“It was a turning point in my business and my career, and I really wish I’d done it earlier.” So says Cobra Beer’s founder Karan Bilimoria of the Business Growth Programme at Cranfield.
Despite having two first degrees, an MA in law and chartered accountancy qualifications under his belt, it was the ‘mini MBA’ which really turned Bilimoria on to the power of education and training within a business.
And he hasn’t been able to keep away from the classroom since – Bilimoria and his management team are regular attendees of business courses at Cranfield, Harvard and the London Business School. He is an ardent believer in training as an essential cornerstone of a successful company, for entrepreneurs as well as their employees.
“When you start a business with only an idea, all the odds are stacked against you. You are taking big risks, you have limited resources, and a credibility gap, because no-one knows who you are, and training simply isn't on the agenda,” he says. Bilimoria believes mentoring is more important in the early days, but three or four years into the life of a firm, an intensive, practical course can really give the company a boost. He is passionate about the subject because he sees a direct link between business success – the bottom line – and investment in good training.
Research bears this out. Colin Barrow is a professor at Cranfield School of Management. He looked into owner-managers who invested in training and developing themselves and those that didn’t. He discovered the reward for investment in people was almost universally a rate of profit and sales growth far ahead of that achieved by small firms in general. “Just as a football team can be coached and trained into the Premier League, so a business team can be trained to deliver superior performance,” he says.
FILLING IN THE GAPS
Entrepreneurs often look at their own training and development only when they realise they don’t have the skills to take the business past a certain point and want to fill the gap. One option is to let go of complete control and hire that expertise in. The other is to get a broader grounding in business principles and strategy, and formalise what you have learnt so far in building your business, and fill in the gaps.
There’s a number of ways of doing this, from management books and one-day masterclasses, to short courses of a few months, part-time executive MBAs or for the ultimate prestige of a full MBA.
However, there’s debate about whether you need to go back to school at all. Professor Colin Coulson-Thomas, the author of a new book, The Knowledge Entrepreneur, from the Centre for Competitiveness says: “The problem with being trained in every area is you can spend your life being quite good at most things without being outstanding in one area. Entrepreneurs tend to be gifted in one area and hopeless in others, so rather than try and remedy all your deficiencies, you should play on your strength. It’s easier to complement yourself with other people who do have those skills.”
How you feel about business education is likely to depend on your age and background. David Williams, the managing director of equity company Sand Aire, which invests in family and owner-managed businesses, says many entrepreneurs are ambivalent about education.
“I sometimes think real entrepreneurs wouldn’t go near formal education – they will just get on with it and learn by gut instinct and hard work. A lot of owner managers haven’t had any higher education and swear by the ‘University of Life’. But we are seeing a lot of entrepreneurs who feel they should have had some kind of business education and think they have missed out.”
John Tucker, the head of UK family business services at Grant Thornton, agrees. He has a background as a social worker and was involved in the development of the Family Business MBA at the University of Gloucestershire.
“The problem with the business founders I’ve worked with is that their entrepreneurial traits don’t lend themselves readily to sitting in a classroom. A lot of the guys who started on the MBA said early on that they could not do it. They had been led to believe they didn’t belong in the university system, and it was not their environment. And yet when we opened our resource centre they were like kids in a sweet shop because they really wanted to learn.”
LEARN FORM THE MISTAKES OF OTHERS
If you decide to take the plunge and do some kind of business training course, what can it give you that experience doesn’t? Academics and entrepreneurs agree that the personal impact of education is as valuable as the business benefits.
Allison Harper, director of etc consulting’s Accelerated Growth Programme for entrepreneurs, adds that education can be a useful shortcut. “Education enables you to make fewer mistakes and get where you want to be faster than experience alone. It makes you more confident and aware.” However, she warns that: “It’s only a tool to enable you to achieve your potential, not a guarantee of success.”
London Business School’s associate professor of management practice, John Mullins, agrees: “You can’t make an entrepreneur, but you can enable entrepreneurship and equip people with the tools to be successful. Training takes you round the learning curve faster. You can’t transform a company just by going on a training programme, but it can open doors – you make new contacts and learn tools and frameworks to help with the challenges you face.”
