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Serial entrepreneur Carl Reader joined Bex on the latest episode of the Sound Advice podcast, to reveal how to start a business from scratch.

From ditching traditional business plans, using fear to drive yourself forward, having uncomfortable conversations, and overcoming creative avoidance – you simply must have these show notes in your startup life.

You can be an accidental entrepreneur

The reality of business? Scrappiness and hustle

Debunking business myths: do you need a business plan?

The Dream-Plan-Do-Review Process

What is creative avoidance and how can you, er, avoid it?

Do you need lots of money to start a business?

You don’t need a website – here’s what you do need

Sometimes money-saving exercises are expensive, weirdly

Don’t underestimate critical analysis

Do you have a dozen ideas before breakfast? Here’s how to implement them

Do you know about the concept of glass and rubber balls in business?

Bex Burn-Callander:

There’s such a wealth of knowledge that we’re going to tap into today. But I want to start by learning a bit about you.

So you’ve helped literally thousands of business owners to start ventures and become successful. But how did you get into the weird and wonderful world of business?

Because you started your career someplace quite different, is that right?

Carl Reader:

Yeah. So it was completely by accident. And I’ll give you the brief summary without going back as far as the midwife holding me up by my feet.

I was lucky and fortunate to be blessed with a grammar school education. But I didn’t realise just how privileged I was to be in that position.

And at the age of 15, I’ll be quite honest, I was more interested in going out, hanging out with mates, playing football, basically doing the stuff that young boys do.

But I ended up being quite disinterested in school and ultimately leaving to start a Youth Training Scheme in hairdressing.

Now that probably isn’t the start in life that most people would associate with being involved in the business. It really didn’t work out. I was there for all of six weeks. You probably could say I wasn’t cut out for it.

And pretty soon afterwards, I had to work out what I was going to do it myself. Because the way it was looking, it was likely to be a supermarket job or a stacking job.

Something that, whilst it’s very important, wasn’t necessarily going to help me reach my potential.

Added to that, the fact that I’d left home by that point as well.

So I applied for every job in the newspaper and got three interviews. I got two interviews at accountancy firms and one in the army.

I got offered both jobs in the accounting firms.

So that was my introduction to the world of business at the age of 16. Not having a clue what accountants did, not having any idea about tax or what the difference was between a chartered accountant and an unqualified accountant.

All of his stuff was new to me, but that’s what got me going.

Bex Burn-Callander:

And you knew it wasn’t hairdressing.

Carl Reader:

That’s right. It’s really showing my age, isn’t it?

The fact that I’ve referred to the Youth Training Scheme, which could be otherwise described as slave labour.

I think I earned £31.50 per week and a 50p allowance towards my bus fares. So that was the apprenticeship scheme.

I think by that point, it had actually been rebranded to modern apprenticeships. So that was fair.

But the other bit that showed my age was the fact that I actually was looking for a job in a newspaper. I mean, how antiquated is that?

Bex Burn-Callander:

Yeah. Well you see, I remember those days too. So if you’re old, I’m old. We’re old together.

And so you’ve trained as an accountant and you are a great accountant, but you are a business expert and that’s mostly because you’ve owned several ventures. In fact, you still do.

Tell me about creating businesses.

Carl Reader:

Yeah sure. So as you say, I am an accountant by training. I would actually contend that I’m a great accountant. I would sometimes say that I’m the world’s worst accountant.

I found that within my accountancy career, whilst I understood the value of accountancy to businesses, I didn’t particularly enjoy the hard graft of being an accountant.

Because actually, whilst it might seem quite simple, it’s actually quite a task to be an accountant and to stay on top of all of the tax legislation and so on.

So over time, I found that my role naturally evolved.

First of all within my firm, where I went from being an accountant to advising businesses on software, then moving through to selling and building my own client portfolio.

Then building a sales team, then building a marketing team and so on. But alongside that, I was actually involved in the management buyout of my firm.

