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Hosted by Ben Thompson, the Oxford Business Podcast is a monthly podcast featuring conversations with experts in a range of fields including marketing, finance and sales.
Ben Thompson 0:06
Hello, welcome to the Oxford Business Podcast of the Oxford Business Community Network. Thank you very much to our good friends, Story Ninety-Four for hosting this podcast at their wonderful podcast studio in Oxford. Today, I'm joined by a friend of mine, a trusted entrepreneur, the Entrepreneur's Mentor, Mike Foster. Welcome Mike!
Mike Foster 0:24
Hi, Ben. Thanks for having me.
Ben Thompson 0:25
Thanks so much for joining me. So, Mike, today, let's start by learning a little bit about you and the Entrepreneur's Mentor.
Mike Foster 0:34
Yes, so my journey is quite varied in terms of, I was an area manager for Barclays' startups years ago, after leaving school immediately and starting with Barclays two weeks before my 16th birthday, I wanted to get into business as quickly as possible. I did a leisure start-up, which is a breakaway from South Oxford District Council then worked in the leisure industry for about two and a half years, and then decided to start my own businesses. Had a number of my own businesses, six in total, sold a couple of them, quite varied from a bookkeeping accounts business for a training company, right through to an indoor Soft Play Centre and since I sold that in 2013, I've been doing my mentoring and with my mentoring, I've worked in an accountancy practice and I've also worked in the science and tech sector. Also, what do I do is the Entrepreneur's Mentor now. I support other entrepreneurs to start, develop and grow their own business, and really what's evolved over really since the pandemic is actually a bit more of a sounding board. So I think because my broad experience and knowledge that I've picked up over those various different roles that I've had, I act as a sounding board, I can support my clients, I know where my limits are in terms of you know, I can't help somebody sack somebody, but I know quite a bit around HR, for example, and I can't recruit people like you, but I know a little bit about recruitment. But I spark or fuel other people's ideas to not necessarily tell them how to do things and that's really why I position myself as a mentor, I couldn't be a consultant. I couldn't be a coach, I find coaches, we ask great questions in terms of how do you think you do that? What's your opinion? What's your thoughts? But sometimes and this is even off back my own experience, and from my market research business owners say, Well, I've engaged my coach to help me to do things I don't know the answer to. So I'm more about, you know, it's being that sounding board sparking and fueling their ideas, using case studies and using examples to bring the best ideas out of those businesses that I'm working with to help them develop their business and you know, growth is a dirty word a little bit at this moment in time. So I sort of say, but developing and improving the business that they have.
Ben Thompson 2:38
Amazing, a really good overview, I think one of the things that was really surprising to me there is when you said just before your 16th birthday, you were bursting to get into the world of business and knowing you, I can certainly imagine that. The word entrepreneur is quite a widely used word. So I'm gonna put you on the spot a little bit here, what is an entrepreneur?
Mike Foster 2:58
Yeah, when I chose it, now, I didn't realise I wouldn't be able to spell it so easily, or how we pronounce it! Well, actually, a business owner is an entrepreneur and I've been challenged a few times being an entrepreneur's mentor, well, you're not the right mentor for me, because I'm, you know, I just run a business, I don't run multiple businesses, etc. But actually, if you look at the definition of an entrepreneur, an entrepreneur is somebody who takes a risk and ultimately, as a business owner, we all take a risk, you know, some of us have moved away from well-paid jobs, some of us have been forced into the situation. But we've all still taken a risk in some way, in terms of what our future may look like and, you know, as entrepreneurs, business owners, I think most of us love that in terms of the destiny in control in our own hands. So in simple terms, I think an entrepreneur is a business owner and I say someone who takes risks.
Ben Thompson 3:46
Amazing, amazing. One of the things that I've always admired from being a client of yours in the past, which was amazing, but also speaking, I know quite a lot of clients of yours, is you seem to give entrepreneurs real confidence. Is that something that entrepreneurs lack at times, and you see as something that you do intentionally, to give that confidence?
