Latest / The Enterprisors / From One CEO to Another - The Isolation Premium
Transcript
- Tim Meadows-Smith: Welcome to the enterprises. A founder at 30 million has thousands of people around them. They are also structurally the loneliest person in British business. Their problems are too large for their friends to understand and too small for the FTSE 100 world to care about. The most consequential decisions in the company get made without a single person in the room who understands the terrain. Tim, you've called it the isolation premium. That's founder with thousands of people around them yet somehow they are the loneliest person in British business. How does that work? Well, it actually originates from a little phrase, SME. ⁓ Small and medium sized businesses. So that phrase covers people who are essentially self-employed. maybe turning over between 50 and 100,000 a year. It's a self-employed job. The top end of M, that little throw away letter at the end of it. Medium. Medium. Could be turning over 300 million pounds a year and employing 249 people. So, a second. it goes from one person to 249 people as employees, but it goes from... 100,000 or actually less than because we've discussed this in a previous episode. I don't know that some people are actually on benefits to help support them in their enterprise to 300 million. That's a big, so that little throwaway now included in that SME group that government refers to and they treat them as one lump. Yeah. about five and a half million businesses. All right. Two million of them are actually on benefits. Yeah, we've discussed this in a previous episode. Within that five and a half million, only 60,000 are M's, the medium sized ones. They have much more in common with large businesses and corporations than they do micro businesses. But so you start with the isolation of that small group of companies that have proved that they can get somewhere because they're in the top less than half a percent of all of newly founded businesses. But somehow they're lumped in with the beginners. Right. So if you think then about that and you have a need as a leader of one of those medium sized businesses, to meet with other people who've got similar problems to you, to have some camaraderie, some peers, some friends who've got the same issues that you've got, you have to walk past a thousand other business leaders before you find one as big as you. A thousand. So when you say, I'm lonely, I wanna go and join a business networking group locally, and there are 50 people in the room. And they're all self-employed. chances of any of them being anywhere near your size. Some of them claiming benefits. Are tiny. Yeah. And so you are isolated. It's quite hard to find other people who are doing something similar to you. And what's most valuable to you is finding somebody who is similar, but a bit bigger. Because they're the ones who not only understand what you're going through, but they've already solved problems that you're wrestling with today. But the other isolation is that you might be employing 60, 70, 100 people. You can't talk to any of them as a mate. No, and you can't, no, you absolutely can't. So you can't, you you can't, you can go to the Christmas party, but you're slightly apart. You can. go down to somebody's leaving due, but you're slightly apart. can maybe even go to some worked out, but you're slightly apart. So you can't actually just be yourself with any of those people. And you can't find business people who are the same size. You go home, your family haven't got a clue what the business is about at all. They really don't get it. Where do you actually? Not necessarily in your circle of friends, either there's nobody that understands that. And to your circle of friends, you're the hero anyway, aren't you? So it's very difficult to say actually. I don't have a hero, but you you're the weird one actually. yeah, mean, people have some sneaking admiration. He's got his own business and it does millions. And you know, he's got this, you know, I don't know, Lexus or... Tesla or some car that is better than the car they've got that's in the car park. You know, it's new, but it's actually on lease. so there is a certain amount of jealousy of what you've achieved and who you are. So it is very isolating. But you don't actually meet people who have the same problems that you do. What about peer groups like EO and YPO? Well, there are a number of There are a number of organisations that sell services to mid-sized businesses, the annual cost of being involved is anywhere between, you know, £15,000 and £50,000 to be a member and to benefit from it. So they're quite expensive. And you said services, so that indicates that there's something missing. There's not that connection because you can get services anywhere. in the peer groups, is that connection? Is there that Well, there is some. some. If you join a group that is essentially a service to bring similar sized businesses together and to run mastermind groups or to listen to speakers or those kinds of things, but the organizers are delivering a service effectively to other mid-sized business owners. But the numbers of mid-sized business leaders who go to them are quite small. Right. And they're not they're not huge organizations that support that 60,000 cohorts of business leaders. So where do we find each other? You have to work at it. But I mean, the first thing you have to do is recognize the problem because most people are really busy. They a lot of them think they're doing all right, even though actually they're not. Yeah. And they've got this feeling that they could be doing better, but they can't find any evidence as to why what they feel is right, because everybody else tells them that