So, I was involved at quite an early age, making an offer to buy into the firm.

And then we had two formal management buyouts, which led me towards being a joint shareholder in the business.

So that was, I guess, my first exposure to running a business. But I always had the mindset that once I owned the business, I wanted to be running it as if it was a turnkey business and making sure that it wasn’t reliant on me.

So building a management team, building a leadership team and finding a way to step away.

Now, I had hoped that that would result in me going away, sitting on a beach, not doing anything.

But that’s not in my personality.

So the moment I stepped away from the business, I started doing other stuff. And that’s what led me towards starting a couple of businesses, investing in businesses and so on.

And it’s been a great fun journey.

Bex Burn-Callander:

But I suppose that’s the point of difference about you when you’re giving advice, you are actually coming at it with all these different perspectives because you’ve lived it as a business owner.

You’ve not only run businesses and spoken to loads of business owners and you have the accounting stuff.

That must be quite unusual to be able to bring all of that together in one package?

Carl Reader:

Yeah, quite possibly. There’s also been another side to it I guess Bex, which is, I’ve always noticed that there’s a disconnect between what’s taught in schools.

The academic curriculum around business is all very much focused on share price valuations and formalities of business.

I like to put it as big shiny glass offices in London.

That’s where business studies are focused. And if you were to believe the structure of the academic syllabus, you’d believe that there are only 700 businesses in the UK and they’re all multimillion corporations, employing thousands of people.

Whereas the reality is that businesses are actually like the business that my dad ran.

My dad was a partner in the family business of locksmiths. And I’ve never known anyone work harder than he has.

He’ll go out very early in the morning, doing jobs backed up throughout the day, whilst his brothers are running the shop.

So I’ve seen the reality of business and I guess the scrappiness and the hustle. And the fact that actually, every pound has got a value.

Seeing that disconnect to what’s taught both within schools, but also within professional qualifications and at universities and through business links and so on.

There’s a very real difference.

I guess one of my drivers for that business advice and what might come out from that is that I’ve tried translating the jargon and the technical stuff and actually bring it into relatable, actionable tips that business owners can use.

Bex Burn-Callander:

Well, let’s debunk some of these myths then.

Carl Reader:

Sure.

Bex Burn-Callander:

Because there the London office with the business owner that wants to create a company that’s going to change the world.

They’re going to grow 200 times every year and might need things like a business plan, and loads of startup capital.

But if you are just trying to start a company to make a living and support your family, what do you actually need? Do you need a business plan? Do you need to be going for a loan to get going?

What’s real?

Carl Reader:

Yes, and no. That’s an unfortunate answer, but let me explain it.

Some businesses really can benefit from that stuff. But if we were to talk about the average small business for starting up, the reality is that most businesses don’t need a loan and they’re not particularly capital intensive.

Yes, there is an amount of money needed to start up.

But I guess one of the challenges that I see is, down to human nature, that if you start a business and you decide to take the leap into self-employment and you’ve got, let’s say, 12 months worth of living expenses, I can guarantee you, that you won’t start truly working until month 11.

And that is the unfortunate reality for most people.

We are more driven by fear and the pain of being broke than the, I guess, the target-driven mindset of going out, getting it and smashing results.

We might see all the social media noise about being go-getters, but the reality is, most of us are lazy and we just need to look back to our school days.

When did we do our project? The likelihood is a week before submission, at best.

We can look at how we do things in our day to day lives. When we set a task, do we do it straight away or do we wait until the deadline?

Most of us tend to put it off because why do it today when we can do it tomorrow?

So on that basis, I’m a genuine believer that most businesses don’t need as much capital as people fear and actually running it on a shoestring can sometimes be better.

Do they need a plan? Yes, they need a plan. However, I don’t believe it necessarily needs to be a business plan.

Carl Reader:

I talk about it in my book, The Dream-Plan-Do-Review process, and that every successful business has a great dream, it has a plan, actually has a business owner taking action, which is the most important part.

