Entrepreneurs: Is insecurity their fuel?

As one-off mavericks, they elude categorisation, yet the characters who launch and nurture businesses all seem to have something to prove.

Last Updated: 31 Aug 2010

The subject of this MT Round Table, in association with Royal Bank of Scotland, is that hottest of business topics, entrepreneurialism. What is it? Do we value those who possess it highly enough? And how, as a nation, can we get more of it? Everywhere, from the commercial front line to academia, from the saloon bar to the corridors of power, there's no shortage of people with opinions on the subject of enterprise. But what do the people who really know - the entrepreneurs themselves - think has made them what they are?

To try to distil the essence of entrepreneurship, we assembled a panel of some of the UK's most successful self-made business people, all of whom featured prominently in MT's latest ranking of Britain's Top 100 entrepreneurs last January, together with representatives from RBS, government campaigner Enterprise Insight and a corporate psychologist.

MATTHEW GWYTHER: Entrepreneurialism is something that everyone is hugely interested in, and people are always asking how we can foster it. Can you buy it? Can you nurture it? Are entrepreneurs born or are they made?

Steve, can you spot an entrepreneur who will help make you a lot of money when he or she walks through the RBS door?

STEVE PATEMAN: One of the challenges we face is that banking in 2005 is a more regulated business than it was five years ago, and certainly more than 10 years ago. These days, it is quite hard to support entrepreneurs in setting up their businesses because they are not the easy decisions to back. They are the ones where there is a degree of gut feeling as much as a business plan and all the other bits and pieces. If I look at some of the most successful businesses that work with us today and how we financed them when they started, in all honesty, we would find it hard to finance some of them in the current environment.

How do we get around that? We look for all the usual things you would expect in terms of business planning: cashflow, forecasts and so on, supported by market due diligence. However, much of it comes down to the pitch from the management team about where they want to take their business and where they see the opportunities.

The hardest thing will be whether you back your instinct. You cannot write a book about how you back instinct; nevertheless, that's what it is about. If I have a fear for where banking is going - and not just RBS, but across the sector - it would be that instinct and gut reaction are being regulated out.

It comes down to the quality of people you have as your front deal-doers, those guys who interface with entrepreneurs and opportunities. It is about personal engagement and the ability to understand and adapt to situations that are not black-and-white and that may not be the easiest deals to do.

GWYTHER: Adrian, let's go right to the crux of it: do you believe, with your experience of studying entrepreneurs over the years, that they are born or made?

ADRIAN ATKINSON: Entrepreneurs are made in a strange way; you cannot create them. I'd say there are maybe only two people at most around this table who are entrepreneurs; the rest are enterprisers, and there is a big distinction. It seems that entrepreneurs are created from childhood difficulties and experiences - we think 45% of them are dyslexic. And second-generation immigrants can be angry about the way society has treated their parents; often, very bright individuals end up as hospital cleaners or whatever. So their children are furious and want to show the world.

But the children of entrepreneurs never become entrepreneurs themselves, because their backgrounds are wealthy and they have a good time. They may be good business people, but that is a different thing altogether.

MICHAEL CLARE: I totally agree with what you are saying, although in my schooldays it was not called dyslexia. Two of my sons are dyslexic, and their dyslexia teacher says I am also dyslexic, which makes me feel better about my education. My father died when I was 12, and your dad dying during your childhood seems to be a common factor among various entrepreneurs. My brother went to Cambridge University and did very well, but I didn't even go to university. He is two years older than me and I was very much trying to prove myself. I'm in next year's Who's Who? and he still hasn't made it yet. Entrepreneurs do seem to want to prove something; something drives them to prove to the world or to an individual that they are better than maybe is perceived.

ANDREW TURNER: I'm interested that Adrian thinks that there are only two entrepreneurs around the table, because the obvious question is whether I am one of them. Certainly, I have always had drive and still do. Probably worryingly for my family, I have more drive as the company gets bigger because it becomes more interesting and exciting. I think I'm becoming more entrepreneurial as I get older.

ATKINSON: I should add that women are different to men in this. Women entrepreneurs are not driven and do not come from the same source as men.

PENNY STREETER: At age 12 I had to flee a country at war; we lost everything we had and then restarted in the UK. I have run my own businesses consistently and failed in businesses consistently, but I have picked myself up and gone forward. The trigger for this business was that on returning from South Africa, I was divorced, I was homeless, pregnant with my third child, and I realised that if I did not get off my arse and create something to support my family, nobody would do it for me.

I think I have had all the trigger factors, but I also come from what I would consider to be an entrepreneurial family, perhaps not hugely successful, but entrepreneurial nevertheless.