Mike Foster 4:07
That's kind of you to say, and I don't intentionally, you know, I think part of my role and the traditional role as a coach or a mentor is to say, Okay, where are you now? Where do you want to get to? And, you know, what's the plan to get there? And I'm a big advocate of breaking that down, I think, if you want to change, the steps quite often are far too big. So you haven't brought that step, sit down, and give yourself steps that you can celebrate, but also achieve in a smart way, you know, realistic and achievable and I think in terms of the confidence comes through that now, I think most business owners are confident, but they're confident in what they do, or they're confident in what they know and most business owners that come to work with me get to a point whereby, where now I need to do something slightly different. You know, one of my favourite sayings from a good book is if you always do what you've always done, you always get what you've always got, you're gonna get similar results, the same results, etc. So I think it's where you know, business plateaus, for example, and they want to do something different or they know that they need to do something that's outside their technical comfort zone if you like. So, one of my favourite books is the E-Myth, which moves business owners. E-Myth is the entrepreneurial myth and it moves people from, you know, the technical role, because Gerber basically talks that most people don't set up businesses, because they're entrepreneurs, they set up businesses, because they're technically good at what they do, and they're willing to take a risk, then you go through from technician to manager. Manager of your business, manager of your people, and then commonly come the entrepreneur and I think my role, in addition to helping people plan and then have clarity about their journey, is to keep them accountable, but also to motivate them to do what they do and I think that's where I embed confidence into people into the things that they don't know the answers to initially, is by motivating them and giving them the confidence within themselves to try things to fail fast, and make a step into an element where their comfort zone perhaps hadn't let them go before.
Ben Thompson 6:02
It's really interesting, actually, there that you say that because I think one of the things that I often see in corporate careers or entrepreneurs and in networking circles is I think that when we work for someone, we've got a boss saying, you need to do that, you need to do that and often things that we don't want to do, but actually, as a business owner, we don't have necessarily somebody ahead of us that is going to hold us accountable. Do you see that when you start to work with clients, who may not have worked with a mentor or a coach previously, in terms of that accountability thing is, I think we're all in business wanting to do that thing that we really want to do, won't we, but not necessarily the harder bits?
Mike Foster 6:37
Yeah, yeah, I think from my perspective, there was one thing I wanted to do was get out of the corporate rat race and run my own businesses. But actually, two, three years in, I realised there was so much in the corporate rat race that I had to embed into my small business, you know, wherever that was, you know, from your perspective, how you structurally recruit people, how you do your performance reviews, and how you do keep yourself accountable to somebody, and I've got my own coaches, I've got a personal coach who looks after my well being, and I've got a business coach, and I'm pretty disciplined, as you know, but I still need that coach to sort of like, remind me some of the things that, you know, I consider to be important. In terms of business owners and accountability, again, I think it's that piece about what they're comfortable doing. So, you know, for example, I always set my tasks with my client, like, hey, what do you want to take away from this session, what's the things that you're going to work on, before we see each other again, and I can probably guarantee that in most cases, the things that are a little bit uncomfortable, are the things that have to check in with them or remind them to do, whereas the things that are really comfortable, and you could probably sometimes do without, are done without a problem and so I think the accountability is just pushing that performance level to, as I call it, level up, or a step change that you need to make in your business.
Ben Thompson 7:54
Absolutely no really, really useful. All of the things that you touched on with the E-Myth, I know that you're a big reader and one of the things I think a lot of business books, and particularly social media in the current age, which again, you know, a lot more about than I, is a lot of platforms say that we should all be growing our business by 20% or 30% or 50% a year, you should be a millionaire by the time you're 15. That may be an exaggeration, but I know something that you touched on again, earlier in this podcast is about not necessarily working with your clients just to grow, but actually about being kind of more fulfilling for them or whatever else. Can you just kind of talk about that process and maybe really kind of give some advice to entrepreneurs who might be listening and might be feeling that pressure that I need to be more profitable, or I need to increase turnover? What would be your advice from your experience?