And then a review against the plan.

But the word plan doesn’t necessarily mean a ream of A4 paper with executive summaries and SWOT analysis and so on.

This stuff is useful for raising funds and the process of producing it is useful because it helps you think about the business objectively.

The reality is that most businesses actually need an operational plan, a tactical plan rather than a templated business plan that, let’s say, the bank has told them to prepare.

What most businesses need is, day one, I’m going to take these three actions. Day two, I’m going to do this. Day three, I’m going to do this.

And then within those actions, a marker as to what success is and the contingencies that rely on the step before.

So as a business owner, you understand what’s truly essential to be working on, because business is really simple.

It’s about getting customers and keeping them.

We all over-complicate it beyond that, but for a small business, it’s about finding your customer, winning them, charging £10 for something that cost you £5. It is that simple.

Provided we can tee up all of our actions so that that is the end result, then we’ve got a great plan.

If we’ve got the best 200-page document with all of the financial projections, all neatly done and calculated to a penny, that’s great. And your accountant will be happy, and your bank manager will be happy.

But you’ve got more chance of winning the lottery than those numbers being penny perfect.

So it’s about finding the right balance of planning and focusing on operational success, rather than doing it as a tickbox exercise.

Bex Burn-Callander:

And I suppose a lot about planning is down to the founder and how their mind works?

Because if you are someone that works well with things jotted down, then perhaps a written plan, a formal document that keeps you honest, you’ve got everything in one place.

But a lot of people… And we’ve had entrepreneurs on this show, an amazing cake maker called Autumn Rabbitts. She had a plan, nothing written down, all in her head, but she knew where she wanted to go and that’s what worked for her.

Carl Reader:

Yeah. And this is it…

And I think one of the challenging parts of starting a business is, I mentioned about the dreaming, the planning and the doing, and they all take three different types of mindset.

So the dream needs a really big picture, optimistic, strategic view.

You need to be looking at, I don’t necessarily just want to open up one cake shop, I want to open up 10 cake shops, 20 cake shops.

At the dreaming stage, it’s about finding a dream that’s sufficiently compelling to get you out of bed, but also it doesn’t seem so unrealistic that you think, “What’s the point because I’m never going to achieve this?”

So the dreaming takes a blend of entrepreneurial dreaming with a dose of reality, whereas the planning… To do the planning properly takes a real engineering mindset almost, and you need to almost disregard the dream and then start getting down to the nuts and bolts.

To do both of those successfully actually takes two different skill sets.

You take in the action of running the business, and then you’re bringing in the uncomfortable conversations like speaking to customers and selling to them, taking on staff members or possibly firing staff members, having negotiations with suppliers.

Again, a very different mindset to working behind a spreadsheet, coming up with a plan or sitting back on the beach and dreaming up of something.

It is difficult to have that balance across the business.

With the review stage, where you go back and you look over what you’ve done, that’s the bit most business owners hide from.

And I think the reason why is, because they know they’re going to have failed in one of those areas, because none of us are superhuman.

Bex Burn-Callander:

And even if you get all that right, no business can succeed without execution.

So it’s almost like you can have all the dreams sorted, you could have done your research, you can have the plan, but unless you’re willing to put in blood, sweat and tears to make it happen, then all of that is for nought, really,

Carl Reader:

It’s pointless.

I always talk about creative avoidance and, again, it’s my fundamental belief that humans are lazy. And I know we are not all lazy, but I know I certainly am.

And often we find stuff to do, that we feel makes us busy and important and makes us feel like we’re being really productive.

Take to-do apps, for example. That is the worst kind of procrastination for me, even though it’s superficially about productivity.

What is my favourite time-wasting activity? Downloading a new task.

And what’s the first thing I do? I put five tasks in that I’ve already completed so I can hear the noise when it makes when I tick them off.

That’s a perfect example of creative avoidance.

