Welcome to the Idiots

By Phil Davies

A Business Memoir including 236 insights into the mistakes pitfals and pratfalls of building a business

• Language: English
• Publisher: Redvers Press
• Release date: Jun 15, 2016
• ISBN: 9780995466210

Book preview

1970

Having failed as a rock star, I got a job as a ‘Trainee Work Study Engineer’ with a clothing manufacturer in Eastbourne. The famous ‘up market’ clothing brand Jaeger had a total of 17 factories in the UK (back then) and this was their smallest, employing 43 female machinists and finishers, an elderly manager, a caretaker/maintenance man and now me. I couldn’t believe my luck, a job actually watching people work - I was brilliant at it.

I was responsible for the productivity of the factory and was trained and then qualified in MTM2 (Methods Timed Measurement 2), which was developed in Swedish shipyards and was more sophisticated than using a stop watch (like traditional work study). One instead concentrated on the method of the task, the ergonomics of the work space, and the only timed aspects were the machine runs.

INSIGHT 1:- I’ve never found delegation to be a problem. I have always been happy to witness other people doing things (usually) better than me, something that might have been ingrained as a result of this job. Even though I wasn’t a qualified tailor or machinist, I was trained to organise and set out the method of a task (one I would never have been able to fulfil in several lifetimes, as the sewing machinists and finishers were magnificently more dexterous than me).

Therefore never be afraid to hire somebody who is better at a job than you, even the job that you consider yourself to be the most expert in; you can only build a successful business with the most talented, hardworking, persistent, and qualified people.

INSIGHT 2:- I got 4 ‘O’ levels in English, maths, geography, and woodwork and a couple of CSEs in technical drawing and metalwork. Note that I failed physics at ‘O’ level and didn’t take art at all; however, an older friend of mine had taken pure and applied maths, physics and art at A Level, and had passed them. I thought that I would take the same, even though I hadn’t studied art and had failed at physics. The Sixth Form College didn’t appear to be worried, my parents didn’t take any interest and so I enrolled into the tough One Year Course (A Levels were/are still usually taken over two years).

In truth I just wanted to be a rock star, and everything was really geared to avoiding work for as long as I could get away with it. I was doing appallingly at the pure side of maths and the physics was impossible; I was doing quite well at art though, and had gained an interview with Goldsmiths College in London. On the way to the interview I got off of the train having left my portfolio of work on it - I only realised as I was finally marching up to the entrance of the College. I turned around, got the train home, never went back to the Sixth Form and never bothered to take the exams. The Art A Level was for the major part based on my work which was lost forever.

When the job for Jaeger was advertised, they required A Level maths. I had put on my CV that I had taken AND PASSED my A Levels. I thought: ‘seeing as I had spent a year of my life studying them, why not claim them anyway and hope they don’t ask to see the certificates or want other verification’. They didn’t and the most difficult maths that was required was a simultaneous equation - any 14-year-old good at maths would have coped easily.

Why do companies want to recruit overqualified people? Why do companies today still not check out an applicant’s qualifications?

Having failed as a rock star, I got a job as a ‘Trainee Work Study Engineer’ with a clothing manufacturer in Eastbourne. The famous ‘up market’ clothing brand Jaeger had a total of 17 factories in the UK (back then) and this was their smallest, employing 43 female machinists and finishers, an elderly manager, a caretaker/maintenance man and now me. I couldn’t believe my luck, a job actually watching people work - I was brilliant at it.

I was responsible for the productivity of the factory and was trained and then qualified in MTM2 (Methods Timed Measurement 2), which was developed in Swedish shipyards and was more sophisticated than using a stop watch (like traditional work study). One instead concentrated on the method of the task, the ergonomics of the work space, and the only timed aspects were the machine runs.

INSIGHT 1:- I’ve never found delegation to be a problem. I have always been happy to witness other people doing things (usually) better than me, something that might have been ingrained as a result of this job. Even though I wasn’t a qualified tailor or machinist, I was trained to organise and set out the method of a task (one I would never have been able to fulfil in several lifetimes, as the sewing machinists and finishers were magnificently more dexterous than me).