CHRIS DAWSON: I still cannot write or spell. I learned to read when I was 23, but my maths would beat most calculators, especially if I am selling, although it is pretty crap when I am buying. My maths ability was revealed when I was at a building and the various surveyors would calculate a certain rent per square footage of the site, yet I was able to calculate the net profit; not because I wanted to show off, it was just clear to me and it only took about four minutes. The banks, bless them, would not believe a word. They wanted demographics for this, that and the other, and I simply repeated my calculation. I did not get it quite right, but I was within 3% when we actually opened the door. I had a word with myself and gave myself a bollocking over that 3%.

I have a personal drive to want more. Sometimes I'll take someone under my wing and tell them not to be afraid to be greedy; to be honest and say: 'I want more of that. I will have that yacht. I will have that aircraft.' Be honest with yourself. I fancy doing a Philip Green. It is part of the make-up. You want to be able to wave to everybody who said you did not stand a chance - in my case, my schoolteacher. I do enjoy making the money now I know that I can really do something in life.

CHEY GARLAND: My mum had me before she was married, and then my dad took me when I was about six or seven. Their marriage was very turbulent. We grew up in a very northern, working-class world. If my brother wanted a hot drink, I was told to go and make it for him. My sister was extremely pretty, while nobody really seemed to notice me. I did go to secondary school, but what with having to babysit while my mum went to work and so on, my aspirations were incredibly low.

I began work as an office junior and saw things I never knew anything about, such as sales departments, sales ledgers and all the components that make up a business. I quickly realised that I wanted to have recognition and make decisions that shaped something. But with my lack of education, I also knew I could not make it to a decision-making post on my own terms. The consequence was that I started a business at 23. Once I started to make money, that became a driving factor as well; but more than anything else, I am driven by recognition.

KEVIN STEELE: When we did the market research for the campaign for young people we now run, we tried to find a way of boiling down what being enterprising meant in ordinary language. The result of this is that it is about making ideas happen - having an idea and then making it a reality. Ten thousand years ago we were all hunter-gatherers living around the Mediterranean, and we lived or died depending on how entrepreneurial we were at scraping an existence along with everybody else. That leads you to think that being enterprising is something that is in everybody, and everyone has the potential to be enterprising.

CLARE: You said that we were all living around the Mediterranean and that we were all really entrepreneurs at heart, yet there was not really anything entrepreneurial to do back then. It seems to me the definition should really be someone who takes a risk. Possibly, entrepreneurs are the successful risk-takers.

GWYTHER: And risk, as we all know, can lead to failure. Steve, for an organisation like yours, failure is unthinkable, is it not?

PATEMAN: It depends how you define failure. If a UK bank posts a series of results that has a disproportionately high level of bad and doubtful debts compared with its peer group, its share price will take a hammering. You do not have to be Einstein to work that out. Given that share price is one of the factors you look at when assessing the performance of organisations, I don't think you'd find many chief executives who would sign up to that type of strategy.

It's hard to take a stance and say you think a management team is right when there are seven other syndicate banks saying they want to call it a day. It is a very brave banker who says: 'You guys have it wrong, I am right.' And yet most of the success stories around rescuing companies that have subsequently gone on to better things have been because one banker was prepared to back them.

For a bank to sign up to take a significant proportion of equity risk that may go wrong is not something the UK banking infrastructure is either regulated to do or where shareholder expectations are. Private-equity funds and the likes of 3i are there to fill that gap.

STREETER: When my business failed, I certainly was made to feel a pariah, not just by institutions that had lent me money - fair enough, I owed them money - but by friends, colleagues and family who said: 'For God's sake, it was inevitable you were going to fail. Give it up and get yourself a proper job.' People want to know you when you are successful, but definitely not when you are unsuccessful. It's the fear of failure that sometimes pushes people back - although it actually drove me forward.

PETER JONES: I had a failure. I think I already know I am not one of the two entrepreneurs here. Failure is an interesting subject, because I have always viewed a bank as the person that puts the umbrella up, but takes it away when it is raining. I would like to see all the major banks put 25% of their annual profit back into the pot to inspire enterprise in new business in the UK. I would like to see something more entrepreneurial from the banks.

ADRIAN GILL: I probably cannot argue for the figure of 25%. It would challenge many bank finance directors. There is an element of banks putting a layer of equity capital back into regional growth funds or backing regional development agencies. Certainly, that is a method of investing that we have tried to use.

Many people at this table have made a lot of their own personal equity. As entrepreneurs, how keen are you to use that to provide seedcorn capital to other start-up enterprises? Do you find yourselves drawn to nurturing lots of new entrepreneurs?

CHARLES WIGODER: I will give you two sides of the same equation and, interestingly, RBS plays a role at both ends. When I was starting my first business I raised £250,000 of equity, which included remortgaging my house and getting some people to inject capital. I went to my local RBS bank manager, where I had had an account for 10 years, and told him I had £250,000 of equity but needed £500,000, and asked him to give me a £250,000 overdraft facility. I showed him the business plan, although it was not terribly detailed, and he said: 'OK, 50% debt, 50% equity, that sounds reasonable.' I think it's a shame that this kind of thing does not happen today.