Where business owners will typically start creatively avoiding what they need to do, is by designing business cards and then redesigning them and over-obsessing about their logo or their website, rather than just outsourcing it and getting on with it.

As you say, Bex, the reality for all businesses is that the market is the judge of your product or service and you need to have those conversations.

You need to be going out there and asking people to give you money.

And if you don’t get given money, you haven’t got a business.

Bex Burn-Callander:

And we touched on earlier that it could be a bit of a myth that you need a lot of money in the bank to start a business, and that actually a lot of businesses aren’t that capital intensive, but I’d like to drill into that a little bit more and discuss what you actually do need.

If you start with 12 quid to incorporate in Companies House – I think that’s still the fee. I should check that So that’s like the basic, but what else does every business need?

Carl Reader:

Sure. So nowadays Bex, I think every business it’s safe to say needs a computer.

The reality is that with the changes that are going on externally with Making Tax Digital and the filings at Companies House online, you need a computer to run your admin.

So you need a computer, but you can always repurpose your own computer for your business, but you might need to go out and buy one.

The reality is, but you need a place to work.

Now, again, that might be perched on your kitchen table. It might be an office. It might be a shop. But you need somewhere that you can operate.

And this is where I think sometimes trying to run it too much on the shoestring is a problem, you need enough cash so that you’re not operating in the monkey mindset.

Bex Burn-Callander:

What’s the monkey mindset?

Carl Reader:

This is a saying from The Chimp Paradox [a book by psychologist Steve Peters], a fantastic book about the fact that when you’ve got worries, you don’t necessarily think logically.

As a business owner, if you’re starting your business and give up your job with no savings whatsoever, that’s a whole lot worse than going into it with 12 months’ savings.

Every one of us will have a sweet spot based on our own experiences, and that will be experiences from childhood with how our families run their personal finances.

Did you grow up seeing your family dividing up the pound notes and working out how they pay for bills? Was that even a problem?

Some of us run a financial red line and some of us need a whole lot more security.

So understanding that level of security you need as an individual working out what that amount is and then having that put aside, has to be deemed to be a capital investment in the business.

Then of course there’s equipment or initial stock of products and so on.

One of the things I suggest to a business if they’re stocking products is don’t stock products until you’ve got sales, or at least commitment of interest for sales, whether that’s preorders or similar.

Make sure that you keep your stock level optimised, when you need that level of stock.

So yeah, there is a capital need. But what is that capital need? It depends business by business. How long is a piece of string?

Bex Burn-Callander:

Would you say that for example, every business needs a website?

Is that something that’s a prerogative now?

Carl Reader:

I think every business needs a web presence. However, do they actually need a website?

I’m going to upset a few people here. I don’t think it’s as important as it was 10, 15 years ago.

But actually, businesses didn’t place as much importance on it 10, 15 years ago.

So I can look at my own business and I’m going to be very open with you Bex and vulnerable here. Our website is absolutely shocking and it’s being redesigned.

We found out it was shocking because we went on to Google. Yeah, you don’t tend to check your own website. We went on to Google.

We realised that some of the images have been pulled down, the formatting’s dreadful, and it’s out of date.

The reality for most businesses nowadays is that I believe the social media presence that they have is actually the social proof plus for websites nowadays.

Clearly, if you’re an e-commerce business, you need a functioning e-commerce tool, but most businesses that I see are doing quite well. Actually use an off-the-shelf tool, the likes of Shopify or so on.

And they just take it, they add their product and move on with the template.

And they focus on driving traffic to it rather than building up a bespoke website. Whilst a web presence is essential, I think it is so much more than a website nowadays.

Bex Burn-Callander:

And would you say that when you’re in the research stage, it’s actually worth looking at what time-saving apps and kind of tech options are out there to save you all that stuff like the web build or laboriously creating tweets on, tweets, social posts on multiple platform forms if you can do it all through one. Is that part of a necessary part of planning now?

