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Taking a closer look at Small Businesses

Credits: Business Connect Magazine

2 Mar 2024

The BIG INTERVIEW with Theo Paphitis, In support of the event, Theo has shared an exclusive interview with us talking about his passion for small businesses:

Taking a closer look at Small Businesses

The BIG INTERVIEW with Theo Paphitis

#SBS Small Business Sunday is one of the foremost networks for small businesses in the UK. With 4,000 active members, the organisation has been nurturing and supporting small businesses since 2010 when retail entrepreneur Theo Paphitis – the ‘Godfather to Small Businesses’ – created the network. Every week 6 new businesses are chosen by Theo who in turn promotes them across his personal Twitter and Instagram network. Business Connect Magazine is very pleased to be invited to Birmingham in February to take part in the annual #SBS event hosting 1,000 winners, plus guest speakers and leading industry figures, as well as Theo himself.

In support of the event, Theo has shared an exclusive interview with us talking about his passion for small businesses:

As a successful business entrepreneur at the forefront of a large business group, what makes you so keen to help small businesses?

“I know exactly how lonely it is to find yourself struggling to make sense of running a small business. The late nights, finding yourself trying to understand a business plan as the clock strikes midnight. Wondering how to raise capital, what to spend it on to guarantee growth for your fledgling start-up.

“It’s a situation that all entrepreneurs find themselves in regularly, especially at the beginning of their journey. The feeling that you’re the only one that can navigate the correct course for your business and that you’re completely on your own is something that resonates very strongly with me.

“It doesn’t need to be this way though. The fact is there are tens of thousands of small businesses out there going through exactly the same kind of self reflection. Not just businesses at the start of their journey, but at many stages of their growth.

“It was this that inspired me to create Small Business Sunday. My vision was to create a friendly club, where like-minded business owners can share their stories, problems, needs and learnings. It’s a place where people don’t have to take a lonely path to make their business choices, they can share and compare those experiences with others, and hopefully make better informed decisions about their journey.”

What types of businesses are in the #SBS network, and are there any that stand out?

“There are so many different businesses within the network. From a kitchen table operation run as a side hustle to a day job, through to multi-million pound businesses that I’ve seen grow and grow at an incredible pace since winning #SBS, there are so many different styles and sectors in the mix.

“Rather than specific businesses that stand out, it’s the sheer diversity that shines through. We have an incredible range of different demographics that goes to show there’s something for everyone to aspire to, and success can come in many different forms.”

What would you say are the most important skills or attitudes in making a business successful?

“Well, the first thing you have to do right is to understand what you’re doing. It may sound simple, but you need to have a passion for seeing your idea turn into a working business, and to understand why you’re building it in the first place. This drive will get you through the incredible hard work bringing your idea to life.

“If you have the passion, it can be quite lonely, and you can never seem to switch off in your drive to get the business moving. However, with tenacity and a little bit of luck, your dream can become real.

“There’s an old business adage which I’ve always used since day one of my own journey, and that is the harder I work the luckier I seem to get. Luck is about that chance meeting with a dream client that takes your business on a steep curve upwards, and the more effort you put into a business always increases the chances of those lucky opportunities.”

How would you approach funding for a small business that can’t go through the usual channels?

“Funding can be a real issue for businesses at all stages of their growth. We have many opportunities to find out more about funding at our #SBS event in February, not least the support from NatWest as one of our partners offering help through their small business accelerator programme. This gives advice and showcases support opportunities from not just NatWest but many other areas of alternative funding, including government grants as well as other investment vehicles.

“It is tough out there, but you’ve got to go and search for the right financial support. Talking about different types of finance with other businesses is a great start, and also being clear on strategy is very important. You could borrow big to grow fast or take a measured approach with reduced risk, but there isn’t actually one best way of financing.

“Some businesses need a large investment that offer a critical mass to grow, however, some benefit from a more organic pace keeping borrowing down in favour of a slower growth. It’s horses for courses, but the key point is you need to understand the best path for your business and have that decision already made in your mind when you start your business journey.”

How do you see traditional retail businesses developing over the next few years – particularly on the high street?

“The marketplace has been changing rapidly over the last 10 to 12 years, particularly with the challenge of the online sector. I don’t think there will ever be a situation where the high street would be gone, particularly when figures like those posted recently from great physical retailers like Marks & Spencer show strength in specific high street offers.