Therefore never be afraid to hire somebody who is better at a job than you, even the job that you consider yourself to be the most expert in; you can only build a successful business with the most talented, hardworking, persistent, and qualified people.

INSIGHT 2:- I got 4 ‘O’ levels in English, maths, geography, and woodwork and a couple of CSEs in technical drawing and metalwork. Note that I failed physics at ‘O’ level and didn’t take art at all; however, an older friend of mine had taken pure and applied maths, physics and art at A Level, and had passed them. I thought that I would take the same, even though I hadn’t studied art and had failed at physics. The Sixth Form College didn’t appear to be worried, my parents didn’t take any interest and so I enrolled into the tough One Year Course (A Levels were/are still usually taken over two years).

In truth I just wanted to be a rock star, and everything was really geared to avoiding work for as long as I could get away with it. I was doing appallingly at the pure side of maths and the physics was impossible; I was doing quite well at art though, and had gained an interview with Goldsmiths College in London. On the way to the interview I got off of the train having left my portfolio of work on it - I only realised as I was finally marching up to the entrance of the College. I turned around, got the train home, never went back to the Sixth Form and never bothered to take the exams. The Art A Level was for the major part based on my work which was lost forever.

When the job for Jaeger was advertised, they required A Level maths. I had put on my CV that I had taken AND PASSED my A Levels. I thought: ‘seeing as I had spent a year of my life studying them, why not claim them anyway and hope they don’t ask to see the certificates or want other verification’. They didn’t and the most difficult maths that was required was a simultaneous equation - any 14-year-old good at maths would have coped easily.

Why do companies want to recruit overqualified people? Why do companies today still not check out an applicant’s qualifications?

1972

My school friend Rodney Tate had started a record shop. I was massively impressed with this - he only ever wanted to work for himself and was truly the first genuinely entrepreneurial person of my acquaintance. I used to sit in his shop during quiet periods and we discussed having a clothing boutique as well as vinyl records in larger premises in a better retail position in Eastbourne.

My fiancé Jenny and I had saved £1,000 as a deposit for a flat and this, together with an equal amount from Rodney, would be the start-up capital for the enterprise. We would also launch our own jeans brand. The girls that I worked with at Jaeger had their own sewing machines at home and would make the jeans on a piece rate basis in their own time.

‘Supertramp’ was born (named before the rock group of the same name). With the record shop (100% owned by Rodney) and boutique (50-50), the lease was in his name only and we paid the smaller share of the rent as we were on the first floor with the record shop at ground level.

I moved into the second floor rooms with a sink, toilet and cold tap. The main room had cutting tables for the ‘in-house’ jeans and a mattress on the floor where I slept. The excess mannequins for the showroom were also stored there and cast alluring poses in the half-darkness of the room, semi lit by the street lights through the uncurtained windows.

We hired a friend who was very keen on fashion and looked the part, then we all went up to the east end of London to buy the stock. That was five people: myself and Jen, Rodney and Mandy (his future wife), and Dianne our Manager. We all had different ideas on what the shop should sell.

INSIGHT 3:- Rather than having a proper strategy for the shop and agreeing on the types of clothes we were going to stock, we ended up spreading our very small amount of capital over everybody’s ideas of what we should sell (and for both sexes). There should only have been one buyer with a very sharp idea of the market that we were going to satisfy; we had limited resources and tried to do too much with it.

1973

As far as I can remember it went something like this: Supertramp opened to a mini fanfare, as we had run out of money and didn’t have sufficient resources for a decent marketing splurge or a proper launch; our bought-in stock looked very thin around the shop; and our ‘in-house’ denim jeans just didn’t cut the mustard, they were awful.

Somehow they just didn’t look cool and were a very poor seller. The bought-in stock that was selling wasn’t being replaced fast enough with similar lines and the slow or non-moving stock wasn’t reduced in price quickly enough to shift and therefore refresh the shop.

We found out pretty quickly that the clothes-buying female of the species gives you upwards of 3 weeks to maintain her interest. She expects to see something new every visit, and on the occasion that she walks around and sees that the same (unsellable) stuff (that she didn’t want to buy) is still hanging on the rails, well that is going to be the last time you see her for a while and her word of mouth is going to kill you off.

