I’ve seen Julian Richer’s name appear a few times recently and I got curious (he’s the guy who started Richer Sounds shops). I don’t think I have ever been in one of his shops, I’m not big into Hi-Fi and home entertainment systems.
So why has he appeared in my consciousness? Two reasons come to mind…
1. Employee Benefit Trusts
I’ve been reading more about Employee Benefit Trusts (EBTs), also called Employee Share Ownership Trusts. Rather than sell their business to the open market, some private business owners sell part of their shareholding to the Trust. The Trust can then be a vehicle for the employees to become the owners of the business.
Julian Richer sold 60% of his business to an EBT.
I am working with some of my clients and their accountants towards setting up their EBTs.
2. The Way You Treat Your Customers And Employees
Last week there was an article in the FT (I’m trialling the digital version for 30 days for £1) about Julian Richer’s business philosophy. The basis of his philosophy is:
“Treat your customers and employees well and the business will thrive.”
Sounds simple. Yet that article in the FT suggests there are 5 reasons why companies miss the point. The author of the article, Michael Skapinker, seems to be writing about larger, more-corporate companies.
But what about the much smaller owner-managed business? Is there anything that applies to those business that are the backbone of the UK economy?
How Does This Translate To SMEs?
Here’s my interpretation of the reasons why companies miss the point of Julian Richer’s philosophy and how this translates to SMEs.
1. Size – As companies get bigger they get more bureaucratic and hierarchical. The bosses lose connection with staff and customers; they become less bothered and rely on policies and procedures. Yet all SMEs are encouraged to have more processes and not rely on the boss to do everything. Here’s the reminders for owner-managers:
- Yes, have processes but keep decision-making close to the front-line;
- When it’s your business you can’t go all corporate. It’s your baby and you can’t stop caring about it. But the trick is to help your staff care more for the business;
- Don’t create hierarchies when the size of the business doesn’t need it.
2. Politics – When several owners or non-owner managers are given control there is an increased risk of negative politics. Arguments, scheming and plotting takes over and the main purpose of the business, serving customers, can get lost. If you are one of several owner-managers then my advice, taken from a recent blog is:
- be super clear on each others’ aspirations for the future;
- communicate and resolve how you will share workloads;
- understand each other’s behaviour traits and know how best to work together;
- work out how you will make decisions as individuals and as a group.
3. Distraction – Larger businesses often want to enter new markets, acquire other businesses, broaden product ranges, etc. If growth strategies don’t work then retrenching and cut backs can follow. The result is usually demoralised staff….and customers notice! For owner-managers the message is simple…
Feed your focus, starve your distraction!
- Concentrate on what the business is good at and sell that to as many customers as possible;
- Don’t take on too many projects and changes at the same time. My rule of thumb is no more than 4 significant areas of focus in a year.
4. Greed – This can be the silent killer of a business in that it creeps up slowly and often nobody is prepared to call it out. Making “money-making” the primary focus of the business is likely to foster and feed greed. A customer-first, our-employees-are-our-biggest-asset mindset can’t survive if it’s money-first.
For owner-managers you have a real advantage over the corporates. You can directly influence the culture of the business and remember why you set up the business.
Be clear on the purpose of the business and your “WHY”.
5. Competition – Keeping ahead of the competition is tough. For the owner- manager you can influence who you recruit. Try this advice:
- recruit people with a positive attitude;
- look for enthusiastic people who can love what the business does.
With staff like that you will challenge and probably beat any competitor!
Are you planning for your legacy?
There are certainly interesting thoughts about Julian Richer’s business philosophy. He made it work, became rich, yet was able to create a legacy for his staff.
If you want to create a legacy for your staff or your family then you need to maximise the value of your business. But how do you know how valuable your business is now and find out what you need to do to make it more valuable?
You can start by getting your Value Builder score. It’s free, takes 13 minutes and you’ll get your score instantly! Take the Value Builder Assessment now.