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Lord Sugar's rules for first time entrepreneurs

His eight commandments for business debutants

Lord Sugar's rules for first time entrepreneurs

Against the backdrop of ongoing recession and brutal government cuts, you could argue that to launch a new business in Britain right now would be foolish. Nevertheless, many start-ups are flourishing. When it comes to business, there are few braver men than Lord Alan Sugar: the millionaire businessman and former “enterprise tsar”. Here he gives us his hard-earned tips for first-time business success…

1 . Don't call yourself and entrepreneur...yet

Despite being the public face of entrepreneurship, Lord Sugar has a beef with those who claim it as an occupation. “That’s the biggest wind-up going,” he explains. “An entrepreneur is not what you call yourself, it’s what someone calls you in recognition of what you’ve achieved. I call Richard Branson an entrepreneur. Rupert Murdoch called me one. Anybody who stands up and says: ‘I’m an entrepreneur’ needs shooting. You’ll drive people crazy.”

2 . Don't expect a free lunch

There was a time when you could buy a house or finance a business on little more than handshakes, promises and sheer nerve. And look where that got us. It’s a strategy that’s outmoded and doomed to failure, says Lord Sugar: “I am sick and tired of this free-lunch culture, and people asking, ‘Where can I get some money? How do I borrow that? Who’s gonna fund me?’ It’s the disease that caused banks to collapse.” Similarly, Lord Sugar explains, don’t expect that anything less than hard graft is going to drive your business forward; schmoozing at random events in the hope of big rewards is a waste of time. “I’ve taken an office and filled it up with people who’ve all been thinking they’re going out to network meetings and all this sh*t. And it’s all bull, it comes to nothing, it’s a disease. Get this approach out of your head.”

3 . Have a clear business plan

“No bank’s going to give you money on the basis of your ideas and no one’s going to lend you any unless you’ve got some collateral you can put up there,” says Lord Sugar. The boom days of swanning into a bank, mentioning the word ‘.com’ and walking out with a big cheque are over. You need a business strategy, clear plan, balance sheet and informed backers. “No one’s going to tell you how to do it,” continues Lord Sugar. “And if you don’t know how to do it, then stay with the job you’re doing. Because if you’ve not got a road map in your head, then forget it.”

4 . Be Prepared to hand over a stake

Still want to pitch an idea, rather than a business? Then be warned: even if you do succeed, it’s going to come at a price. “It’s difficult to generalise because there are people who are great technologists who do need funding by venture capitalists and so on to get things off the ground,” says Lord Sugar. “But people who go to capitalists with brainstormed ideas need to be aware that they’re dealing with gamblers who will take 40 or 50 per cent of your business.”

5 . Stick to what you know

There are notable exceptions, but few entrepreneurs take leaps into unfamiliar sectors and come up smelling of lucre. As Lord Sugar explains: “Do not start a business on your own if you haven’t had experience in it. So, for example, you might have worked in the purchasing department of ‘Philip Green’s Shop For Ladies’ Shoes’, say, and been out to Hong Kong or China to buy shoes and realised that they only cost £3 and end up being sold for £39 in the shop. You’re the one who has the expertise, so you develop a little range for yourself and start to sell them. That’s the way you start. But that’s because you’ve amassed some experience, not because you just randomly think it’s a good idea.”

6 . Differentiate yourself from the competition

In other words, nail your unique selling point. What are you going to bring to the party? The country’s full of mobile phone retailers, recruitment consultancies and estate agents, yet new businesses do appear. And flourish. “Ask yourself,” says Lord Sugar, “‘Am I going to be any different to the 30,000 people already in the marketplace? What are my customers going to get from me that they aren’t going to get from someone else?’ Are you the cheap one, the one with good service, the ethical or bespoke one? What’s your hook?”

7 . Build a decent team

If it’s your business, you’re the one who’s going to take the glory — or carry the can. Yet that’s not to say that you should do it all by yourself. “Sometimes you need partners who are competent in areas of the business that you’re not good at,” says Lord Sugar, “particularly with the technical aspect. If you’re good at the commercial side, you’ll need a person who’s good at the manufacturing logistics side.”

8 . Don't Panic

Although The Apprentice candidates seem to make the same dunderheaded errors series after series, according to Lord Sugar, they can be forgiven. And so can you. “Even if I woke up Philip Green, Richard Branson and Bill Gates at 6am and said to them, ‘Here’s £100, go and buy a bunch of chickens and some vegetables. I’ve found you a stall on the South Bank of the Thames, and I want you to cook chicken dinners and turn a profit by tonight,’ they’d be lost. So while the contestants look like they make the same mistakes every time, the fact is, they just panic. They panic because they don’t want to lose. They’re not working as a team, not co-ordinating or thinking properly.” In the cut and thrust of business, if you lose your head, mistakes will happen. Learn from them and move on.

(Main image: Rex Features)