Understanding Small Businesses and earning The Nod

i. A business built on profit

Many businesses have one aim: to grow quickly and make money.

It’s the principle foundation for lots of businesses and something the many marketing messages focus around. Just think how many B2B communications you see that can be boiled down to We’ll save you time and money.

The foundation of pure profiteering is an interesting one – both because it’s such a common narrative in the world of the start up (the concept of 10X growth and the desire to become a ‘unicorn’ business is mentioned in nearly every Silicon Valley blogpost/podcast) and, conversely, because it’s an element very few small businesses we met said was their biggest driving force. However, there were some.

To find out more about a small business that is built on the foundations of making money, we headed up to the North East and interviewed Tony Snaith, owner and CEO of Communicate PLC. For him, growth and profit gains were key reasons for setting up his business.

Communicate PLC was created to provide networking solutions to businesses across business parks – enabling new and small businesses to move in without the worry of having to set up their IT infrastructure.

Tony told us that when you have a very specific goal, which in his case was to float the business within 10 years, you need two key things as part of your foundation: rigour and effective structures that all fit with the business’s ultimate goal.

For him, this meant setting up as a Public Limited Company from the very beginning (and even including the PLC element within their name). It also meant he worked hard and invested heavily right at the start to have the right legal structures, the right accounting practices and the right businesses process in place from day one – something many business do much later down the line (or never in some cases).

Rigour means my business can quickly expand and roll out in new regions, as well as adapting to new market trends and technology innovations while keeping to a clear direction.

Tony preached the importance of having a strong mission and vision from the start that you can always come back to, and it’s worked: his flawless business plan that he has stuck to from day one, has now earned him the status as one of the fastest growing small businesses and most innovative companies in Europe.

It’s clear that a business whose mission is to grow fast and sell must keep its eyes on the prize and, at the least, should have a very specific roadmap of how to get there.

The question for marketers looking to sell to and support people like Tony should be where they can best fit in along that journey and how they can make that road to success both smoother and shorter.

01 Foundations

iii. A business built on personality

Whether someone has set up their business with a shorter-term plan to grow and sell, or a longer-term plan to build an empire, there is one thing that connects them all – the blurred lines between their work and personal life.

Often a small business owner’s personality and personal story are itself the foundations of the business, and the very essence of what the company is all about.

Up in Middlesbrough we met Andrew Burton, an incredibly likeable guy who has built his business on his own, very personal story. After signing as a professional footballer, Andy was released from his contract at Middlesbrough FC, which led to an incredibly low time in his life and a battle with mental health that was sadly coupled with further health difficulties.

But Andy used this experience to his advantage when it came to setting up a business unique to him and this in itself has become his unique selling point.

Andy’s realisation was around the importance of learning about the mental and psychological side of exercise, as well as the physical side. It was this personal insight that gave the inspiration for the foundation of his business.

Looking back at my life, it was fitness that helped me through personal struggles. Everything in here is from my own personal experiences, which makes my business completely original and unique.

When it comes to passion for what he is trying to achieve, Andy has it in spades. He genuinely wants to help his clients change their lives and has dedicated his life (working 5.30am – 10pm all day, everyday) to help them do it.

Andy doesn’t want to be a millionaire, he doesn’t want to start the next Virgin Active, he just wants to help people learn and not experience what he did – and you see this in every single part of his business.

Our gym is not your standard commercial gym – we are looking to actually do what we say in changing lives both from a lifestyle and mental health point of view. We are all about giving people direction. The aim really is to change lives.

But having such close links between your personal life and your business can bring its own challenges.

Of course stuff goes wrong, but I lie awake at night knowing I am not only the person that cares the most about it, but I am the only person really responsible for fixing it.

Each day you’ve got a purpose, you know why you are there, and you stick to that and once I can see the real change in people, looking back, that’s when I know I am a success.

Marketers need to understand this passion and this raw ambition to build and create something that is unique to the person – it’s the biggest example of where generic, rational and corporate messages just won’t be given the time of day.

