Richard Branson - Business Stripped Bare

So what’s the cost to BSkyB of that share purchase? At a share price of 40p it would be in excess of $1.3 billion. James’s mistake was to overreact to what Virgin was doing. He could see that Virgin Media was going to be a threat to the Murdoch media empire and that we would do well. Virgin Media’s aim was to give Sky a run for their money. But I don’t think it would have damaged Sky in any dramatic way — certainly not nearly as much as he’s lost trying to stop us.

Once you’ve been able to assess the level of danger in any given situation, you must be able to honestly gauge your own strengths and weaknesses as leader. You need to be able to recognise what you can do as an individual — and how you inspire and motivate other individuals to cooperate willingly to get the job done.

How to achieve this? Well, for starters, this is something that should — no, must — be written into every business plan: This company will have lots and lots of parties and social get-togethers. Parties are a way of galvanising teams and allowing people to let their hair down. They have to be inclusive and encouraging, and then they are an excellent way of bringing everyone together and forging a great business culture.

I used to invite everyone in the Virgin business to a party at my home in Oxfordshire — but unfortunately it became too big. At the last one we held — over three days — we had nearly 60,000 people. We put on fairground rides, sideshows, hamburgers and hot dogs, and rock bands — all paid for by the Virgin Group. I stood at the entrance and made sure I shook everyone’s hand. My hand was swollen and rather painful after two days of this, but it was worthwhile. Today we have smaller gatherings, and I aim to get to as many of them as possible.

The Virgin Blue party, meanwhile, has become a glittering, red-carpet event — raising thousands for charity in Australia. The event is organised, set up and served by Virgin Blue people. It’s headed by Jane Tewson, who established Comic Relief in the UK and lots of other charity projects, and who has been working in Australia with Aboriginal people. I donate a week’s holiday in Necker Island in the British Virgin Islands as a major auction prize, and one trick I use is to get the runner-up, who has bid perhaps A$80,000, and the winner, who’s paid A$90,000, both to pay A$85,000 and both go to Necker together. It’s forged some great friendships. We also raise A$100,000 by letting someone name one of our aircraft, and all that costs is the paint job. It’s easy money for charity and fantastic for staff morale.

I think governments should make parties completely tax-deductible, with the proviso that every time there’s a knees-up, shindig, disco or rave, the proceeds go to charity. That’s the deal. It should be much more than just a fun night for everybody. A night when everybody gets merry is good, but it’s even better if you can combine it with something that makes a difference to others. Music events, fashion shows, sports contests, anything that gets people together and is enjoyable can be rolled out across every business — just don’t let anyone use the charity’s money to pay for the drinks!

A poor leader can make life hell for so many people. Leadership is not about a person sitting at the top of the tree, making all the decisions and expecting everyone to do as they’re told. That’s hardly leadership: it’s more like dictatorship.

I have huge admiration for the British version of the TV show The Apprentice , in which people compete for a single job with Alan Sugar. The camerawork is slick, the editing is clever, the music is great. The power of television is immense, and if it’s capable of inspiring people to treat business with excitement and enthusiasm, that can only be a positive thing. Frankly, anything that can be done to inspire young people to give it a go has to be worthwhile.

But I have one issue, and that’s with the way Alan has to say, with a frown, at the end of each episode: ‘You’re fired!’ It’s in his contract because it makes good television. And it’s cobblers. The whole competition is structured around the fear of being fired. While this does make it interesting for the viewer, it is not, in my opinion, how businesses should be run.

Where The Apprentice is successful is in its wider portrayal of the modern business world. There are few jobs for life any more. As individuals we need to be positive and sell ourselves. Most of those taking part in the show will have a better grasp of this than is apparent on camera. They know that failure is not something to fear. They know there are other options, other places to work.

So here it is important to stress that there is a fundamental difference between an entrepreneur and a manager . They are often contrasting people and it’s crucial to realise this. Although I’m sure there are entrepreneurs who could make good managers, my advice would be: don’t try to do both.

Entrepreneurs have the dynamism to get something started. They view the world differently from other people. They create opportunity that others don’t necessarily see and have the guts to give it a go. Yet an entrepreneur is not necessarily good at the nuts and bolts of running a business. I admit that this is not my true forte — and recognising this weakness is essential for the entrepreneur. The annals of business are littered with stories of the driving force trying to run the business on a day-to-day level — and failing dreadfully.

Good managers are worth their weight in gold. People with the acute psychological know-how to smoothly organise and handle the pressures of an ongoing business venture are the glue that binds the business world. My notebooks are full of contacts and names of people who have been recommended or whom we seek out to come and be Virgin business managers. Cherish them, and give them a proper stake in the business, because they deserve a big share of any success. Once the entrepreneur has the company up and running, they often need to pass the baton on to the manager. The creator’s job is to find someone with expertise who understands the vision and is prepared to follow the path.

The entrepreneur’s job is effectively to put themselves out of a job each time the new company is up and running. Then they can step aside and free themselves up to be entrepreneurial in a different business. It is generally asking for trouble for an entrepreneur to stick around for too long, trying to cover both roles.

In a small business, you can be both the entrepreneur and the manager while you are getting it going. But you need to know and understand everything about that business. And I really mean everything. An emerging entrepreneur should sign every cheque. Examine every invoice, and you’ll soon appreciate where your money is going. Even in a big business like the Virgin Group, I sit down now and again and sign every single cheque that goes out, and I ask my managing directors to do the same. For a month. Sign everything for a month every six months and suddenly you’re asking: ‘What on earth is this for?’ You’ll be able to cut out unnecessary expenditure quite dramatically when you do that.

As a small-business person, you must immerse yourself 100 per cent in everything and learn about the ins and outs of every single department. As you get bigger, you will be able to delegate, and when people come to you with their problems, they’ll be surprised how knowledgeable you are and how much practical advice you can offer. The reason you’re knowledgeable is because in the early days of the business, you learned all about it. This is how business leadership is achieved. There are no short cuts. Remember my earlier description of Brett Godfrey at Virgin Blue who insists that all of their senior managers spend time doing the different manual jobs like luggage loading. (I needed a physical after my stint!)