why your own ambition is vital for building your business 3

Consultancy for ambitious Business Owners on the Isle of Wight

White Paper Report: 15/6/15

Why Your Own Ambition is Vital for Building Your BusinessDave Simon BSc, MPhil, MSc

Extracted from 'Could You Double Your Profits?', Dave Simon, 2015, InkMark Publications.

Date: 1/11/15 www.double-your-profits.co.uk Dave Simon freecall 0800 158 5324

One Of The Most Important Factors In Business

What Do We Know About Ambition?

Growth Is Not An Accident

Little Changes Make Big Differences

Optimise Everything For Profit

Your Chances of Success

One Of The Most Important Factors In Business

“One of the key signs of a good company is the almost tangible feeling one gets that it is going somewhere.

Sir John Harvey-Jones, retired Chair of ICI, star of TroubleShooter and TroubleShooter2 TV Series 1990's

This drive for progress towards an unknown destination can only originate from the leadership of the company. Moreover, the sense of direction will inevitably be subject to change — if only because the world outside is constantly changing.

The successful company has a clear goal in mind and everything that is done is directed towards achieving that goal. Even when survival is uppermost in everyone's mind, those who are clear about their goals will act very differently from those who are merely trying to keep bankruptcy at bay.

The ambition attached to these goals is one of the most important single decisions the businessman or woman can take. It must be testing and yet achievable at the same time, and this is a very difficult mix to manage. One of the surprises to me in the first series [of the TROUBLESHOOTER TV Series] was that companies appeared to be satisfied with levels of achievement far below what I judged their potential to be. This is partly a matter of the self-confidence of the people running the businesses, and also a feeling that to aim too high was to take an unjustifiable risk.

All too often in the UK ambition is equated with greed and of itself, is considered to be a bad thing. And yet ambition for your company is really ambition for others. It is ambition for your people and your products. Curiously enough, nobody thinks ill of a man or woman who wants to make the best product in the world. Yet if the ambition was described as being to

run the most successful and profitable company in the world there would be a very different reaction.

It is very difficult for the leaders of small companies in the UK to get this judgement right. On balance I have been surprised at the very moderate expectations that British people have for their companies. Also, at a time when mega-salaries are much in the news, I have been surprised at the low levels of personal reward which people have been prepared to take out of their businesses.

Most of the small businesses I havemet so far really benefit from thewholehearted commitment and involvementof their top managers. It is as though their businesses are an extension of their families,indeed in some cases, the businesses seem tohave taken over the families. This is anotherarea which the TROUBLESHOOTER programme revealed quite strikingly to me.”

From the Introduction of Troubeshooter2.


“The ambition attached to [their] goals is one of the most important single decisions the businessman or woman can take.”

What Do We Know About Ambition?In plain English, ambitious people are most often thought to be successful. The characteristics are so closely linked in our minds that they almost define one another automatically. But we remember that some ambitious people are unsuccessful – perhaps having misjudged certain risks – and some success can come a bit unexpectedly for other people.

An independent research study starts by saying “It is self-evident that if entrepreneurs do not intend to grow their businesses, theirbusinesses are less likely to grow.Achieving growth is difficult anddemands effort, and if the effort is notthere, growth is less likely tomaterialise.” (Growth and GrowthIntentions, Enterprise Research Centre,2013)

They studied “growth intentions” (meaning growth ambition). Their study collects all previous research that tracks businesses that turn out to grow successfully over two years or more, either in employee numbers or turnover. Their results confirm the importance of growth intentions as directlyaffecting subsequent growth. “What’s more, the effect is not small. Growth intentions do matter.”

It is too difficult to say whether age, size or technology level of the business have any effect. Clearly, the people around the owner/manager will influence things, but that may in turn relate to the entrepreneur's recruitment and motivational skills.

Looking at the owner/manager of the business, it turns out that age doesn't matter, gender doesn't matter, good education helps a bit, previous

entrepreneurial experience definitely helps a bit, management or industry experience doesn't seem to matter. In personality, risk-taking propensity, need for achievement and innovativeness all have small but definite effects.

The clearest thing to emerge from this research is about the business owner's motivations. Wealth-seeking motivation may be important at the start-up stage (but not later), independence-seeking seems not to make any difference over-all. It may be that it is the desire to build something new and worthwhile that is the main driving force, especially when the business makes more profitsthan is required to fund a good lifestyle for the owner.

Growth Is Not An Accident Government research shows that growth is not an accident (Business Growth Ambitions amongst SMEs, BIS, March 2015).

Successful owner/managers starting with a self-description as having high growth ambitions are more likely to have reported two years later that they had put efforts into investment, exporting, training, improved efficiency/productivity, innovation and management decision-making.