Carl Reader:

Definitely, because I feel that most business owners see that they want to take the route of least cost.

And sometimes that route of least cost is the most expensive because they will try to reinvent the wheel and do stuff themselves rather than paying 15, 20 quid a month for a social media platform or £200 or £300 a month for a social media agency, they will try and do it all themselves.

Plus, they will try and do their books themselves.

Plus, they will try and build their website themselves.

And there’s only one finite resource that we’re all limited by which is time.

And I think the test of whether somebody will truly go from self-employed to a successful business owner is if they can let go of this stuff early and trust the technology and trust other people to do it for them.

Bex Burn-Callander:

That’s great advice.

And because you’ve helped so many businesses, I feel like you must see time and time again the same stumbling blocks coming up and even like cross-sector, cross size of business, there tends to be a few sticking points that are just almost universal.

I’d love it if you could share one or two of those with our listeners.

Carl Reader:

Yeah, of course. I’d always say that execution is the most important because, without execution, it’s just a good idea or a pretty business plan.

That one I don’t think needs too many examples because we all know people who only talk about their next big business idea. We all know people who come up with big plans and they just don’t do it.

So I don’t think that one needs too much explanation.

The one that I think gets underestimated is the lack of review and the lack of critical analysis on what you’ve done because we’re all scared of admitting when we got things wrong.

And once you get into the flow of running a business, it is busy. It is tough and it takes up time.

And it’s really hard to sort of sit back and look at whether my dream still relevant in today’s world?

Was my plan correct or do I need to change my course of action?

There have been countless examples. You have so many it’s really hard to give you specifics because most of them do end up in failure, but I’ve seen that time and time and time again where business owners just follow a path blindly.

And it’s very similar to the analogy in Stephen R Covey’s 7 Habits of Highly Effective People, where he talks about the ladders up against the wall.

I don’t know if you’ve ever read the book, but he talks about that there could be a few ladders up against a few different walls. And if you’re climbing the ladder, often you tend to try and go faster and faster.

But sometimes you don’t check that you’re climbing up the right wall and that can be a trap.

Bex Burn-Callander:

Do you know what this reminds me of? It was the advice when we were all kids that when you finish your exam, you should read over your paper.

And I remember always being one of the kids, and all my friends were the same, we resisted.

You just didn’t want to read the damn exam paper. You didn’t want to see what you could correct. It’s so stupid. It’s the stupidest thing.

Think of all the points we could have got if we just found that spelling mistake or that we’d use the wrong name or whatever, but it is totally human nature.

And how do you then, you’re a busy guy, you’ve got lots of stuff going on, how do you plan to review your life?

Carl Reader:

Sure. That’s a really good question, Bex.

So I’m going to, first of all, start with my businesses and then I’m going to move it to life as well, because I think that both of them are important for business owners.

Within the businesses, what I’ve realised very early on is that my mindset isn’t rounded enough.

My approach, my personality, isn’t rounded enough to be able to do all of this stuff.

I know that I’m great at coming up with ideas. I’m what used to be called a naughty kid, with what’s now known as Attention Deficit Hyperactivity Disorder (ADHD).

And I have more ideas before breakfast than most people have in their life.

So ideation isn’t a problem. Implementation is OK. I’m really good. If there was a job of just running up and kicking the ball in a football match or a rugby match and seeing how far you can kick it, I would do that bit really well.

But I’d run out of puff by 15 minutes.

I’m not a completer myself and I’m certainly not detailed enough or critical enough to be able to review adequately.

I’ve made sure that I’ve got the right team around me.

And for example, in d&t my business partner, Ben, is the polar opposite of me.

If there’s a glass, we would normally say that I’d see it as half full, he’d see it as half empty. It was literally pouring out the top and he would be saying, “This glass is completely empty and we need another five bottles of water.”

So we’ve got a very different mindset.