Owner-manager Geoffrey Dovey, CEO of restaurant supplier Dovey Premium Products (see page 48), backs this up: “Doing an MBA taught me that there was a leader inside me. But universities can’t teach you what it’s like to run a company, hire and fire people and how to motivate them – that has to come from within.”
FINDING THE TIME
An MBA is the ultimate business education, but is it worthwhile? At Cranfield, Barrow admits that if you are running a business, there just isn’t time to do an MBA as well, although some manage it part-time. However, it can be worth the time and money, if, for example, you are working for someone else, being groomed as the future head of a company, or about to start your own business.
“Most businesses that start small stay small, because of the inability of most entrepreneurs to manage,” says Barrow. “There’s a conflict in thinking between entrepreneurship and management, and an MBA can help give entrepreneurs broad management skills.”
One of the most important things to be gained from any business course is the network of contacts. Once you have been on a course, you will never be alone again and will have learned a lot from your fellow students.
At London Business School, Mullins says: “You are up to your eyeballs in problems all the time when you are building a company, and it’s useful to see that others have faced similar problems, so you can learn from their experiences.”
And since there’s a proven link between investment in training and profitability, it makes sense to think about the development of your employees as well as you and your management team.
“Successful businesses are often constantly thinking about raising their people’s game through formal and informal training,” says Williams at Sand Aire. “Those which cut training from budgets or have never done it tend to fail or get taken over. It’s not a nice-to-have, it’s a must-have.”
The link between training and the bottom line is connected with a stable and happy workforce. Employees who know they and their careers are being looked after are more likely to return the loyalty, stay where they are, work harder and be more productive.
Harper at etc consulting says: “Investing in people is essential for attracting, recruiting and retaining people. If you don’t show people how important they are then they will move.”
Despite the benefits, training is often the first thing to be cut in a tough market. At Pembridge, Caroe warns against this: ”If you don’t think training is worth the time and money, that may be a valid short-term response to a crisis, but it’s not a sustainable long-term position. Once a company cuts a budget line item like that, then it can take a long time to reinstate it.”
Training may be seen as a low priority because directors have seen training as an added extra they ought to do, rather than tying individual staff training programmes in with building the skills the company needs to grow and flourish – in effect tying personal goals in with business objectives, which can only be a win-win situation.
The message is clear. Neglect your own training and education and that of your staff at your peril. It may not be able to resuscitate an already-failing firm, but there’s little doubt it can increase the chances of a good business becoming great.
BUSINESS TRAINING FOR ALL MANAGERS
Name: Charlie Bigham
Business: Bighams
Staff: 90
Turnover: £6m
Story in 10 words: Company-wide management education brings fast growth dividends
Bighams makes ready meals – but not your bog standard Monday-night fair. The fresh food company set up six years ago by former management consultant Charlie Bigham, makes top-end additive-free meals for customers such as Waitrose. He puts such a high value on quality that the comprehensive training programme involves everyone in the production kitchens, as well as the management team.
“We are in an industry with a huge staff turnover problem, but we have a retention rate of 98%,” says Bigham. “We take training seriously because our food is handmade and it makes sense to invest in the people making it. The two key benefits are staff retention and motivation.”
The company has been shortlisted for a National Business Award for outstanding people development, and while preparing for the awards panel interview, Bigham says he found the company had 24 training initiatives on the go.
Training is an intrinsic part of the company’s culture and includes mentoring. Bigham has also become a member of an executive development forum with MDs from other companies. The management development programme covers areas such as strategy, HR and finance. The kitchen staff training includes English language classes, as most of the production staff don’t have English as a first language, through to food hygiene. Employees may also take a course on sensory analysis or neuro-linguistic programming.
Crucially, every course links back to the core business objectives. “Before the course we identify the business benefits, and then evaluate afterwards. Customers are also very aware of our training and development programme, because we tend to work with long-term partners where it’s important to their work culture too,” says Bigham.
AN MBA FOR A FAMILY BUSINESSMAN
Name: Geoffrey Dovey
Business: Dovey Premium Products
Staff: 30
Turnover: Not disclosed
Story in 10 words: MBA education helps to convert family business into market leader
After 10 years working in industry as a successful chartered surveyor, Geoffrey Dovey returned to the fold and joined his family’s business. He became CEO two years after completing his MBA.
