Every entrepreneur and business leader I meet is trying to uncover the same secret: what will help them grow their customer base and keep those clients loyal? At Virgin, we have had our fair share of success stories over the years, but also a few failures. I always look for patterns in both our achievements and our missteps, and try to learn from them.
While it can be tough to compare companies across industries, also taking into account sizes and circumstances, I do believe that successful businesses have a number of qualities in common. The following questions, submitted by readers of Entrepreneur magazine and American Express OpenForum, sum up two key dilemmas facing many different kinds of businesses.
Q: I am starting my own company, and I don’t have much experience in hiring or managing employees. As one of the most renowned entrepreneurs in the world, what kind of approach would you suggest?
— Harem El Hennawy, Cairo, Egypt
A: People are one of the most important assets of any business. The Virgin Group would be nothing without its great employees. It is often said that the most important factor in real estate investment is “location, location, location.” Well, I believe that a key part of building a successful business is people, people, people.
Virgin has made its name by breaking into new markets and offering great value, superior service, a fresh approach and a bit of fun. It is up to our staff to consistently deliver all those elements to customers, which means that our airlines, for example, get their appealing personality from the cheerfulness — sometimes cheekiness — of the crew. Their confidence in reaching out to customers is in part due to our having selected the right leaders.
We spend a lot of time finding the right personalities to run our companies. It can be challenging, since we look for managers who take their roles seriously and lead by example, but who are also willing to see the lighter side of life. They tend to be focused yet also good listeners, inventive yet organized, determined yet ready to enjoy themselves.
Try to avoid hiring status seekers, as they tend to distance themselves from their employees. Look for people who care passionately about the company and not simply their status within it.
Of course, you can’t get it right every time. When you do make the wrong management decision, it’s vital to act decisively. As the saying goes, “Rot starts at the top.”
How will you know when things are going wrong? In the early days at Virgin, I would give out my phone number to all our music company staffers and tell them to call me whenever they felt we were doing something wrong. This was key to our development, both because it helped me to identify problems early on and, more importantly, because it let the employees know that management was ready to listen to them.
Fostering this kind of dialogue is essential if you want to build a company that will grow and thrive. Your staff will feel more valued and committed if they really believe you are listening to them, and you will benefit from hearing a lot of great ideas from the people on the front lines.
Q: I’ve read your books, and clearly you are not afraid to take risks. What qualities must a person have to be successful in business — and can they be learned?
— Elena Gorchakova, Russia
A: It’s important to distinguish between the public profile of risk-taking and daring that we have cultivated for the Virgin brand, and my personal approach to business risk. I have always tried to grab attention for Virgin and our companies by performing stunts and holding flamboyant launches; but I am also careful not to risk too much on any one business or investment.
I believe an aspiring entrepreneur needs to be confident, take risks and challenge the status quo — but also protect the downside. This means you don’t bet the farm on every move.
That said, we have come close a few times. In the early 1980s, our music business was hit by the recession, and we tumbled into the red. A few years later, the combination of British Airways’ dirty tricks campaign and the start of the Persian Gulf War forced us to sell Virgin Records to bail out the airline. On each occasion, we took a calculated risk to expand our businesses out of trouble, and it paid off.
Can you develop good judgment when it comes to risk and reward? Yes, I believe that’s a skill you can learn on the job, but sooner or later you have to take the biggest risk of all: running a company according to your own judgment. A big part of being an entrepreneur is simply giving new ideas a go, but it is also about accepting failure and learning from mistakes — picking yourself up, dusting yourself off and trying all over again with a smile on your face!
Richard Branson is a philanthropist, entrepreneur and founder of the Virgin Group.