01 Foundations

v. A business built on a bigger mission

Foundations of a business can go beyond the organisation itself. The ambitions and reasons for scratching the itch may be based on a bigger ambition to change an industry or society’s attitudes and actions as a whole. In short, the foundations for some businesses have a whole bigger meaning.

This is certainly the case for Matt who runs Temple Cycles in Bristol.

When we asked about his vision of the future, he told us that, yes, he not only wanted to grow the size and reach of his own business, but he had a bigger ambition. He wants to grow the number of people cycling in and around Bristol, educating people more about bikes – how they are made, what makes good quality and even how owning one can change your life.

I see myself as much more than just building a bike shop, I want to build an industry and I want to change the way people see cycling in general.

In Britain, people’s perspective of bikes is not how it should be. I want to create a shift in opinion and society’s attitudes towards my product. I want to help grow the bicycle industry.

Matt wants to do this by building a completely different business model to his competition. Take, for example, his idea of wanting to create products for life – something he thinks has been lost in our more disposable, commercial world.

Where bike manufacturers largely bring out new models every year, slashing the prices of the previous season’s bikes, and build bikes that (potentially) are not made to last, Temple Cycles want their customers to buy once and the bike to last them for life – with owners passing on their bikes through the generations.

I wanted to design bikes that blended what I loved about vintage bikes and what I loved about modern bikes. The fundamental idea is to create bikes that are well-styled and should last a long time if they are looked after.

It may come back to bite me in the ass, but it’s the only way I can see to help people change their relationship with their bikes.

Brands need to buy into these longer term and bigger visions that many small businesses have today, especially those run by a younger generation. Many big businesses presume small business are short term (many aren’t) and so too many marketing messages are based on the here and now (presumably because bigger businesses are all about short term gain). It’s time for a mind shift, and people are calling out for it.

i. Partnerships

How do just two twenty-year-old blokes run an international business that brought in over a million pounds of revenue in its first year, all from a small warehouse?

Apart from a strong work ethic, a whole heap of bravery (and maybe a sprinkling of luck), it’s largely due to the network of partners and suppliers that the business is built upon.

Down in the middle of Wiltshire, we met the (annoyingly) young and successful Monty and Dan who run Furniture Box, a furniture company that imports and sells flat pack furniture online.

Monty, who set up the firm, started his business ventures at just 12 by selling sushi kits on eBay. By 18, he had found his niche in selling furniture predominantly on eBay, Amazon and Tesco Direct (and interestingly only 5% through his own website).

On the face of it, the business model for Furniture Box is very simple. Monty and Dan choose a series of products (all flat-packed) from a supplier in China, get the furniture shipped over, sell the product ranges on various websites (eBay etc.) and then ship to customers whenever they are ordered.

But behind the scenes, things are a little more complicated. The business relies on a network of ten different suppliers in China, as well as three delivery partners, accountants, currency brokers, insurance brokers and vendors – and their key channel partners who they sell through.

This network of partners essentially is the business and it depends on partners and suppliers who are helpful, reliable and, ultimately, an extension of their own business and the Furniture Box brand. You could really see what this meant for Monty and Dan when they were looking for brands to partner with.

We saw the same trend across a number of other businesses we met. Di Hassall, who runs shoe brand ‘Di’ based in Stratford-upon-Avon, spent a whole year finding the right partners and suppliers for her business. It’s a drawn out process, but it sets good foundations for the business.

Brands that want to be part of these partnership networks need to understand they are not just selling a product or a service; they really are fitting in as an important cog in the works for the people they sell to. Yes, cog not spanner; so don’t go over promising. That demands brands to do their utmost to look after their small business customers and build long lasting relationships and stop focusing on pure acquisition.

02 Networks

iii. The local community

Support networks don’t just come in the form of other businesses – they also take the form of friends, family and members of the local community.

It’s these networks that Rob, owner of Lynwood & Co, has relied on to help support and grow his coffee shop and food business.

