inspirational story. However I’d like to use one piece of advice he gives in his book that goes against much of the advice offered by many business advisors, and that I myself also disagree with.

My first business wasn’t a great success. I ran it for two years and it pretty much as good as went out of business. My second business struggled for the first couple of years, and that also nearly went down the pan until I changed my ways. It’s now a great success, so what changed? Well quite a lot of things changed about the way I approach my business, and one key area was that I started to use professionals to do things instead of struggling to do everything myself.

In Duncan’s book he gives reference to two examples. One is that he learnt how to form a Limited company, and then completed all the paperwork and formed his first business by himself. The second is he gives reference to learning about the legislation involved in running a nursing home. He then advises that you shouldn’t waste money paying other people to do things when you can in save that money and do the “thing” yourself. This I firmly disagree with, and I’m a true example of why it is wrong to take on that apprach and here is a couple of examples why.

Websites: I have lost count of how many businesses have poorly designed websites that they have tried to do in house to save money, without realising that all they are doing is making their businesses look too tight fisted to create a professional image of their organisation. They look tachy and I’d never deal with a business who takes pride in promoting a lame public image of themselves.

Business Cards: When someone passes you a business card printed on cheap do-it-yourself paper from a cheap stationer. Realistically it would cost you less than £50 to get some better quality business cards printed from a high street printer, on card. If you can’t afford £50 for business cards then you need to relook at your budgeting and startup costs.

Both the above reflect the impression you are giving other people about your business, and you should be thinking about creating a professional image. You want to portray a sustainable business that is going to be around for a while, not that of a business that can’t afford basic business cards. As for a website, it is better to have nothing at all than something that makes you look like an amateur.

Duncan does suggest contacting the relevant Government organistations and ordering their handout booklets to read and learn about whatever it is that you need to comply with. Personally I feel this is a waste of your own time, when you should be focusing your energies on growing, developing and selling your business. If I relied on the Government guidance on how to comply with the Money Laundering Regulations I could inadvertantly find myself breaking the law because their guidance is riddled with contradictions. If I followed their guidance on how to comply with the umpteen million different Emplyment Legislations I again could find myself breaking the law without realising, or worse still, I could find myself drowning in so much paperwork I’d never find time to run my businesses.

My advice is manage your time. It is actually sometimes a much more efficient and cost effective use of your time to use professionals to do what they are good at so you can get on with running your business safe in the confidence that “whatever” you could have done yourself more slowly has been done more quickly and professionally by a professional. I now surround myself with professionals who know how to do things much better than I do. I technically can do the programming that powers my Efiling business, but it is a much more efficient use of my time to pay others to do it better than I can. I could also technically learn how to write my staff contracts, but it is a much more efficient use of my time to pay someone else to do it. The end result is that my businesses get the attention from me that they need to grow and develop, and not have me tied up in books, leaflets and other unnecessary paperwork.

Using Duncan Bannatyne’s example of forming a Limited company. It probably cost him about £40 all in to form one of his companies himself, and by the time he received all his paperwork back it would have been about a week. So that is about 5 hours of his time learning and form filling, £40 paid out, and a week delay in delivery of his Certificate. He could have paid my “professional” company to do it for about £50, took him about 15 minutes and we would have had the paperwork back with him the next day (quicker than Companies House directly).

Even multi-millionaires can learn something from us mere trainee millionaires.

Comments (6)

  1. Avatar
    Xavier
    May 16, 2008

    I wholeheartedly agree.

    Would even add that its obviously more complicated than that in reality.
    In hindsight, sure everyone can choose the right thing. But when getting a company formed is alien and the first quote one sees is exorbitant. Doing it oneself appears best. Keep looking for a better quote? Sure, but when its your first company, with 10,000 other pressing things to do and no money to allocate to anything, a DIY/ “take it all on” mentality is high on the agenda.

    Consequently, planning a roadmap and assigning ones focus and attention depends highly on circumstance:
    On ones resources, stage of development, industry, knowledge/experience/contacts in that industry and Business model. A person’s ability or willingness to plan, allocate funds, to be a manager and delegate, to be a control freak and not…

    I would imagine that traders, which is essentially what his first business was, typically create most of the value by themselves, leaving other functions to be carried out by low value add administrators…

  2. Avatar
    May 17, 2008

    I agree with you, but when it comes to nursing homes actually going through the legislation himself might well have been a contributing factor in his success.

    At least that’s the impression I got from the book and a couple of the interviews he’s done.

  3. Avatar
    May 17, 2008

    John – You are right, knowing the legal technicalities of his industry no doubt did play an important role in the success of the homes. However, I do believe that there must be a line drawn between researching your industry and a false economy of doing everything yourself to save a few bob.

  4. Avatar
    May 27, 2008

    As another example of when not to “DIY”, I’d suggest accountancy and company accounts.

    Yes sure, you *can* DIY when it comes to all the paperwork, accounts, and Inland Revenue documentation, but (in my experience) you just don’t know enough to be sure you’re safe. Having an accountant do your figures for you and submit them a) suggests responsibility to the Inland Revenue – that you’re at least aiming to do the right thing and b) uses the accountants extra knowledge of Inland Revenue’s foibles – you’re likely to get better tax advice, expenses advice etc. from an accountant rather than just “Well I *think* I can get away with that”.

    To me – having done it both ways with a limited company now – having a decent accountant to handle that (and the payroll stuff) just makes sense.

  5. Avatar
    Nick
    Aug 11, 2008

    Hi All,

    I think if the paperwork or “thing” is central to the business idea, then it makes perfect sense to do the work yourself. In Duncan’s case he managed to find his niche by understanding all the legislation – which was a huge factor in determining his successful business model.

    If the paperwork or “thing” isn’t core to your business model (i.e. a corporate website or your accounting) then it’s probably better to farm that work out to save time.

    Example – If I was running a printing business, I’d be foolish to trust someone else to design my own business card. Any other sort of business (where business cards are not central to the business model) would simply pay for cards to be designed by a printing company.

    I think Duncan’s point was to take control and be knowledgeable of the things that will ensure success for your business. I do agree though that he possibly could have saved his time by getting someone to form his company for him, though I suspect he wanted to learn about this process so that he fully understood what was involved. Perhaps doing this at least once would help all business owners, if only for the experience.

    Great blog by the way, I’m a new reader but am quickly going through the archives! I hope to read more soon.

    Thanks,
    Nick

  6. Avatar
    Oct 20, 2008

    Nice to read the bit about how important image is on the web. As a professional web designer, you’re constantly faced with companies who don’t see the difference between a professional doing the job vs the Chairman’s nephew’s mate.