“My chartered surveyor training gave me a professional framework, but I needed to get a strategic view, and broaden and deepen my management skills. Coupling my practical experience with theoretical models was immensely powerful,” he says.
The effect on the business of Dovey applying in a real world situation what he learned on the MBA has been remarkable. In just seven years, he has succeeded in developing an Indian and ethnic food/drink supplier, in an already crowded market, into a premium-branded chicken supplier, which is now arguably the market leader in the UK.
As a result of the MBA, Dovey implemented wide-ranging changes throughout the company – a hard enough task for any business, let alone while delicately handling the sensitivities and issues which came with managing a family firm. He also completed a foundation year of a counselling diploma to help him cope better with the family dimension of his role.
Dovey went back to the company’s 1950s roots, as a high-quality chicken farmer, and created a branded range for the first time. He also looked at core values and made the decision that the firm’s own chicken range would have a strict policy of not using any added animal proteins, and that this would be incorporated into rigorous product specifications and enforced by DNA testing.
“I realised after completing the MBA that I didn’t want to be in business if I couldn’t look my customers straight in the eye. Now our branded guarantee certificates are appearing in restaurant windows,” says Dovey.
PART-TIME PROGRAMME BOOSTS BUSINESS
Name: Karen Earl
Business: Karen Earl Sponsorship
Staff: 30
Turnover: £6m
Story in 10 words: Short course provides confidence to take company to next level
Karen Earl has managed to build her sponsorship firm, so that it now has an annual turnover of £6m without any business qualifications whatever. But despite her success, she felt her lack of formal training was hampering the company’s growth, so she decided to rectify the situation by enrolling in etc consulting’s Accelerated Growth Programme.
“I had talked about furthering my business knowledge with my fellow directors for a while. We get sent hundreds of bits of information about various courses, but the AGP really impressed, because of the character of the people involved and the empathy they had with our own problems. I felt I would be better suited than on a course where people are just talking at you,” she says.
As well as focusing on the key areas of finance, marketing and HR, the course also provided Earl with the opportunity to mix with people from different types of business, but who shared similar problems. And by going for a shorter programme, the disruption to her own firm was kept to a minimum with plenty of time available for additional reading and completing homework. “I found myself looking forward to each session, to get feedback and to talk to others about the issues we’d been addressing,” she says.
Since finishing the course Earl has set about tightening up KES’ human resources operations with regular staff reviews and it has given her the impetus to provide training to improve the skills of her employees and formulate a plan to take the business further. What she learned also helped boost the creative process at KES, which Earl believes contributed to her company winning two pieces of major business.
“When I look back I was not taught anything mind-blowingly different, but was given the confidence to put what I felt was right into action,” she says.
AN MBA FOR THE BUSINESS BUILDING BLOCKS
Name: John Turner
Business: Buildspan
Staff: 36
Turnover: £9m (2004 expected)
Story in 10 words: MBA transforms building industry veteran into serial entrepreneur
John Turner says his Open University MBA had such a profound effect on both his life and career that he bitterly regrets not having done it years earlier when he was in his thirties.
After 28 years with construction materials firm ARC, the MBA gave Turner the confidence to embark on his very first entrepreneurial venture, buying Bradwell Aggregates. It also gave him the ability to change the business’ fortunes, turning it around and getting 600% more productivity out of a workforce of 45 employees with an average age of 59, many of whom had been with the company for more than 30 years.
Turner is in no doubt just how his return to study after all these years has benefitted him in his subsequent career. He believes the overriding advantage of completing the MBA was to remove the ‘fear factor’ of running a business.
“The MBA gives you confidence, and risk is much less of a worry. Before, I thought the risk of failure was more important than just having a go – now I know that it’s the other way round.”
A couple of years on from completing his qualification, Turner is now CEO of specialist building products wholesaler Buildspan, having completed a management buy-in in October 2002, with the help of Sand Aire Private Equity.
And he’s taken his new found business confidence with him. In his first year in the job, Turner has increased turnover by around 27%. He says the single biggest change he has made at Buildspan – and one hugely influenced by his MBA – has been to change the company culture to.
“An open, transparent, flexible business where you actually see people laughing and happy in their work”.
“I also learned on the MBA course that it’s impossible to get people to do the best job they can if they are not happy where they are and not enjoying what they are doing,” he says.