Mike Foster 8:43
It's interesting the word that you used there, pressure, because I do feel that a lot of business owners feel under pressure to perform and that's not necessarily performed to what they desire, to perform to their peers, to perform what they read on social media, to perform, as you say, what they read in the book to say, you wouldn't be a successful business owner, if you didn't do a million pounds in a year, or if you didn't own a yacht, or if you didn't have your private plane, etc. I think from my perspective, and you know, I got a really lovely testimonial, coming back to the new year about someone who had removed their anxiety for the first time was able to sleep last night and I think for me, it's basically helping business owners to identify what it is that they really want, and how they define success by themselves, not necessarily in terms of what somebody else is telling them what success looks like and, you know, you won't be surprised, I'm sure because of conversations we've had. But, you know, I think when people haven't really balanced that down and say what do I really want? Is it a work-life balance? Is it pounds in the bank account to give me choices? Is it better use of my time? Is it having a business that operates without me so that I can enjoy the elements of the business that I enjoy? Because we know that business owners have to wear so many hats, particularly in the early stages of their business. So I think yes, I spend a lot of time really understanding what my clients want to do, the journey that they want to take, you know that A to B, I always say, look, let's say where you want to be 3/5/10 years time, but let's bring it back to a year and a line in the sand in a year's time, because if we can actually work towards that business, then we've got a trajectory about where we're going forward and, you know, my as a partial, like, you'll know how I work. But I used to when I first did this mentoring is my first session was all about questions, question, question, question what are your goals? What's the objectives? And my own values helped, that didn't feel right, my clients just paid me to sit there and ask them questions. So I put together a questionnaire, what I call a kickstart questionnaire and this kickstart questionnaire really delves deep into what the business's... the business owner wants and what they want for themselves personally and what they want for the business and by doing that, by putting a questionnaire format, I feel I get a more considered response. It's not necessarily the response that they feel I need to hear as a as a coach or a mentor. But it's also not an off-the-cuff response that they probably regret 24 hours later, so I encourage them, here's the questionnaire, complete questionnaire, put it to one side for 24 hours, and then revisit it and what I tend to get out of that is the really deep, actually, the business isn't really that important. It's a mechanism to deliver what my goals and objectives are, wherever that is, work-life balance, wherever that is time and like I say, work-life balance is really interesting. Because when I challenge people on work-life balance, they don't really know what they want to do if they get all this time available and actually, entrepreneurs love running their businesses.
Ben Thompson 11:30
No, amazing. It's interesting, you bring that up, because I remember completing that presentation. Actually, one of the things that as I was completing it that came out was when I want to retire, and I hadn't even really thought about it before completing that questionnaire so thank you for that. One of your other tools and I don't mean to share all of your tools on the podcast with everyone listening. But one of your other tools, I think he's really useful and it'd be really good for you to talk the listeners through is your business model canvas. I appreciate it's sometimes easier to do visually, isn't it? But yeah, I like to challenge what is the business model canvas and how does it work and how would it be useful for some of the listeners right now?
Mike Foster 12:09
Yeah, and ask away, Ben, because I think from my perspective, I want people to know how I work, the sort of things that I talk about. One of the things that frustrates me about the industry that we are encouraged to sign up with a coach where we don't know really know what they talk about what they do, how they work, etc. So I try to be open in terms of the resources I share. Business Model Canvas is not necessarily my tool, it's a tool that's been around for years, I can't remember the name of the guys that put it together although I use it very regularly. I first came across it when I was involved with Business Link and delivering the growth accelerator scheme, as many of us were across Oxfordshire at that time, it was the sort of the common tool and I wanted a tool that I felt underpinned my work, but also was that one-page strategic document view of the business and I always use it with my clients to basically establish okay, well, let's look at the areas is nine building blocks of the business that are covered on the business model canvas. I use it, sometimes use it with post-it notes, whether they're red, green, or blue, to identify the red ones are the ones that we need to focus on, you can make it very visual to say there's the area you obviously need to focus on because of how you responded to my questions. It's underpinned in the central box by the value proposition. Ultimately, what's your USP? What's your differentiation? Why would people lead towards you rather than their competitors? And why are they likely to buy you? And then if we get to the right hand side, I think it's all about them, your marketing attracting your ideal customers and the relationships you're building and I talk about that area in a nice little loop, because if you go right to the far right insights about your key segments, those ideal customers that you want to attract that might be vertical markets, niches, or a persona of the person you're trying to attract and once you've really identified that, you can then come back to a box, which is about marketing channels, and the channels and tactics that you want to use to take your value proposition to market and attract those customer segments and why I call it a bit of a loop because the top box, so if you come from value proposition under and around, you get to customer relationships, and we have different customer relationships at different stages of our customer