Rob came over to the UK from Australia. After working in hospitality for a number of years, he wanted to set up a business that brought some of the Australian culture to the UK – namely good coffee and the social culture that surrounds the coffee shops.

Lynwood opened its first shop in the small town of Lechlade in Gloucestershire, and when we went to meet Rob there the sense of the community around the business was clear to see.

The best bit about growing Lynwood has been the support from the local community. They have been so supportive, from spreading the word of the shop, to helping me out wherever they can to just their regular custom. And in turn I have tried to give something back. We buy our meat from the local butcher who comes in to buy his coffee and all of the bread we sell in the shop is from a friend down the road.

In return, Lynwood acts as a social hub for the local community and for local businesses to meet and network – as a result making themselves the epicentre of local businesses.

The importance of local communities and connections rang true across the majority of small businesses that we met.

Local communities and networks may prove the hardest thing for bigger businesses to break into, but if you can find a way chances are potential small business customers will lend you their ear.

Word up: If you want to avoid being seen as an out-of-touch corporate behemoth, kick that brand advertising into touch and get out there doing your bit on the ground. Be a brand providing a platform for small businesses to share and benefit from each other’s expertise.

02 Networks

i. The dark side of failure

I was once having a conversation with a friend about someone who had just launched his own business. He told me that while this person had enjoyed a high flying start to his small business adventure, things had recently turned rather rocky.

Over a pint, his mate had opened up to him about the most difficult bits of running a business that, at the time, was going south. Of course there was the dread of failure, the anxiety of letting friends and family down and threat of losing everything you have put into the business, but there was one quote that really stuck out: If I have to read one more article about how ‘good’ it is to fail, I’m going to scream. Because, quite frankly, it’s not good, it’s shit.

That quote has always stood out for me because I have always worried about how business culture has fetishized failure. While I fully understand the importance of stepping outside your comfort zone and sometimes falling flat on your face, I believe our obsession with failure has a dark side.

When we met Martin who runs Your Bike Shed, a cycling and bike repair coffee shop in the middle of York, he shared my worry about our obsession with failure.

The idea for the business came from a concept he had seen while travelling in Bangkok. When he brought it over here, he was the first of a kind in York and one of only a handful in the UK. While Your Bike Shed was a new and innovative idea, it was the constant narrative of failure, and particularly that of the failure rate of small business, that were his biggest obstacles to getting up and running and growing his business. The banks were reticent to loan money, not just because he was a small business, but also because he had an unproven business model in the UK. Thanks to the noise around small business failure, his business was written-off by many before he even got going. Funding was hard to come by and support was hard to find.

Thankfully, despite these obstacles, four years later his business is thriving, and it was lovely to see someone with so much passion for what they do clearly doing so well.

But Martin still thinks that big businesses and brands are not pulling their weight when it comes to looking after their small business customers. Not once has anyone come to see how hard I actually work and what running a small business actually means, Martin told us.

When we asked him if he thought marketers’ obsession with digital channels is making this worse, he agreed completely. I think digital channels are ruining communications between people in general as no one wants to interact person to person anymore. It was a stark insight into the world of a small business owner – businesses will treat you like a king when they need your custom, but be happy to sit behind a computer screen the rest of the time. And if you want to dare to innovate, it’s the risk of the big F word that will stand in your way because, whilst it may be glamorous to talk about, it’s just far too risky for businesses to bet against.

If we want real innovation and new small businesses that break the mold and disrupt industries in the UK, we need to celebrate more successes rather than talk about and glamorize failures – it will give everyone more confidence (most importantly the banks) and allow us to progress at a much more rapid rate.

03 Struggles

iii. The light side of failure

Here’s a situation not too many people want to find themselves in.

You’ve spent years building your own business. You’ve taken out a long lease on a large, four-story building in a major city centre. You’re running the sort of business you’ve always wanted to, and it’s growing. Then one day a large investor pulls out, leaving you in a financial hole and you’re 48 hours away from administration. You call in your staff and open up to them: If you’re willing to work for a week for free, then I think, I think, I can save the business.

