Success? It’s down to you all the way: Lord Sugar spouts sense and rubbish at the same time! – Telegraph

I am sure that many owners of small businesses (SMEs) are considering what they are about to face in 2011. True, there are doom and gloom messages from the Government, not helped by David Cameron who, in covering his backside, stated that he sees 2011 as very challenging, still singing the same song, “We are cleaning up the mess we inherited.” A bit of the broken record syndrome, I think. My message to those who run a small business is that at this time of year it’s good to have a good look in the mirror and rethink your strategy. May I suggest that whatever plans you are thinking of, don’t – repeat don’t – rely upon government or banks or anybody else to give you ideas? Unless you sign on to the fact that it is you alone that runs your business, you will be going down the wrong road. It’s all about you. Consider why you started your business. I assume it was that you have some experience or expertise in your field, and that is the big point – don’t rely upon anyone else. It’s going to be you who defines the way forward. I am sick and tired of hearing people asking what to do, going to networking meetings and seminars expecting to glean some gems of wisdom. These events are money-making exercises and benefit one party and one party only: the organiser. They have become an escape for people to justify sitting around wasting a day bullshitting with each other while they should be working. You will learn nothing other than that there are another load of people in the same boat as you. Moaning about the banks is another thing that winds me up. Get real! Banks are a business just like you. They are there to make money from their customers and just like you, the more customers they have the more they will make for their shareholders. They are not a charity and they do not have to lend money to any Tom, Dick and Harry. They are not cheap – they’ll charge you to breathe, with arrangement fees and other costs.

They should only be used to your advantage. Consider the cost of money as if it is another expense you have to bear, no different from any other costs you have. But there has to be a reason why you need the money.

Ask yourself why you need the bank for money. What do you need it for? I spoke to a person who ran a dry-cleaning shop a while ago. He had obviously bought all his equipment a while back. His day-to-day consumables are just the chemicals he needs to clean the clothes. Those, plus his utility bills, rent and salaries, are his expenses. He has a cash business and yet he was moaning about the bank not lending to him. When I asked why he needed the money, he said he is in debt. “Why are you in debt?” I asked.

“You are not a shop that has to buy stock, so are you opening other branches? Do you need the money to buy new plant and equipment?” No, it was simple – he was running at an accumulative loss. So simple – his takings were less than his outgoings, and had been for ages. So he wanted the cash to pay his salary and his staff’s salary as his business could not generate it. Sorry mate, you are totally unjustified in complaining about a bank. They don’t back losers. You are insolvent – simple as that. What he needed to do is refocus and see how to start to make money and not just cover overheads.

It is incredible that the simple basics of business go out of the window with all of these modern-day so-called theories and principles. You don’t need spreadsheets and complex business plans; you need a pencil and a plain sheet of paper. Take my example of the dry-cleaner. On a sheet of paper he can write down his monthly costs of rent, utilities staff and consumables. From this he will get a figure that tells him that unless he takes in excess of that each month he will lose money. This is a quick sanity check, a wake-up call that all small businesses should do.

In my book What You See Is What You Get, I explained in detail that when I started my business in 1967, there were no free lunches. No banks lending. You wanted something? You paid for it or got it yourself. And when you could show that you had a good, viable business, then and only then would “come and see me” be the words of the bank manager.

I feel sorry for young people who have lived through the madness of the past 10 years or so and grown up with an expectancy culture. They witnessed irresponsible lending from banks to people who had a whim of an idea. It’s all over folks! Banks are now back to the old days. Forget them unless you have a clear road map of how you will repay them or how you can make money from these expensive loans.

It’s hard for me in this article to cater for all aspects of business. I am conscious that there are service businesses such as recruitment and estate agencies where the only asset is the people. There are people who make things and sell them (not enough I would say) – there are hairdressers, car repairers and a variety of shopkeepers. The principle is the same whatever business you are in.

As mundane as it might sound, I did a health check every week when I started. I was conscious of my expenses, including my pay, as well as the cost price of the goods I was selling.

As mad as it might sound, I wanted to cover my expense by Wednesday of every week so that profits made on Thursday and Friday were going to accumulate to net assets. I needed targets. There were weeks when I didn’t make it and I had to find the determination to step up a gear the next week to try to make up the deficit. You are the only one who knows what to do with your business. There is no shame in looking at your competitors or reading up on what new trends and ideas are around. By all means spend valuable time at exhibitions.

Consider, if you are a shop, for example, that while you have a mass of overheads, any new venture you might wish to diversify into – product- or service-wise – can be done with little or no increment of your existing overhead. Think of expanding your range of products or services. Look at the climate and see what new services are required these days.

Just as one example, if you are in the recruitment industry, health and safety is now a big thing with firms. Trust me, you don’t have to be a rocket scientist to gen up on it. Instead of wasting your time at networking seminars, you may as well sit in your own premises and research it, and then perhaps add providing H&S people to companies as one of your offerings.

In my early days, I used my suppliers to finance my stock. The bank would not touch me with a barge pole. First of all, you need to build up trust with your suppliers. Treat them as if you have a tax bill or electricity bill. They must be paid on time. There is nothing wrong in establishing extended terms such as 30-60 or even 90 days. The suppliers will go along with it if you build a history of trust with them.

But never buy more than you would normally buy just for the sake of it. You have to pay and you can only pay if you sell it, and by that I mean make a profit, not just turn over. A retail business sells for cash and if you have suppliers who offer you terms, you can use this cash flow to stock up with a more diverse range. That’s business.

I conclude by saying again that it is you and only you – no one else. You know what to do, otherwise you should not be in business. It’s just down to hard work, discipline and determination combined with your knowledge and experience of your sector. Trust me, you will be satisfied and happy with yourself.

• Baron Sugar of Clapton was Enterprise Champion under the Labour government and is chairman of Amshold Group and Amsprop London.

Business is about getting on with it AND networking and learning new stuff!

There is no room for moaning – but there is room to build relationships with others to help you grow faster Lord Sugar or Sir Alan or whatever your name is 🙂

More from Lee...

Lee has worked with...

UK Parliament
nhs leadership academy (1)