I had the pleasure of interviewing Richard Bell, the founder of Business Leaderz, a multi-million dollar private advisory and investment firm with seven businesses under their banner. One of those businesses is Fit Stop which some of you are probably familiar with.
Business Leaderz both start-up their own companies and also help others with investment.
Rich also sits on the board of 6 major companies internationally and is a popular consultant due to his history of creating successful businesses, but also exiting successfully as well. Additionally, he has started a Business Leaderz Club which allows him to mentor start-ups.
You can find the full interview on You Tube, but here is an extract.
Can you talk about the current market and the challenges that businesses are facing?
From a market perspective, at the moment it is interesting because there are a lot of different categories.
There are business owners running scared, bunkering down, cutting expenses and thinking the world is over, which may be true in some cases.
Then you have the other category of people who are looking for opportunities in the market.
Of course there are some industries, including some that I am in, that are really hurting, but as business leaders, we need to look at how we respond to it. This has certainly shocked us into thinking of different ways we can do business.
Fit Stop, one of my businesses lost 100% of revenue overnight. Literally in 12 hours. We have 70 franchisees around Australia and this is obviously devastating, but we are not putting our heads in the sand. Instead we are looking at the opportunities and changing the model.
We quickly branded Fit Stop to Fit Stop at Home, which was in the works already but we hurried it along and got it set up within 14 days.
At times like these it is easy to put your head in the sand, but others may look at things in terms of what they can do differently and what new services they can offer.
The reality is some businesses will do very well now, others won’t be here in 6 months. This falls to the leader. How quickly are you innovating?
Being an entrepreneur and business owner yourself, can you talk from a personal perspective about how you have to deal with this in your businesses right now? What are some of the strategies you are implementing?
With Business Leaderz Group we are the overarching group that has ownership stakes in the 7 companies that we have invested in. For me personally, my business model from an advisory standpoint is face to face. Last year I was on 240 flights all over the world so this has hit me hard. It’s given me a massive shakeup.
Additionally, with the businesses that I chair, Fit Stop stopped overnight. Aj Hackett is another one that I have. It is an adventure tourism business and that obviously is not happening now.
Then we have other businesses such as the National Business Review, which is like the AFR but it is in NZ. That one is booming right now, we had over 500 subscribers in the last 6 days.
So I think different businesses are going to experience different situations. For example, our head company lost 80% of revenue but in other companies we are doubling in revenue.
Moving on from the current situation, for businesses looking to grow, can you tell us about the Leaderz Club and what advice would you give to them?
The Leaderz Club was actually my wife’s idea. We were talking about the future of the business and one of the things that came up was that I like to work with early-stage businesses, so the $0-2 million in revenue ones and I hadn’t had that chance for a while. The Leaderz Club was born out of a passion for me to work with early-stage companies.
The idea is that I bring 12 businesses into work with on me an annual basis. They come into a board room every month for a full day with me and we cover topics such as sales, marketing, capital raising, mindset, leadership management and exiting to name a few.
It is essentially a condensed version of everything I have learned in the past 10 years. At the end of the session they get a 1.5-hour Q+A with me where they can ask anything they like. At each session they also have to write a one-page performance plan telling me what they will do in the next 30 days. Then they are held accountable the following month.
The three key things business owners need to know are:
The business needs to be able to operate without you. Many businesses operate as a sole trader or a subcontractor and this is a big mistake. You need to build the business in a model that does not require you to be in it. If it requires you to be there 100% of the time to do the invoicing, make the coffee etc. you put yourself in a stressful job and it is harder to sell the business. Build a business that works without you. You create the idea, put the right people in place, then step back and just be the leader and drive the business.
My businesses all work without me.
If you are earning under $1Million in revenue, then 80% of your time should be spent on sales. Don’t tinker around with your product when you are starting out. Drive hard for the 1st million of revenue. Once you have done that you should have enough income to stay in business. That is when you can tweak the business/ product.
My advice is to go to the market first. Get those first customers to give you feedback to tweak your product and make it better.
Get the right people around you I cannot stress this enough. There are so many business coaches out there telling you about what they have read and learned, but my suggestion is to get yourself around business people. People who have built and scaled a company and can show you what they did, not what they heard about.
Throughout my entire journey I have surrounded myself with successful business people and successful mentors who have built companies, sold companies and helped me on the way.
Out of interest, how much is it to be in the Leaderz Club? It’s not about making money for me, it’s the passion. It is $997 a month, fully catered and you also get a fortnightly call with me as well.