And whilst I’m very big picture, he’s very detailed. We work as great foils against each other, and we can both test each other’s thinking. It was a difficult relationship at first until we really understood those differences.

So I’ve tried to do that within my businesses because I knew that was a weakness of mine.

I’ve tried to get the right people for the checks and measures. So for example, we’re a firm of accountants, but we have a financial controller in place. We have a finance team, rather than trying to do it all ourselves.

In terms of life, I think that’s a really important, I guess, use of words that you had there, about how do entrepreneurs do that in life as well.

Because we can get so caught up in the hustle, that we actually forget why we are doing it.

We forget what that dream was.

Was the vision to retire on a beach, or to spend more time with our family?

I don’t want to go off on a tangent here, but it’s important for business owners to think about how they can critically review not just the performance of their business, but the performance of their whole life and the impact that the business has on it.

Bex Burn-Callander:

That’s such an interesting point. And it’s been something that I have been asking so-called successful entrepreneurs for a few years, just for myself.

Do you have any regrets, or do you feel that you’ve sacrificed a lot to get where you are?

And there’s always a pause.

The people who I think are really successful are the ones saying, “Actually, no, I kind of got a great family and I’ve got hobbies and I’ve got friends.”

Then there are the ones that say, “Yeah, I didn’t see my kids grow up. I haven’t had a holiday in four years. I’ve got a heart murmur,” or whatever is.

You think, “It’s just an interesting kind of added layer when you consider what is success.”

Carl Reader:

It really is. And it’s so important.

When you mentioned it, I actually had a cold shiver go down me.

I certainly can’t class every area of my life as a success. I’m 17 stone. And I would love to say, that’s 17 stone of muscle, but the reality is there’s probably a pound or two of body fat on there.

So certainly my health has been sacrificed along the way.

I’m very fortunate that now I get to spend a lot more time with the family, but there’s been a lot of time that’s been sacrificed in my past, which has had a dramatic shift in my life because of the business.

So there’s been a number of balls that I’ve dropped.

And one of the things that I always try to think about as a business owner is the concept of glass balls and rubber balls. Because ultimately, running a business is like juggling.

I mean, I can juggle two balls I think. Three balls and I start getting tested. Four balls, I’d have to be really lucky to keep them up in the air.

You might have gone to clown school and you might be able to juggle 15 balls, I don’t know. But there will be an upper limit on the number of balls that you can juggle.

And when you’re juggling those, there will be a tipping point at some point.

Let’s say it’s from four balls. You can juggle four balls, but you can’t juggle five. You’re going to drop one of them.

What happens when you drop a ball?

If it’s a rubber ball, it bounces back. So it might be, that if you’ve got an average team member or an average customer or something in your life that’s not really that important, that’s a rubber ball. It will bounce back. It will get repaired.

But if it’s a glass ball, it’ll shatter, and that’s something that can’t be fixed.

So it’s really important when considering that balance and how you approach your business, that you focus on the glass balls, not the rubber balls, and you make sure you catch those.

So that’s your health, that’s your family, that’s your wellbeing. It could be your spirituality and so on.

Everybody will have their own glass balls. But ultimately, you need to make sure that they’re the ones that are protected.

Bex Burn-Callander:

I love that analogy. Is that a Carlism? This, “I see rubber balls and glass balls”?

Carl Reader:

Do you know what? I’m going to take it.

Bex Burn-Callander:

Yeah, I’m going to use that.

Carl Reader:

It’s not. I’ve heard it from somewhere, but I’m going to take it.

Bex Burn-Callander:

I hope you found this episode useful. Remember, there’s more! Look out for part two of this episode, dropping soon, for more Carlisms.

In the meantime, make sure you follow Carl on Instagram and Twitter @carlreader. And for goodness sake, go buy his latest book, Boss It.

Full disclosure, one of the testimonials on the cover is from me.

To get a bit more detail on some of the themes from today’s show, head to sage.com/podcast. See you in two weeks for the next instalment.

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