TL; DR
I know many entrepreneurs in the United Kingdom and all of them have strong connections to the United States.
The US and UK share a “special relationship” after all, and so all of these entrepreneurs learn from US business owners, markets, and professionals, as well as ones based in the UK.
But what’s the difference between the two, and are you doing yourself a disservice as a UK business owner if you seek to learn from US entrepreneurs?
This was one of the questions that I put to Phil Fraser during the latest episode of This Week With Sabir.
Phil is a mentor who began by founding, growing, and then selling his own successful SME. He has personally experienced every stage of growth and has used it to help countless clients. He is also based in the UK, and it was interesting to learn how the UK and the US differ in retail and e-commerce and what these differences mean for UK business owners.
Some of the things that we discussed during this episode included:
- The Importance of Finding a Mentor: Although business mentors are not as common in the UK, they really should be. A mentor can limit your mistakes, increase your profits, and fix your issues in one fell swoop. They can shorten the learning curve and provide you with some valuable insights that may take you years to learn yourself.
- Failure is a Fact: Failure is embraced in the United States as it’s a necessary evil that allows us to grow as entrepreneurs. It’s not the same in the UK, though, and this is one area in which UK SMEs can benefit from the American outlook.
- The Risks of Overextension: It’s important to be ready for growth and preparing in advance is how the most successful companies expand so quickly. However, rapid growth is not essential and there are alternatives that might be more suitable for your business.
At the end of this guide and the accompanying video, Phil Fraser offers his most valuable piece of advice, so be sure to read/watch to the end for a £100,000 recommendation.
Watch The Full Video Interview / Listen To The Audio Podcast “Business Sounding Framework With Phil Fraser”
Listen To The Audio Version Of This Written Article
Navigating UK SMEs With The Help Of A Business Mentor
Phil Fraser describes himself as being an extra pair of eyes and ears for small to medium-sized businesses. He is a sounding board, an ideas man, and someone who can fix many of the issues that modern UK businesses struggle with.
After building a business from the ground up and eventually selling for millions, he has direct experience with every step of the growth process, from those anxious early days when everything is an equal mix of excitement, curiosity, and abject terror, to the lofty heights of SME success.
To tap into this experience, and to learn about mentorship and the challenges that UK SMEs face, I invited Phil Fraser on the This Week With Sabir podcast.
Here are some of the things that we discussed…
The Differences Between The US And The UK As An SME
Until now, all This Week With Sabir episodes have featured US businesses, from the rapidly-rising Magic Spoon to the B2B giant that is Young Nails.
I haven’t had a lot of insight into UK businesses, and so one of the first questions that I asked Phil Fraser was how UK SMEs differ from US SMEs.
Unsurprisingly, there are many similarities.
We speak the same language after all, and when it comes to eCommerce, we use similar structures, distribution platforms, and marketing software.
But there are some notable differences and many of them are cultural.
Failure is a great example.
In the US business world, failure is considered to be just another step on the road to success.
The majority of guests on This Week With Sabir have talked about their failures and how they have used them to grow. I’ve spoken about similar topics myself, noting how all successful business owners have scars that reveal their failures and their struggles.
In the UK, failure is failure. It’s more concrete and less abstract. It’s not always seen as an inevitability and so it often hits much harder.
After all, if someone tells you that you’ll fail before you succeed and that your success will ultimately be determined by how you manage that failure, you won’t panic when it happens. You’ll take it on the chin and keep moving forward.
On the flip side, if you see failure as the end and not the beginning, a disaster and not an inevitability, it could be the thing that causes you to quit.
Mentorships are also different.
In the US, it’s very common to have a mentor. In the UK, they are much less common.
There are a few potential reasons for this.
The main issue is that professional mentors are not as much a part of the culture in the United Kingdom. It has more of an “I’ll do it myself” culture. But it seems to be born of an unwillingness to ask for help as opposed to stubbornness.
It has been said that the UK doesn’t have as many mentorship programs as the US, but that’s not necessarily the case. The UK government has many such programs, and they are also offered by banks and major educational institutions.
They aren’t as easy to find as US programs, and you really need to know what you’re looking for, but they are definitely out there.
What Are The Main Challenges Of UK SMEs?
Brexit came up a few times during my discussion with Phil Fraser. It’s a topic that I’m sure every UK citizen is tired of hearing about, but it’s still prevalent because it’s still relevant.
Officially, the UK left the EU at the beginning of 2020, although this move came several years after the British people voted in their majority to “Leave”.
The delay was the result of countless negotiations between the UK and the EU as they tried to hash out a withdrawal agreement. When the deal was done, there was still a great deal of uncertainty and many argued that the UK economy wasn’t ready and would suffer.
A few months after the UK turned its back on Europe, the world went into lockdown and this compounded the nation’s issues.
Some businesses were able to benefit off the back of Brexit and I’m sure that a lot of hedge fund managers profited as well, but the majority of the country’s SMEs struggled and many of them were forced to shut their doors.
To understand just how difficult this transition was for the country’s businesses, imagine that you ran a small business selling Chinese-made products across the UK and EU.
Before Brexit, you could freely purchase goods from China and ship them across the continent without paying additional custom charges or VAT costs. In fact, many couriers offered expedited 2 or 3 day delivery to countries like France and Germany, with all shipments being driven or ferried across the Channel.
After Brexit, you would have the following issues to deal with
- More paperwork and charges for incoming parcels
- Higher costs for EU shipments
- Additional custom declarations for all EU shipments
- Limited choice of couriers
- Labor shortages
- Transport problems
- Massive delays
Some of these responsibilities were placed squarely on the shoulders of the pandemic, and while it certainly played a role, the fallout from Brexit has been a bigger factor.
