HE'S one of the "sharks" on the hit show Shark Tank and Dr Glen Richards deals with startups and scale-ups on a daily basis and he's in a position to know who might succeed, but definitely knows when someone will fail.
"Don't ever lose your passion because once you lose your passion you meet the end of your business. You've got to be passionate every single day because that mojo helps carry the company along on the journey," Richards says.
As the founder and former CEO of Greencross, Richards was responsible for driving the Brisbane company to become a multi-million dollar integrated pet care empire which now operates more than 160 veterinary hospitals and 230 stores under the brand names Petbarn and City Farmers in Australia and New Zealand.
Since moving from an executive role, Richards is now a professional investor and mentor, as well as being on the board of ASX-listed companies Greencross, 1300Smiles and Regeneus.
Business News Australia spoke with Glen Richards who is our breakfast guest speaker in Brisbane on 2 August, and he says the key to securing investment lies in the entrepreneur's passion for their business and understanding of their industry.
What type of investor are you?
I would prefer to think myself a bit more of a scale-up kind of investor, where there's some sales already coming through, they've reached a certain point in the life stage of a business and I help give it a turbo charge to take it to the next level.
What do you look for in a business idea as an investor? Is it a unique idea or product, the people themselves, what are the common threads you're looking for?
"I want to see a few things. I want to see that they completely understand the market and they've already engaged with potential customers so they know that their product or service is relevant to the market place."
I see it a lot where it's a great idea but in actual fact their price point might be wrong or the need is not great enough that people will change whatever they're already doing.
They have to have done a bit of work around the potentiality that customers will want to engage with the product or service and demonstrate that to me.They have to put their time into some financial forecast to show me what the future might look like and if they can't do that then, if I like the idea, then 'good'. I'll put my own resources into it to develop some financial forecast to try to predict where the future might go if they're moderately successful.
"So, passion, focus and financial forecasting is what I'm looking for."
If you go ahead and decide you're going to invest, what do you expect in return in terms of revenue and do you expect regular updates?
I have 26 investments out there at the moment, and 11 of them are in early stage startup space. We have a financial road map that we create alongside a business plan and we have monthly chats and we hold, to some degree, a blow torch to the entrepreneurs.
It's to some degree of giving them a damn hard push to pave a financial road map, that's where we are going, so what do you have to do on the execution side to deliver those sorts of numbers?
My job is to be sort of like a coach as well as a mentor for businesses to give them a push and make sure they are doing the hard work often with their very limited resources. Those resources are time and money and it's about making sure they put in that time and money on the right things to generate and deliver that financial road map.
Is there any particular industry or business which is ripe for disruption right now?
The scale-up stage I'm in is very much health and allied health. Now I'm in five separate health and allied health start-up businesses, which are similar models to Greencross but with a lot more discipline, a lot more rigour. I guess that's because I've had a similar journey in the past, learnt from my mistakes and am bringing some experience and know-how to those companies.
So, I'm currently an investor, shareholder and director of podiatry businesses, GP clinics, private day hospitals, dental clinics. Obviously, I still continue with the Greencross journey as a director and shareholder so that cross-pollination across all those businesses is really useful.
All those experiences connected to those companies and in the board room is valuable as well as being able to mentor the drivers of each of those businesses and CEO's. The aim is to give them the right support and advice based on what I did well, and what I did badly and put my opinions forward but to keep reminding them, 'these are my opinions', you still have to work it out for yourself so don't just follow what I say, reflect on it and work out how you can do it better.
So a hypothetical, you've got a wannabe entrepreneur in your office and you've given them two minutes. What do you tell them?
I make sure I understand the vision they're trying to achieve. What's the big vision of where you're trying to get to, tell me about the plan you developed and the financial and operational road map that's going to deliver that big vision in five or 10 years.
"Absolutely be patient, what really bothers me about a lot of startups is they want to be incredibly wealthy in the next one to two years."
What's wrong with thinking about evolving a business over the next five, 10 or even 20 years. That sustained effort of time and effort is so powerful in business.
Absolutely look after the people, look after your customers 'cause that's got to be your focus. But the people you bring on the journey, both customer and employee, make sure that you're checking in with them all the way along the journey so that you're not making rookie mistakes and missing really obvious feedback that comes out of your frontline and comes out of your employees and your customer base.
And don't ever lose your passion because once you lose your passion you meet the end of the business. So, you've got to be passionate every single day because that mojo helps carry the company along on the journey.
Read previous articles here for Dr Glen Richards' views on everything from private equity to IPOs and politics:
- Good old-fashion business still relevant
- The clock is ticking, time to act
- Should you ever whack-a-mole?
- How I pick tech companies
- Bringing an idea to life
Business News Australia
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