Monday, November 12, 2007

How to Start a Business

According to a recent report, the North East of England needs another 30,000 businesses.

That's an awful lot of business cards, I should start up a graphic design company. Apparently we need to "develop a more entrepreneurial culture".

The name "entrepreneur" sounds like a member of some exclusive sect. I became one because I had a phone call from Andrew Lloyd Webber. He asked me to direct a television version of his musical Song & Dance, and he wanted me to cast his then girlfriend, and subsequent wife, Sarah Brightman.

At that time I was at the BBC earning £2,000 a month. I was thinking about going freelance, but never had the courage. Obviously I jumped at the chance of working with the great man, but I had no idea what to charge him for the month's work it was going to take. So I rang an agent, the late Richard Armitage, whose father Noel Gay wrote The Lambeth Walk and Run Rabbit Run. He was the wisest man and most loyal friend.

"What would make you happy?" he said.

As anything more than two grand would have been a bonus, I said "Do you think he would stretch to three?"

An hour later Richard rang back. "I said you'd accept £45,000".

After I regained consciousness he said, "Let that be a lesson to you. Andrew only employs the best, and I told him you are the best director in the world. So that seemed about right to both of us."

Of course, it was nonsense. I was way down the directors' pecking order, but it's undoubtedly the most important lesson I ever learned, and which I recently passed onto my son who has become a director himself.

So I had £45,000 burning a hole in my bank account, and at that time Richard was reviving his father's hit West End show, Me and My Girl. He was looking for backers, so I offered to invest my entire earnings in the show. Richard refused the money with two other pieces of great advice: "Never invest in a friend's business, and never put all your money into something you can't control". Shame, really, because the show ran and ran. Instead I quit the BBC and put the cash into setting up a TV production company. Within two years it was the largest in the UK.

During the next fifteen years, there were incredible highs and utterly miserable lows. The most important quality an entrepreneur can have is the ability to cope with failure. Television production is like Norfolk: turkeys come with the territory.

Mark Thompson, now director general of the BBC, once said that his most disastrous commission was Happy Families, a terrible Saturday night spectacle that involved Grannies being hoisted into the air in giant cages. One of my many turkeys, which viewers voted off with their remotes. Occasionally out of the gloom would emerge a couple of shows which would become part of popular culture and make it all worthwhile, like Challenge Anneka and Robot Wars.

Now I've launched another production company in Newcastle, which has cost me ten times as much as the last one. Reducing the North East business start-up requirement to 29,999.

Talk about risk money: I know I can lose the lot, but that's what entrepreneurs do. The venture capitalists (who actually take almost no risks at all) call it "skin in the game". It's the adrenalin of potential failure which keeps you awake at night and drives you to success. It requires courage and a good sense of humour. And I know those are qualities that people in the North East of England have in abundance.

Which makes it all the more galling that just as One North East is calling for more entrepreneurial risk, our government is trying to stifle it by increasing Capital Gains Tax by 80%.

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