journey, whether that's through their awareness stage, their consideration stage, their purchase, their advocacy, their loyalty. So how does that customer relationship change? How do we need to change and adapt to that, but also what do we find out on the journey and why I call it loop is the end goes back to your value proposition because we've got good feedback from our customers that will help us to develop our value proposition because we can only start with what we believe is right for our market. Over on the left-hand side is all about how you then deliver your promise. You've got key partners, those that are external to the business that might be your supply chain, your subcontractors, your advisors, your strategic partners, and it also gets you to establish on why are they key partners to the business and what's in it in the relationship you know, is it about economies of scale, for example, is about sharing risk, is it about just a win-win situation, you've then got the internal resources. So the obvious one is any team that you have, I actually talk commonly about internal-external about being your team anyway, your internal your PAYE people, your key resources, but also talks about things that you have in the business that can't necessarily be replicated by a competitor. So that might be your IP or intellectual property. It might be your software, your hardware, it might be even the cash that you have available, the access you have to finance, and then the last box on that side is your key activities. What are the fundamental parts of your business, again, that can't necessarily be replicated to help you deliver your promise to your customer that you've made as part of your value proposition? The two boxes at the bottom are your finances right-hand side is your revenue, left-hand side is your costs and personally, I think if you get the top seven boxes, right, they start to dictate those two, because if you get the right-hand side, right, that dictates the bottom right, which is your revenue and dictate your primary revenue streams, your secondary revenue streams and actually, if you get left-hand side, right, that will give you a nice lean business, and therefore dictate your costs a little bit. So therefore, what's the differentiation and there's no coincidence in my mind about how the Business Model Canvas works out. If your revenues over and above your costs, and belonging in the middle is your profit, which is right underneath the value proposition, ie the profit for return of your value proposition.
Ben Thompson 16:19
Clever, really, really clever. I might have made this up this is available on your website as well, isn't it?
Mike Foster 16:24
I've got a copy of it on my website. I talk about it in my blogs, my videos, recent social post.
Ben Thompson 16:29
Brilliant, that was risky that I said that, that was risky mentioning that if it wasn't on! It would have been a bit awkward wouldn't it! I'm just gonna bring on something was very topical at the moment. I think that we're seeing a bit of doom and gloom in the economic climate, there are businesses that are struggling, and you know there is this recession, you've set up six businesses, you've worked with hundreds of entrepreneurs across this time, what would be your advice to businesses? Should they change the way they're working? What should they kind of be doing right now?
Mike Foster 16:58
It's been a really interesting journey, isn't it? I think, towards the end of last year, there's loads of uncertainty, we were warned that we're going into recession, good old press sort of built it up, as I usually do. I think sometimes we're a little bit lucky in Oxfordshire, sort of sitting in a bit of a bubble. But I'd be careful of that, you know, how we might take that. But, you know, we saw in terms of loads of uncertainty, so people weren't making decisions, they weren't closing off on projects, there was less visitors to a lot of people's websites and I think then when we turned the corner of the new year, you know, the government had settled down as much as it can settle down at this moment in time, there was a few more decisions, I think, a bit more confidence coming to market, although there was an element of we're going into a recession, it was a bit more confidence, you can see things in the new year now, starting to stir move around. I think my advice to people is control the controllable, I don't watch the news, I watched the news last time, probably two years ago. I might catch up on something that someone's tipped me off about in something I need to know from a client's perspective, particularly things around budgets and government, etc. But I don't daily go to the news, because it just is a negative, that saps my energy. I've been aware of that and I can't control you know, I can't control what the government do. I can't control who the next prime minister is going to be, etc. So I didn't get involved in that and I encourage businesses to say, Yeah, we're gonna go into a recession, maybe. But there's still going to be opportunities. There's opportunities out there for any business and quite often you'll see opportunities increase for businesses in a time you just have to find them. But what is it that you can control? And actually, you know, is it about controlling your activity? Is it about controlling the way that you build your business? Is it about, you know, whether you do need to pivot into either a different market, different products, different services, for example? So that'd be my main advice. I'd also in terms of I think, what we've seen with businesses over the last couple of years, they have become more aware of finances, but really understand your finances and forecast your finances out, but do some sensitivity analysis to do some what-if analysis and go if this is likely to happen? Okay, nobody saw a pandemic coming. If anybody says they did, then I question that. But you know, things like, Okay, we're going to drop turnover by 25%. If you model that out as a what-if analysis, you've got your core forecast, take a copy of that, and then do some what-if analysis around that say, Okay, well, if I lost 25% of my turnover, if I lost my key member of staff, what would the impact truly be on my business? And what changes would I need to make from a financial perspective to start with? And that starts to help you model out through because then if that actually happens, all you go, Okay, let's pick that model out. Let's pick that forecast out, and you react very quickly.