I can’t precisely remember how long the boutique lasted, but it wasn’t long, definitely less than a year. We didn’t go bust, everybody was paid; however it was a huge failure. We simply shut up shop. Rodney carried on with his (more) successful record shop and I carried on with my career at Jaeger. I (and my soon-to-be wife) had never left our jobs, we had however blown our savings.

INSIGHT 4:- Try and work out properly how much cash you need to start your business; there really is merit in doing a proper sales forecast and cash flow for the first few years. A new business eats up capital, and then some, and it is very common to underestimate the cash required. These forecasts should be updated very regularly and in line with what actually happens, i.e. Have you achieved the margins? Did you get as much credit as you had hoped? Do you have to give too much credit to your customers? Cash is King!

INSIGHT 5:- A good businessman knows when to take a loss just as well as he knows how to make a profit. Biting the bullet and cutting your losses, getting shot of dead stock, not throwing good money after bad - they are all tough but the consequences of doing nothing are tougher.

We got married in September 1973 and returned from our honeymoon (a week in a caravan in the New Forest) to the rooms above the shop: a mattress on the floor, a loo and a cold tap. It’s no wonder that my future Mother and Father-in-Law were horrified that their lovely daughter was actually going to marry this dreamer.

Something had to happen and happen very quickly.

Jaeger wouldn’t give me a rise of £5 to £33 per week; this would have given me parity with a colleague who was older but not as qualified, and working in another factory in Sussex. I used to have to go to his factory once a week to sign off his work as a requirement of the powerful trade union. I was told that I had to be more patient, however I had just got married and needed to find somewhere to live and the extra money meant that our combined (including my wife’s) wages would give us the multiple required to get a mortgage to buy a 2 bed flat.

Alpine Double Glazing were advertising for salesmen and were offering £40 per week plus commission (this actually turned out to be a lie as there was no basic, it was commission only). I went for an interview and was offered a job which I accepted, believing that they were going to pay me £12 per week more in basic than I was already earning, plus commission. I handed my notice in and was then offered the £5 increase by Jaeger, but decided that if that’s what it took to get a rise it was probably a good time to move on anyway.

INSIGHT 6:- Don’t work for anybody who doesn’t run a meritocracy. Even though I was younger than my colleague, I was actually better qualified and better at my job. He only had the advantage of age, as he was five years my senior and married with kids (a factor which was apparently more important salary-wise to my employer, until I handed my notice in).

I went on a three-day training course. Days 1 and 2 were about products and pricing, and day 3 was about selling and canvassing. The fundamentals were that: if I knocked on doors (cold canvassed) for one hour I would get one appointment to discuss and quote for installing double glazing with the householders; and if I got 10 appointments I would get 2 or 3 sales, but only if I stuck rigidly to the selling formulae and closed the sales on the night, i.e. not just provide a quote.

Others on the course had taken the job as unemployed people and were a little sceptical; however I had given up a good job, it was going to have to work. I decided to believe every word about the sales procedure and closing techniques, and true enough (for me) it worked. I used to clear £22 per week after tax, but in my first week as a double glazing salesman I earned £87 and in my second week £197. Seven weeks after starting I made in two weeks what I used to almost clear in one year - over £1,000. I took to it like a duck to water and my life was changed forever.

My Mother-in-Law had noticed that Jaeger were still advertising for my successor. We had just moved into our new two bed flat, and had recently furnished and equipped it. She couldn’t understand the insecurity of being a self-employed (commission only) salesman and thought that now we were comfortably ensconced in our new home, I should get my ‘secure’ job back. Interestingly enough, Jaeger closed all of their UK factories a few years later (when I was well on the way to building a multi-million pound business). In any case I was never going back; I loved being my own boss.

INSIGHT 7:- If somebody else has the confidence to hire you and pay you a wage, it seems strange that you wouldn’t have the confidence in yourself to do exactly the same, and in fact there is no greater security than employing yourself (obviously) subject to your success - however an employer isn’t going to hire you to fail either.

1974

I had a great run up to the second week in December ‘73, then it was as if somebody had thrown a switch and nobody was interested in my proposition anymore. The experienced Alpine salesmen said this always happened at Christmas and it would probably be better to conserve my energy and come flying back in the new year.