“Unfortunately we still have to navigate that dreaded, and I do say dreaded tax, which is business rates. Yes – there is some small respite at the moment, but the whole system of physical and virtual marketplace taxation needs to be looked at.”

Which external services are important for a small business to put in place?

“You can sub-contract most of the elements that are required for the successful day to day running of a business. In terms of costs and flexibility, there are a great choice of alternative suppliers and services available. For example, websites come at budget prices with added functionality – ecommerce, customer engagement, automated stock control for example. Somebody’s out there offering full suites of services, many under the one umbrella, from payments, marketing, PPC to hosting and creating a website from scratch.

“The important thing is to choose the right partners based on your actual needs as a business. This is where listening to other businesses is so important to identify the correct levels of investment in those outside services.”

When or what should a business owner look out for when it’s time to walk away?

“It’s easy to say a positive bank balance is the simple answer to business success, but the reality can be much more subtle. There are many businesses that have exceptionally good turnovers, and it’s easy to see the transactions creating a false sense of security. As they say ‘Turnover is Vanity, Profit is Sanity’ – no-one wants to be a busy fool, and it’s sometimes easy to get carried away with a rapid turnover of stock.

“A close examination of running and ongoing costs, investment, profits and general financial health of a business can highlight a business growing whilst at the same time seeing declining profit margins mirroring the growth.

“It’s situations like these that need reviewing to see if improvements can be made. It may be raising the price of the products may help the situation, but not at the cost of reduced sales.

“You’ve started this business with passion and belief, and being dogmatic is a quality that can be both a gift and a curse. Yes – it’s important to keep absolutely focused and drive, drive, drive that business forward, but there is a second side to that coin, and you always need to take a step back to re-assess how things are going, and crucially, how successful you are actually being. It may be the case that you simply wish to take a living out of the business, however, that may change with personal circumstances and needs.

“The most difficult decision is simply based on you being realistic about your own business.”

What advice would you give to anyone in an already established business who may perhaps think that #SBS in not for them?

“I love talking to people running businesses, especially around day-to-day issues, and one of the things I’m aware of is that it’s a two-way street. You can chat to people in wildly different sectors and types of business, but more often than not there are similar problems, observations and experiences that can be shared.

“This is especially the case for businesses that are already established. Everyone has a story to share and the expression ‘a problem shared is a problem halved’ is never more true when it comes our #SBS network.

“How many times have you come to a brick wall in one way or another with your business journey. Talking with a fellow business owner who can share that similar experience, and not just share, but offer a solution and guidance based on personal experience, makes you feel inspired and energised to continue. This is the same for many businesses that have been going for years – there’s always a solution to every problem and our network is the perfect platform for finding those solutions.”

Who inspires you, and why?

“I’ve already said how much I love meeting and chatting with small business owners. I love the energy and passion they have, and the way they make me think about issues that aren’t immediately obvious when running my own businesses. I can be chatting with someone and be thinking what they are referring to may seem ‘blindingly obvious’, however, when viewed from their perspective a whole new angle can be revealed. I find these business owners totally inspirational.

“Another source of inspiration are charities, and also how important for businesses to get involved, particularly as part of their Corporate Social Responsibility. I remember when we first met at a fundraising event for Royal Manchester Children’s Hospital through Maurice Watkins CBE – a good friend of ours. Maurice was a fantastic inspiration as a fundraiser. He helped raise £20million for the Children’s Hospital, a legacy that he built tirelessly over the years – God bless his soul.

“Any business that includes CSR as part of their corporate ethics and align themselves with supporting charities will find themselves enjoying very real benefits on many levels. CSR is not simply a box-ticking exercise, but can open doors and engage with an immediate business community that can deliver real returns back to that business. This can also be seen as part of the moral compass of your business.

“Going back to the question of being inspired – businesses who take CSR seriously provide inspiration not just for me but for their wider business community, and business is as much about making and identifying opportunity as simply keeping customers happy.”

If you’re a small business then check out Theo’s free-to-enter #SBS Small Business Sunday competition which runs every Sunday between 5 – 7.30pm on X and Instagram – a free boost for small businesses with ambitions to grow and a chance to join one of the UK’s small business communities. Further information is here

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