Ben Thompson 19:37
Really interesting, really interesting. Just on that note, actually, just around kind of finances. I know that you've worked with in the accounting sector, bookkeeping sector, what sort of reserves should businesses keep? Because there's a lot of different figures that are out there, but what's your advice?
Mike Foster 19:52
So I tend to say that if you want some reserves, you really have to have three months minimum of your core costs so that ultimately if something happens to the business, you can still run for three months and that three months gives you that window of time to have some sort of recovery or some sort of change. I find that that is very personal to people. Yeah, I've got one client, they got nine months, what I'd call a run rate. I've got some other clients that have zero, and I'm working on a month-by-month basis, and we're trying to improve that and I think going into the pandemic, I think we saw so many businesses didn't have those reserves, and hence why so many panicked or struggled, etc. Work on that. So, yeah, I think it's being aware of what those costs are and my personal guidance is a minimum of three months.
Ben Thompson 20:39
Yeah. Okay. Interesting. You touched on there a couple of examples of your clients. So one client that has got nine months and one client that has got zero months, let's focus on the positive without giving too much away about the client. But what would be kind of your advice to a client who maybe does have too many reserves? Should they be reinvesting? Should they be trying to take it out and pay more taxes? I appreciate it's slightly personal preference, but I guess from a... with your entrepreneur's hat on what would be your advise there?
Mike Foster 21:05
Well, this is this is going back to what we were talking about earlier about what's the definition of success? The definition of that reserve is to that business owner. Now ultimately, that person has nine months reserves, which they know is probably more than they need to have, but it's about their anxiety, their comfort factor, that they know that they're going to provide for their team, because that's what happens is, as a business owner, we get, you know, as a startup, it's all got put food on the table, but then I've got 20 staff, I've got food on 20 tables now, you know, that journey that you're on? And I think, I think it's insane. Okay, well, what's right for the business owner? So what does that level look like? That I always say to my clients is saying, well, are you looking at reinvesting your assets? And what are your assets? Are your assets your people? Are your assets your cash, for example? Or your unique key resources that we talked about earlier. Now, if it's cash, you then say now what I'm going to play with those reserves a little bit. So if I've got nine months reserves, am I going to bring those reserves down to six months and give me so much X cash to reinvest in the business? And that's really about this model plan that I talked about earlier, saying, well, what's the journey look like? Because that may mean that if I can take nine months reserve down to six, that gives me enough cash to hire a salesperson and that salesperson takes the objective, which is the next part of the plan, or my step of the journey of growth or development or improvement that I want for my business, because that takes the pressure away from me as the business owner, entrepreneur, of actually doing that task myself and that's the next step that we've identified that we need to do. So that's the sort of reinvestment asset of that asset.
Ben Thompson 22:41
No really good. Really good insight. Okay, cool. So just to kind of bring the conversation on a little bit, and really kind of focus the conversation more around exit. So I feel that we've given lots of advice to, and I thank you for it, to business owners, what can they do now and a little bit of planning, so let's talk about exit. A lot of us business owners don't really know what our exit is, should we know what our exit is? And what are the considerations that you would advise your clients to be thinking about now, even if that exit isn't on the horizon?