I didn’t need a lot of persuading to power down as I had really thrown myself into being a self-employed double glazing salesman, and had earned at least twice as much as I used to earn in a year. In the eight weeks since I had started. I got well and truly into spending the money on the various things that we needed for our new flat. It was fantastic: we had a great first Christmas and new year celebration in our new home, and then it was time to go back to work.

INSIGHT 8:- I didn’t realise at the time, but taking effectively 4 weeks off was very bad for me. I lost the rhythm of work and the momentum of success. I found it very hard to get going again, even though I was still relatively new to it. I had quickly got into the bad habits of some of my colleagues: sitting around in coffee bars; doing crosswords; and finding any excuse not to go canvassing for prospects, particularly in the wind, cold and wet of January. I had become an old lag in less than 3 months!

On the training course we had been indoctrinated into believing that Alpine were the best: even though they were expensive, the products were top notch and installed by the most professional fitters (who would turn up in super liveried vans, cover the furniture and carpets in dust sheets and leave the customers in an ecstatic frame of mind from the super service they had experienced and the pristine condition of their homes).

The windows and doors were custom-made and there was an 8-12 week delivery. My orders started to flow, the first a pair of patio doors to a lovely couple in Newhaven, East Sussex. I got a telephone call from them - they had been deeply worried when the fitters had turned up in a non-sign-written minivan with the patio doors on a roof rack.

The fitters had driven to the south coast from London, blagged their way into the house with some story about their proper van having broken down, and proceeded to bish bash the new patio doors in. They were on their way back up to London again within four hours. I raced around to the customers’ home to find them distraught and confused; they had totally bought my sales patter and were very shocked at the alternative experience, even though the actual job wasn’t too bad and in truth there was very little to complain about. However I apologized, phoned my area manager, and asked him to go and placate these people and also explain to me where the promised liveried vans and professional fitters were.

INSIGHT 9:- Alpine training was about the brilliant company they imagined it to be instead of the poor company it actually was. This inevitably led to a very high turnover of staff: they (the staff) were going to find out the truth anyway, very quickly, and if they cared, leave.

That night, on another appointment, I just couldn’t do the same job. I had lost confidence in the company and most of my patter felt like empty lies. My sales conversion rate suffered big time and the ongoing experience of further fitting dramas confirmed that I was only a good salesman, when I knew I was telling 99% of the truth about the products and company I was working for.

At the same time, a colleague had been approached by a local company to work for them. They were a glass works called MGW, who had decided to manufacture windows, doors and double glazing. They had a glass and mirror showroom in a good secondary position with some window and door samples and were getting sales leads, which, however, their traditional glass trade representatives were wasting; as they weren’t prepared to work anti-social hours or weekends, and just measured and quoted the job without trying to close it. They were losing out to my Alpine colleague, even though he had a much higher price.

The company had been trading for 50 years and had a great local reputation, so I thought to myself how much easier it would be to work for them. We struck an excellent deal - ‘commission only’ wise - and my colleague worked in Eastbourne (their principal town), and enjoyed the sales leads. I carried on working the satellite towns with my canvassing operation, and with renewed vigour and belief, did really well.

The sales leads started to dry up for my colleague, so MGW told him to canvass (like me); in fact, they said that I should be getting the leads anyway as a reward for getting cold business. He said he had had enough and went back to Alpine. I never understood this as we never got leads with Alpine anyway: selling for a local company was a comparative breeze, and to top it all they had better products with an excellent service and a more competitive price.

INSIGHT 10:- Great products, excellent service and competitive price, could be called The Holy Trinity of any successful business.

I was very happy: within six months of leaving Jaeger I had really found my feet and was being encouraged to recruit my own sales force and take an ‘override’ commission from their sales. Within another three months I had five salesmen working for me, who were earning (me) as much as I was (still) earning from my personal sales. I recruited friends and acquaintances who had been amazed at my new apparent wealth and wanted some of it for themselves. I replicated the training course that I had been on 6 months earlier, applied all of the same logic and crucially lead from the front.

