CONCLUSIONS OF THE 2008 MAGIC MILLION SURVEY

WHAT DO THE HIGHLY SUCCESSFUL BUSINESSES FOCUS ON?

Highly successful businesses consistently have a preoccupation with:

• Strategy
• Marketing
• Teams.

…AND WHAT IS IT THAT BUSINESSES THAT BREAK THROUGH THE ELUSIVE MAGIC MILLION TURNOVER BARRIER FOCUS ON?

All of the above AND two additional factors – a willingness to let go of:

• Financial control - sharing ownership
• Management control - sharing the responsibility of growing the business with the team (delegation) and outside advisers (taking advice).

SO, WHAT’S HOLDING PEOPLE BACK? 

The wrong attitude… blaming the outside world when really it is their own self-limiting mindset that is holding them back. For example, self-limiting principles such as:

• Playing within boundaries rather than with them
• Incremental thinking rather than quantum leap thinking
• A lack of belief in what is possible
• A bureaucratic mindset
• An inability to tolerate ambiguity. 
  

The successful MM businesses decide their goals and are prepared to pay the price!

‘When you get right down to the root
of the meaning of the word “succeed”,
you find it simply means to follow through’
FW Nichol

SURVEY CAVEATS

1. Beware of the ‘Survivorship Bias’ - we see the winners and "learn" from them, while forgetting the huge unseen cemetery of losers. This causes skewed results.
2. Beware when people attribute success to certain key factors/activities - performance (good and bad) is probably related far more to chance than skill, yet people rationalise their success and create a cause–effect explanation.

BARRIERS (to becoming a MM business)

In a nutshell, key barriers are:

• Rule-driven, overly systemised culture and unnecessarily complex organisational structures
• Inappropriate leadership
• Initiative fatigue
• Inappropriate aspirations and energy.

ENABLERS (to become a MM business)

We expect some combination of the following to be present to precipitate successful MM behaviour:

Charismatic leadership (and not always by consensus) A ‘can do…’, ‘yes, and…’, ‘blame-free’ culture…, a ‘willingness to pay the price’ A fast-moving, exciting business environment Rewards and systems that motivate the individuals concerned Employing the right people LUCK.

KEY LESSONS

1. When comparing the winners and the losers, there are more similar than different/contrasting attributes.
2. Aspiring growth businesses tend to blame the outside world for their slow progress yet really it is their fear of letting go of financial and managerial control that is the problem.
3. Highly successful businesses consistently have a preoccupation with strategy, marketing and teams. Entrepreneurs must also have a willingness to let go of financial and management control.
4. The big difference between winners and losers isn’t the ‘good stuff of growing a business’ but massive energy and a decent dose of good luck!

NOTE TO THE OWNER - GETTING PAST THE MILLION POUND T/O

YOU ARE THE PROBLEM – you are creating the bottleneck Work ON not IN the business Sell something that people really want… understand their needs and wants… make your offering so seductive that they find it hard to refuse… blow them away with your legendary service Charge sensible prices – don’t be a ‘busy fool’ Stop procrastinating – DO IT NOW. Take MASSIVE ACTION.

In a nutshell the owner must provide:

• LEADERSHIP          direction, commitment, integrity, confidence, initiative
• FOCUS                  drive, determination, selling
• VISION                 

NOTE TO OWNER - GETTING A MILLION OUT OF THE BUSINESS

It is clear that to sell a business it is necessary to have certain aspects in place. The business must be able to put ticks in all of the boxes below to find a buyer:

• Systematic, underlying, repeatable, sustainable profit machine
• Reference and trophy clients
• Uniqueness and excellence
• A senior team to take it to the next stage.

70% of small businesses hope to get their millions out of the sale of their business - only 25% actually make any plans to do so - you need an Exit Strategy... hope is not a method!

Your business is probably not worth what you think it is worth!

‘The greatest danger for most of us
is not that our aim is too high and we miss it,
but that it is too low and we reach it.’
Michelangelo

BACKGROUND COMMENTARY

This was never intended to be an intellectually rigorous piece of research but simply a privately-funded survey to get an understanding of some of the key behaviours and drivers in this field.

There has been much talk of ‘entrepreneurship’ and the Magic Million; the survey examines what successful (and aspiring) owner-managers and directors of growing businesses think is required to break through the MM barriers (the ‘million pound turnover’ barrier and the ‘million pounds out of the business’ barrier). 

ENTREPRENEURS AND THE MAGIC MILLION

There are as many different definitions of ‘entrepreneur’ as there are examples. They tend to be opportunistic, constantly on the lookout for new ways of doing things.  They are curious and often obsessed; often they are poor at the detail.  While many people spot opportunities, it is the entrepreneur who acts upon them and delivers.

We need to draw a distinction between:

• The one-off entrepreneurs, (the self-employed) - the life-stylers
• The serial/real entrepreneurs (who are constantly looking for new opportunities and ways to make money) - the value builders/harvesters.

ADDITIONAL INFORMATION

This qualitative survey was carried out in Quarter 4 of 2007 by The Directors’ Centre.  It comprised of surveys and interviews with 117 existing/former owner-managers and managing directors of independent business in most sectors (as well as desk-based research). The majority of respondents could be classified as MM businesses (turnover breaking through the million-pound barrier) and many were magic millionaires (having taken a million pounds plus from a business sale).

REFERENCES

Burlingham B - Small Giants, 2007 Craven R - Kick-Start Your Business Craven R- Bright Marketing 2001/7 DTI/SBS - Passing The Baton. 2004 Gerber ME - E Myth Revisited, 2005 Godin S - The Dip, 2007 Hay Group - What Makes a Great Entrepreneur, 2001

LBS Pulse Survey, 1996 SBA - Succession Planning, 2006 Storey S - Understanding the Small Business Sector, 1997 Taleb, NN – Fooled By Randomness, 2004 Other sources: Warwick Business School, Barclays, DTI, Global Entrepreneurship Monitor

FOR FURTHER INFORMATION

Contact The Directors’ Centre – the consultancy for growing businesses
1 The High Street, Woolley, Bath BA1 8AR  www.directorscentre.com
Tel: +44 (0)1225 851044   Email:      office@directorscentre.com

To find out more about Magic Million and events where the materials will be used, go to the Magic Million page.

publication details

First published by The Directors' Centre ©2008