Those owners are more likely to have invested in management and leadership training and to have invested in off-the-job training for employees.

And they are also more likely to have got help in for themselves: to have taken strategic advice about running the business, participated in formal training and used a business mentor.


“...the effect is not small. Growth intentions do matter.”

“...it is the aspiration, drive and determination of the people at thetop that is the winning factor in the success of their businesses.”From the Epilogue of Troubeshooter2.

Little Changes Make Big DifferencesThe second study I mentioned above found that more than 41% of firms who started with high ambition grew in employment terms, compared with 38% of firms with moderate ambition and 32%of firms with low ambition. In other words there is 3% between highly ambitious and moderate, and6% between moderate and low ambition.

A recent survey by Santander Corporate & Commercial asking about SME priorities for 2015, showed similarly small differences between the overall average and those who called themselves 'highly ambitious' (shown in the chart below).

So all this adds up to suggest that differences in business growth may arise from fairly smalldifferences in behaviour – which are probably applied strong and often by a determined leader.

These differences maybe accelerators chosenout by entrepreneursdriving their ambition.

Obviously, there areother factors – like theviability of the project(which can only beproven in the attempt),staff, marketing, etc.

Confidence may also play a part. In the Government study, there was an interest to discover why ambition changed – in either direction. Many answers were given, but two that stand out most strongly were described as “the business had reached its optimum size” for reduced ambition, and “increased confidence because of greater experience, having achieved previous growth targets, or successful implementation of a new strategy” for increased ambition.

Your Growth MindsetResearch by the Centre for Enterprise at Manchester Metropolitan University showed that there is a definable set of psychological factors for growing businesses.

1. Market Expertise: Without a good understanding of what Customers might want, getting an innovation to market could be difficult. Much of this understanding comes from discussions in Customer Care and Sales.

2. Innovation Drive: New Products, new money-saving processes, new ways to get to market all help businesses grow. The true innovator is disruptive to the market, upsetting everything competitors took for granted.

3. Growth Drive: Not every Director wants to grow their business – it's their choice. Some people mix up growth in sales with growth in business: selling more of the same product may not be growing the business.

4. Sales Drive: Some inventors – even those who understand the market – may not be driven to make massive numbers of sales that will create the cash-flow from which business growth can then be funded.

5. Business Vision: The Director's job is creating a vision of what direction the business is growing in, and what it will look like when it has grown, is vital to making the right decisions on the way to achieve the vision.


6. Active Decision-Making: Understanding how human beings make decisions and monitoring your own decision-making is an important part of being flexible and opportunistic and yet safe and profitable in a new venture.

You can test yourself to see how strong each component in your mindset is.This will allow you to get to understand and improve these essential tools inside your head.

Your Sales ActivityLet's look at other research that studied the Sales Success of the Owner in High-Growth businesses:that is, those companies who are:

• Growing revenue more than 10% a year (and faster than their industry)

• Growing net profit more than 10% (and faster than their industry)

The answer is clear:Business owners who spent at least 40% of their time on marketing and sales for their companies grew their revenue 60% faster than those that did not.

The researchers called this the Two Days for Growth rule.

Optimise Everything For ProfitIf all this is relevant to success, it shows there is no easy-to-use, magic-wand formula!

Entrepreneurs who make the front page mayhave sold millions of items (so their success isput down to the scale of their enterprise), butthere may be more to it than just sales.

There is some evidence that getting the pricingright is critical also. Obviously, the business that under-prices is at risk of not exploiting the market as well as it could, or at worst, making a loss. In his book, What You See Is What You Get, Alan Sugar clearly states his formula: allow 35% of the price for his own gross margin.

And I remember a story about Richard Branson scribbling notes on the back of an envelope about what do do if things went wrong. In Losing my Virginity he says: “Throughout my business life I have always tried to keep on top of costs and protect the downside risk as much possible. The Virgin Group has survived only because we have always kept tight control of our cash”.

Success FactorsThe job of the ambitious business owner is to optimise everything for profit. Sustainable growth opportunities are then most likely to be maximised with the resulting resources.

External support can help you make the most of your success factors and improve your profits. Government research shows SMEs who used a mentor benefited in 78% of cases, 33% achieved good outcomes faster, and 43% achieved better outcomes than they would have otherwise usually within a year, and most often within six months.

Let me make you an Offer:I am happy to visit you anywhere on the Island and talk through how the research applies to you, free of charge. In fact, I will give you a free copy of my book 'Could You Double Your Profits?'.

All this will give you a deeper understanding of your own preparedness and what else you can do toprogress further and faster – Please call me on 0800 158 5234 – soon!


The job of the ambitious business owner is to optimise everything for profit.

why your own ambition is vital for building your business 3

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