Even today, some 18 months later, the UK is struggling with labor shortages and the chaos that ensures from those shortages.
Many farm workers, drivers, and other minimum wage workers were Europeans, and they all fled back to Europe after Brexit.
As a result, the UK is now experiencing a shortage of fuel, fruits, vegetables, and more. Milk and beer have been destroyed by the ton because there are not enough people to ship them; vegetables have been left to rot in the fields because there’s no one to pick them.
I’m sure that the UK will find its feet again and it might even be stronger for it (although that could take years), but these are very challenging times for UK SMEs.
It’s also something that the rest of the world can learn from.
Many xenophobes try to rationalize their bigotry by insisting that they are just passionate about their country and countrymen. It’s not that they don’t like foreigners, they insist, it’s just that they don’t want those foreigners “stealing” jobs from their citizens.
But as we have seen in the UK, those “foreigners” are essential to the economy and when you remove them from the equation, you create a massive gap in the labor force that no one can—or will—fill.
Amidst all of this chaos and the many challenges it is creating, there have been some opportunities in the UK as in other countries.
Brexit and the pandemic have created the ultimate disasterpiece, but it’s not all bad.
Lockdowns mean that more people are shopping from home and industries such as home fitness, health and wellness, loungewear, gaming, gambling, and electronics have seen immense growth.
It has also been easier and cheaper than ever to use platforms like Google Ads and Facebook Ads. Sure, Brexit has been a fly in the ointment and has made it difficult to ship large quantities of goods into and out of the UK, but intrepid British entrepreneurs have found a way and are thriving as a result.
Generally speaking, the most successful people are the ones who can turn a bad thing into a good thing. That’s the difference between a good entrepreneur and an excellent one, and there are a few excellent ones in the UK (and the US) who are turning those lemons into lemonade.
Dangers Of Overextending With An SME
Phil Fraser touched briefly on the risks associated with overextending yourself as an SME.
It’s something that many businesses struggle with because rapid growth is often seen as the ultimate goal.
If you’re growing quickly and earning lots of cash, what possible problem could you have?
Well actually, there are several potential issues.
Think of it in the context of getting some local advertising thanks to a viral marketing campaign. All of a sudden, 200 people show up at your small pizza restaurant and you have one guy who is now tasked with making 200+ pizzas.
You’re not going to make those pizzas on time and so you’re going to have a lot of angry customers. Most of those won’t come back and your reputation may be tarnished as a result.
It’s something that I have previously discussed with Ricky Choi, an expert in third-party logistics.
The irony is that you’re getting everything you ever wanted, but like King Midas turning his loved ones and sustenance into gold, it’s ultimately the thing that destroys you.
There are ways to prepare for this and ensure that you don’t grow fast and fail just as quickly.
The best option is to scale slowly and manage that growth. The second is to do what Shay Berman did when growing his digital agency and to prepare for the progression you want.
It’s a risky strategy, though, because if that growth doesn’t come, all those extra expenses will bleed you dry.
<H2>Why It’s Important to Find a Good Mentor</H2>
Fraser has served as a mentor for many SMEs in the past. It’s also a topic that I have covered multiple times, referencing my own mentors and mentees, but why is it so important to have a mentor and what benefits do they provide?
Accountability
A mentor provides a level of accountability that business owners don’t always have.
Sure, they are accountable to their friends, family, and employees. They don’t want to fail lest they let them down. But the mentor goes one step further, acting as the eye over their shoulder when they divert from their goals or ignore them altogether.
Guidance
Fraser describes his work as teaching business owners about “proper CEO stuff”.
Very few business owners have experience as managers and CEOs. They’re creators and professionals, not executives.
They don’t always have the experience needed to know whether they are doing the right thing or not.
A mentor is there to provide assurance as well as guidance. It’s the assurance that a certain idea isn’t stupid, or a particular strategy is worth trying.
Also, they can help to ensure that the CEO is acting and operating like a CEO. If you’re a master developer running a software company, you shouldn’t be wasting your time writing copy or handling invoices. Sure, those accounts need to be completed, but that’s what employees and freelancers are for.
Shortening The Learning Curve
When you have an experienced mentor behind you, there will be fewer mistakes and catastrophes, allowing you to shorten the learning curve and get to where you need to be quickly and with very little hassle.
The owner of a pizzeria knows how to make good pizza, but that doesn’t translate to running a restaurant. A mentor is someone who steps in and bridges the gap between the skill and the experience.
During our discussion on this topic, Fraser mentioned the book E Myth by Michael Gerber. It is a book that I have read myself and one that I would also recommend.
Be A Mentor To Your Employees
You can be both a mentee and a mentor—it doesn’t have to be one or the other.
The more you inspire and teach your employees, the more they will help your business.
Adopt a culture in which they can feel comfortable coming forward and expressing their ideas. Not only will you get great ideas, but as your team will feel accountable for those ideas, they’ll be more likely to back them and work hard to make them work.
As we’ve already established, you don’t know everything, and you can’t do it all by yourself. Your employees also understand the industry and the business. They have a unique perspective and might even know more about specific subjects than you do.
Be receptive, encourage them to come forward, and don’t shut them down and criticize them as soon as they voice their ideas.
The £100,000 Question
Fraser had a lot of wise words to share during our discussion but when it was over, I asked him for his best advice of all, one that could generate over £100k in value for SMEs in the UK.
His advice was to always ask the question: What does “perfect” look like in a year’s time?
It sets your goals and gives you direction.
If your goal is to make a million dollars in a year’s time, you now need to think about who you should hire, what systems you should implement, and how to scale your distribution so you can manage those sales.
It’s long-term strategic planning, and that’s essential for SMEs in both the UK and US, as well as every other country around the world.