RBS supported the company, called Peoplesphone, for the next four or five years. We grew the business to £200 million of turnover. RBS then decided, because it had had a bad experience with another company in the same sector, that it preferred to leave, so we found ourselves looking for alternative bankers at very short notice. We saw perhaps two ends of banking: the front end was very helpful, but at the back end, where we had an extremely well-run and profitable business, the bank turned round and said it wanted out.

PATEMAN: The criticism of banks as being guys who lend you an umbrella when the sun is shining but want it back as soon as it is raining is actually a pretty good one. All the experiences that everybody around this table have had will have been a function, either good or bad, of the individual they interacted with at their particular organisation, and that is a fact. The guy who said yes because the debt/equity ratio was 50/50 still exists, but you could also have gone down the road and found someone who got out a form, asked for your telephone number and how long you had lived at your address, and given you an entirely different answer.

TURNER: I have sat here listening for the last 10 minutes thinking that you're in a dream world. If there was an opportunity to put 25% of banks' profits into a pot to help entrepreneurialism, then some bank would make the move to do it. The reality is that it is high-risk, it does not fit the profile of a bank, and it is not what the stock market is looking for banks to do. I am on the bank's side.

I just do not believe there is any entrepreneur in this country who cannot find £5,000 to £10,000 if that is what they need to get a business up and running. That is just petty cash these days; you can get it on your credit card. Ultimately, the market sorts it all out. From what I have heard so far, I also do not think that anybody around this table has been held back by the banks, certainly not for ever.

GORDON SHIELDS: On the point about seed capital, I have helped a number of small businesses over time. Although my help has saved one or two, I've never had a success, which I find interesting. And how many people around this table as entrepreneurs see situations where a person has £25,000 of redundancy money to put into a business and you think: for God's sake, don't do it, you have no chance whatsoever.

GARLAND: I think that once the entrepreneur gets going with their business, they reach a point where what they really need is advice. With my call-centre business, I can remember reaching the stage where we were growing at a phenomenal rate and there were certain things the business needed to do that we were not doing, or that we needed to do better.

Bringing in a really top-quality consultancy firm would have cost £150,000-£200,000, so it was not an option at that stage. Possibly, the banks or other organisations that wish to support entrepreneurial business could consider a way of funding this type of consultancy, because there could be a lot to learn from it.

GWYTHER: Adrian, do you have thoughts on this subject? Why is it that the UK seems to be better at fostering entrepreneurs than elsewhere in Europe at the moment - or is that a myth?

ATKINSON: It is not a myth. The research indicates that the highest entrepreneurial activity is in the US, with the UK a close second, while Ireland and Norway are the lowest. Different countries have different cultures, especially regarding failure - if failure is seen as a negative thing, then nobody tries anything very much. China is highly entrepreneurial; it is a place where you can go and create business very quickly, although you can also lose it quickly.

STEELE: The OECD puts the UK at the top of any developed country in the world in terms of a favourable regulatory regime for starting businesses. In the UK it takes one bureaucratic procedure to set up a company, but in Italy it takes 18 and an average of 26 weeks.

ATKINSON: Entrepreneurs believe totally in themselves. It is a strange kind of confidence: you have to remember that entrepreneurs are angry with the world. They are not gentle, easy-going people. You can immediately find out if someone is an entrepreneur by asking them when they last took a holiday where they stopped working and stopped thinking about work. Entrepreneurs never do. They work 365 days of the year, and do so all their lives. They never stop taking risks and never stop working.

CLARE: Entrepreneurs become bored if they are just administrating. I like to make money. Just as golfers measure themselves by their handicap, I like to measure myself by how much money I have. What is so wrong with that?



chairman & MD, Dreams plc

Business: Retail - beds

Worth: £30m (before flotation)

MT Top 100 rank: =63rd


founder & MD, CDS Superstores

Business: Retail - home and leisure

Worth: £100m

MT Top 100 rank: 15th


founder & CEO, CJ Garland

Business: Call centres

Worth: £20m

MT Top 100 rank: 29th


chairman & CEO, Phones International

Business: Mobile phones

Worth: £180m

MT Top 100 rank: 3rd


founder & chairman, Shields Environmental

Business: Recycling

Worth: £30m

MT Top 100 rank: 12th


founder & MD, Ambition 24 Hours

Business: Recruitment

Worth: £50m

MT Top 100 Rank: 13th


founder and MD, Central Trust

Business: Personal finance

Worth: £200m

MT Top 100 rank: 5th


founder & CEO, Telecoms Plus

Business: Telecoms

Worth: £50m

MT Top 100 rank: 32nd


Adrian Atkinson founder & MD, Human Factors International. Corporate


Steve Pateman MD, corporate banking, Royal Bank of Scotland

Kevin Steele CEO, Enterprise Insight. Promoting youth enterprise

Adrian Gill regional MD, corporate banking, Royal Bank of Scotland

Matthew Gwyther editor, MT

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