INSIGHT 11:- Although some of my friends had a desire for good money, I was actually quite surprised that the most eloquent (who I had thought would find it the easiest) didn’t always make the grade. Others less well-educated, or with (assumed) less naturally gifted communication skills, stuck to the presentation format and closed the sales. This was because they were hungrier for success, away from the drudgery of the jobs they might ordinarily be doing, and as a result they didn’t let potential customers off the hook.

1975

After 18 months MGW decided that we had broken the market for them in East Sussex and put their prices up by 33%, this to cover the 25% commissions that we were being paid (including my 5% override). However, they deployed their previously unsuccessful (but directly employed) glass trade salesmen to handle the lead flow and for them to carry on selling at the pre-increase price (i.e. one company, two price lists).

Effectively they had decided that they didn’t need me or my 5 self-employed salesmen anymore, and would be able to exist off of the goodwill we had built up for them around the county - they thought the brand was built and was now synonymous with replacement window, doors and double glazing, not just glass.

My operation exploded overnight.

INSIGHT 12:- Their strategy was a disaster; the glass reps only worked office hours and didn’t (or couldn’t) sell, and they only measured and quoted for the work. The factory went out of business eventually, having worked through its diminishing order book; it didn’t happen overnight but happen it did. Never underestimate the value of a real salesman, he or she will (and should) always repay their income several times over.

I had saved £5,000 (you could by a 2 bed flat for £9,000), and in truth was growing a little tired of working most evenings and Saturdays. I thought I would take my sales and sales management skills off to another company where I would work normal office hours. I was keen to try selling ‘business to business’ and got the first job I applied for, selling pricing machines and labelling systems, principally to shops but also to anybody else who had a need for a pricing/labelling/stock control system. There was a car, a small basic wage, a high commission (10%) for new business, and a quarter of the commission (2.5%) for managing the 600 already existing business accounts.

The training was all about how brilliant the company was (yet again); however, the car I was given had 100,000 miles on the clock and was falling to bits. I had garaged my own much nicer car (which I still used socially), as I was ashamed of the car they had supplied.

INSIGHT 13:- Training based on ‘pipe dreams’ yet again. Don’t spend a week telling a new recruit how ‘market leading’ and successful you are and then put him in an old banger.

I concentrated on new business and indeed won their New Business Cup in the first 12 weeks. However so far as existing accounts were concerned, unless they were nearby, I would ring them up when it was time for them to reorder, and do the business over the phone.

INSIGHT 14:- If you pay a salesman 4 times as much commission to get one type of business, how can you be surprised if he spends all of his time concentrating in that area; the small basic, smaller commission and old car did not compensate me enough to justify me giving any more time or effort than necessary to those (existing) customers.

For the first time in a couple of years I was an employee, and paying my Tax and National Insurance as I got paid (PAYE). I was maintaining my lifestyle from savings, so after 18 weeks (and yet another bollocking for not getting round to the customer base) I handed my notice in, telling my boss that I couldn’t afford to subsidise them anymore and that I was fed up with driving the rust bucket they had given me. He was genuinely shocked that I preferred to go back to the ‘insecurity’ of being self-employed, but I had met up with my original business partner, and we were hatching a new plan!

HINDSIGHT 15:- I had not lost any existing accounts; I was getting around to them and building relationships, however that was being achieved only at the speed that enabled my personal income priority i.e. getting new business. Frequently successful businesses recognise the separate talents of account winning and account servicing, and therefore pay and recruit separate people accordingly.

Rodney Tate had been relatively successful with his record shop -indeed he had opened another in Hastings. However, stretching himself and the business resources over the two premises was deemed to be ‘over trading’ (a term which neither of us understood but which was to become a regular feature of business life).

He had also bought a house for the first time and had stretched himself a bit too far. He was going to have to retrench back to one showroom, his solution being to transfer all that remained of his diminished stock into one shop and to trade through his difficulties - choosing the cheaper Hastings showroom and selling the lease of the Eastbourne premises.

INSIGHT 16:- Overtrading. I actually thought it sounded like a good thing to do - how can you ‘overtrade’? Surely you would want all of the business you could lay your hands on!

I had an idea: what if we opened up the first double glazing showroom in Sussex, in fact anywhere that I