Mike Foster 23:15
Yeah, an exit is a longer journey than a lot of people feel, you know, even when you're pretty clear about what it is you want to do and you start the mechanisms in terms of due diligence and all that stuff that can take, that can take a year, it could take two years. But it's actually getting to a point again, where you're comfortable with and what it is that you want. So do I want to exit so that my team for example, are guaranteed a job, or do I want, I'm not too bothered about that I'm just worried about the cash and that can let me go off to the Bahamas and retire in that way. So it's about you know, what's your values, what's important to yourself, I then say to my clients, okay with you then need to identify early stage, when you want to retire, how much you want to retire with, which is sufficient to then give you rest of your retirement in the lifestyle that you want that to be and again, I can't define that for people. I'm not an expert in terms of wealth management, but you know, encourage them to have conversations with people about that wealth management and doing the right investments, etc. But that's the key bit, when is it likely to be how much am I going to need? That gives me a number that I need? And then we're just looking at the valuation that business and say, Okay, well, what are your industry? How is your business likely to be valued? Is it on turnover? Is it on profit, you know, turnover, multiples, profit multiples, etc. Now, once you've identified that we know the framework that we're aiming for in terms of whether its turnover profit return that we're looking for and obviously, if we need a level of profit, we might need to push that turnover up anyway to get that level of profit. Once we then identified that, we then go again, looking at the steps that we've taken in that direction, but one of the key aspects I talk to my clients about is working now you've identified what you're likely to do, are you're going to do a management buyout, are you gonna do an employee ownership trust, or are you going to do a trade sale. Then identify well okay, if it's gonna be a trade sale, who's likely to be my buyer and do I need to start direct conversations with them? Do I need to subtly ask conversations and trying to establish what's important to them and if you can establish what's important to them, you can also shape your business in that direction. So if you go, yeah, I need to hit those number targets, because that's my evaluation, I need to take myself out of the business because I don't want to work beyond that date, because I want to start retiring. I don't want to be on any employee contracts, etc. But also, what's important to the client is contracted customers where actually I've got no contracts notice I need to start put some contracts in place, because then there's that security. Or is it about making the business much more leaner so they can just basically take the customer base, add it on to their existing customer base?
Ben Thompson 25:41
Interesting. We're coming towards the end of this episode. But one of the things I think would be really, really useful is to just share some final insights from us. I'm putting you on the spot really now. But bear in mind this podcast is getting out to small Oxfordshire businesses, what would be some of the advice and some of the tips that you might like to share some final points?
Mike Foster 26:00
Oh, good question Ben. I think the thing that I would always say to businesses is you can't be afraid of selling. I think it's probably the thing we all avoid and I'll put myself into that and I would prefer anybody to lean towards me and purchase from me rather than being sold to. But you know, one of the key aspects and key skills we have to do is to identify who we need to speak to, and how we can engage with them and what we need to sell to them and I think one of the things, again, I see with a lot of businesses is they're not clear about who they want to work with. I've got one client at the moment, he's brilliant, he's really clear about who he wants to work with and although it may be affecting him a little bit about who he's letting go at the moment and who he's saying no to, I think it's brilliant because he's going to basically build a business that he's working with the type of clients he wants to work with, he's gonna want to get out of bed every day and he's going to want to get to work because you're working with the right clients and sometimes it's particularly young businesses, we jump at any business because we perhaps need or want the cash, to give us some confidence or security and therefore we end up start working with the wrong client. So I think it's don't be afraid of selling, build your business with the right type of client and be really clear about the customer segments that you want to work with and I think the other thing that I talk quite a lot about is, and this is quite bizarre because there's a lot of coaches don't talk about it and people look at me as if to say, why are we focusing on obstacles? Because one of the things I identified with some work a bit around goal planning a few years ago is that we tend to do goal planning is we set a goal, and we start running towards that goal, and hopefully hit the timeframe with it and then we hit an obstacle and what we do when we hit an obstacle, quite often we bail out, and you see that with new year's resolutions. So I think with obstacles is identify what the obstacles are likely to stop you from achieving your goal, your objective your vision, and can you build that into your business model, into your strategy to eradicate those obstacles as early as possible?
Ben Thompson 27:51
That's really good advice. Really, really good advice. No, thank you so much for that. Thank you to our guest, Mike Foster, the Entrepreneur's Mentor and actually a huge advocate of business in Oxfordshire. Thank you very much to Story Ninety-Four for hosting us at their wonderful podcast studio in Oxford. I definitely recommend getting in touch with Nick and Matt about coming to have a look at what they do because it's a really, really cool space. You've been listening to the Oxford Business Podcast of the Oxford Business Community Network. My name is Ben Thompson, and thank you so much for listening.