they're wrong. Everybody else says, you're doing okay. This is good. It's in, and there's all kinds of excuses. What you really want is to have three or four mates who've got a similar business to yours who are saying, you know what? these guys who keep telling us 5 % is good. It's not. We need to be doing this, this and this to show them that it's not and have the courage of our conviction. You know, cause if you put up a plan and actually far too few business leaders in this size actually have a business plan. Leave that aside. If you put up a plan that next year we're going to do 5%. Are you likely to do much more than 5 %? No. If you put up a plan that says we're gonna do 30 % more next year. When you hit it, well, you might not, but you might get to 20. And it's that ambition and that driving forward and understanding what good looks like that the isolation sucks out of you. It's interesting because most topics come back to that we've discussed in the previous episodes and today most topics come back to the fact that actually as a business owner of a medium size, let's forget you've created yourself a job which is being supported by benefits, but as a business owner of a medium sized business, it is a lonely place to be. It is. It is an untrained place to be for yourself. Yes. the way that you do it is to seek other people. Exactly that. And the thing is that we are psychologically geared to living in a democracy. Psychologically, if 50 % of the people think you're wrong, you're wrong. I you're not. You can be in a minority of one out of 10,000 and still be right. And, but psychologically that takes a lot of courage and a lot of strength to actually feel something and believe it and then have All of this evidence and people telling you you're wrong is really difficult to fight, which is why so few of our businesses reach their potential. You know, when you look at the numbers, you know, only 0.4 % of all the businesses founded get beyond 10 million. That's still a tiny business. It's tiny. I mean, the world's largest company is Walmart. ⁓ $650 billion. If you want to know what that looks like, Walmart is a blue whale and you are a day old chick. That's the difference in scale between 10 million and 650 billion. You are tiny at 10 million and we only get 0.4 % of our companies to that size. And that's all because of what we've continuously talking about the reasons why exactly that and we are equal worst in the world with India. If you look at the best in the world, which is Singapore, they get 15 % to the same stage. That's 40 times better. And it's all down to being isolated. What they do differently in Singapore, the way, they recognise the importance of small businesses and they nurture them. and they put training around them and they give them direction and help them to grow their businesses so that they're successful. All our country does is as soon as they move, they tax them. Yeah, absolutely. You could start a business for 20 quid or whatever it is and then we'll tax you. Yeah, and then we expect tax return. And by the way, you You're the engine of growth. You're going to create all the jobs. You're going to improve productivity. And then we're going to make you pay really extortionate amounts of... ⁓ Anyway, let's not get political. the isolation thing is really important to understand because, you know, if you have a belief in creating something and you've taken the step to follow that entrepreneurial dream, and you've defied all the odds and got yourself to over 10 million a year to then fall at the next hurdle, which is the isolation in a democracy problem where everybody is telling you that what you're doing is good and you know that it's really pretty mediocre if not poor. So it's really important to get peers involved in your company. And are we talking... Not just as friends, but possibly as at NEDS as well. NEDS are great. If you can find people who actually understand and aren't just, you know, retired old buffers who want the kudos of being a NEDS. What you actually want is people who are still in the prime of their mid-size leadership saying, I can actually get some great experience by spending a small amount of my time. in another business listening to their problems and understanding from their ideas I can take back to mine. Yeah, and vice versa. And vice versa. You've got something really powerful. Absolutely, absolutely. if I were, if I'm a founder listening to this and feeling I'm recognizing my own isolation, what should I do? Just say, I need to go and find other people like me. Yeah. and not just sit there and take it. mean, until you start to look, you won't find. You're not going to stumble across other people who are similar to you. You've really got to be proactive about going out and looking. They're not that hard to find, but you actually have to put some effort into finding them and making the connection and following through. Yeah. And you're doing something, which we call in... The whole series is from one CEO to another. there is, you're putting you finding other CEOs and talking to other CEOs. It can be done. Yeah. Well, I mean, I'm now free of most of my executive responsibilities and I am actively trying to meet a similar person to me once a day. I don't quite achieve it, but I certainly meet a new one once a week. Lovely. And I learned so much because we're all slightly different, slightly different circumstances, but the common thread is we're isolated and we have vision, business vision, and we are trying to get better and better and better and keep growing and creating opportunities for people as we build our businesses. It's such a waste, isn't it? It is. It's very different to corporate life. Thank you, Tim. Very good. Enjoyed it. Me too.