For a business looking to work with you or someone like you, what do you look for in a business before agreeing to invest in them or help them?
My universal principle is that I back the person/ the entrepreneur over the idea.
I have worked with so many companies and I know that businesses will end up being different from the original model, so I don’t mind about the idea so much. I back the entrepreneur. If you have the right attitude, mindset and if I can see myself working with you I would be interested in that.
The second thing is, of course, what sector are you playing in. How big is that market? What is the opportunity? Will they be in business in 5-10 years? Is it a scalable business model? Can we raise capital and really go for it?
Last thing, how will this business be acquired? How will we get it ready to sell? Will it be attractive for someone wanting to buy it?
If you can not crystallize the asset and investment it means nothing
What is capital investment and what does that mean?
That’s a huge question, normally when I answer it goes for hours so here is the short version.
Whenever you are raising capital for a company the money does not go to you, it gets injected into the company. Let’s say you are raising money and you put a value on your business at $1million.
Then someone comes to you and says they want 30% of the business so that investor gives you $300K which gets injected into the business. You get a 70% stake, they get 30%. Now you have a business partner
That would mean they now own 30% of your idea, they might want a seat on the board which is a discussion you will need to have, but from there you have $300K to use to grow the business.
The goal is to make the 30% and 70% worth more. Let’s say in 5 years time it is now worth $10 million. That’s a success, but it is only worth that if someone will actually buy it.
My first tip is don’t raise capital for your company just because it is “sexy” to raise capital. Raise money because you have everything ready to go but money is the only thing stopping you. You want it to grow your business with that money, not pay your bills.
Next, just because you get an investor involved does not mean they control your company. You will need a shareholders agreement that governs the company and will say how things are voted on, when dividends are issued etc.
My advice to most founders, protect yourself really well in that agreement so even if you own less than 50% of the company you still have control, this is called controlling share.
There are a few types of investment. Smart Money is what we generally do. It is when we give you cash but we also sit on the board to help scale the business.
Don’t be afraid to only own a small share of a business too. I would personally rather have 20% of a billion-dollar company than 100% of nothing. For example, Mark Zuckerberg only owns 17% of Facebook
What are your top tips for a company that is looking to go for growth?
- Make sure you are spending 80% of your time on revenue-generating activities
- If you can set up an advisory board, get some great people to help drive you through that growth
- Make sure you have a product to market fit. Understand who you are selling to, delivering to and servicing. If your product or service is an online fitness platform that consists of heavy deadlifts but you are pitching that to 80-year-old ladies doing gardening that is not a product to market fit
- Understand your market. Know what they want, their frustrations and what their dreams are
I know you would usually ask this question at the start, but I didn’t want to get off-topic. I read somewhere that you dropped out of high school at 16 and a number of years later, in 2015, you were ranked in the top three of Fairfax’s Media Emerging Business Leaders. Can you tell me a bit about that journey?
It’s true, I didn’t finish high school. I read a lot of business books when I was younger and I came across Richard Branson’s first book called Losing My Virginity. It was an ah-ha moment for me which made me really want to do business and follow that entrepreneurial dream. I started doing more research into it and I discovered that 60% of CEOs don’t have a uni degree. So I put two and two together and decided a lot of self-made entrepreneurs don’t follow the traditional route so I moved out of home. I didn’t know what to do initially and I didn’t have any money so I was living in a car for a little while.
I got a job in sales and went well with that. Then I got into the fitness industry, opened a few gyms, started buying property and finally started investing in businesses such as The Entourage. The Entourage was my first home run. It started with 5 people, I invested all I had into it, which was $278K at the time. We grew the 5 staff to 100 and I was the GM of that company
That was an incredibly successful business. We are still the 3rd largest shareholder in that one. That’s what started the Business Leaderz journey.
After that, I invested in Unfiltered, a media company in NZ which we then launched in NYC and San Fran before exiting.
Now we have Zen Now and Fit Stop.
I couldn’t map that journey if I tried to plan it, but the vision for me has always been the same. I wanted an advisory firm and I worked toward it.
Were there any great outcomes as a result of the ranking in Fairfax for you?
Yeah there were quite a few. At the time there were a lot of media and interviews which put me on the map a little bit. I have never really been a media guy. Our tag line is “Let the results speak for themselves” soI wanted to let the brands I help speak and I was the business guy behind it. I have finally gotten comfortable with that though so I am doing more interviews these days.
I’m a lot more mature than when I was 20 so I feel I can tell my story and help others with it now.