That’s exactly the spot Iain Simons, owner and founder of National Videogame Arcade in Nottingham, found himself in two years ago.

We met Iain in his office surrounded by video gaming memorabilia heaven– for nerds like us – where he told us his story.

The biggest thing you think about when you start your own business is what’s the worst than can happen. And then the absolute worst does happen and it's a strange feeling. It’s sort of like you’re watching a film with yourself in it and thinking ‘I wonder what he's going to do now?’

Iain thinks the real reason businesses don’t want to stare failure in the face is through fear of looking stupid, something he said he got over the minute he stepped on stage in his younger years as a musician.

It doesn’t matter, does it? It’s just part of it. Everyone has fucked something up. If this fails, you can always do something else. To be honest, I wish I’d taken more risks than I did – just accepting that you might fuck it up and look stupid already puts you ahead of 90% of the populous.

I just want to have an interesting day – that’s it. It’s not all-smooth sailing but, at the end of the day, that’s all part of it. The highs and the lows.

Iain’s parting note was about bigger businesses – and the real difference between them and him. Often nobody in bigger businesses want to make a decision, because they want to be to blame if it goes wrong. They don’t want the responsibility. That’s the difference in something like this. It’s my fault. You’ve got to be willing for it to be your fault.

Maybe marketers and business need to understand better the highs and lows of failure and bravery and what they mean to their potential customers. Failure is very real and very scary.

i. Diversification

When it came to looking towards the future, it was clear all the small business owners we met had big ambitions with their sights set firmly on what their business could become.

A big part of this for many was the need for diversification. This was certainly something that was on the mind of Chris Wildman who runs Town End Farm in the Yorkshire Dales.

Town End is currently a farm shop, a tearoom and producer of beef, lamb, pork and charcuterie for chefs and hotels across the Lake District.

Chris knows from experience the importance of keeping up with current trends and moving with the times.

I was born a butcher’s son, so I was born a butcher. It’s what I’ve always known. It’s born into you, so I don’t see it as being anything out of the norm.

We used to have a long-running family business until changing shopping attitudes basically crushed that business and it became defunct.
We had two butchers, a deli, a frozen food shop. It was fantastic and would have survived, if only it had been in Dulwich in London.

Chris now is keen to pass this business and the farm down through the generations, but knows it needs to keep evolving and growing.

The only way to continue is to have it passed down from generation to generation. We don’t want to move, and the kids don’t want to move.

And diversification is so important, especially with any farm – you need to be constantly on the look out for new ideas and innovation. My head is buzzing with new ideas and extensions to what we are doing. We’ve built the butchery on the farm and are now running butchery courses. Now I’m thinking about camping pods, glamping, anything new! There are just not enough hours in the day.

It’s clear that small businesses want to keep diversifying, but they need help from big business to do this. Take, for example, the basics of connectivity:

We fought for ages to get fibre broadband here and that has changed the business and helped us set up ecommerce stores. But when it comes to phones we don’t have 4G, we don’t even really have 3G. Mobile networks aren’t interested in rural areas. They just don’t seem to want to bother with it.

The same goes for bigger businesses offering products and support that is simply worlds away from their price range. One thing you really do realise when coming out of London is that many larger businesses have their price points completely wrong when it comes to selling to small businesses. Something that really frustrates Chris:

We’re a small business. We can’t afford £7000 on a new website. Some of these businesses have to understand small businesses aren’t going to spend £10,000 on marketing or whatever. It’s just a different world.

Bigger businesses have time and money and energy to get the grants, but I just don’t have the time. The whole grants system needs looking at – until then it’s just the money that comes from customers to help us move ahead.

It’s a clear sign that marketers need to better understand the small businesses they are talking to – not only their hopes and dreams but also what it really means running a business in difficult conditions. If ever we saw a business that was disadvantaged by the London bubble, it was Town End.

04 Dreams