In this episode, Rob went to the home of the founder of Poundland, Steve Smith. He set up Poundland in April of 1990, worked in market stools from the age of 2 and in 10 years, he built a business from zero and sold it for 72 million pounds and today Rob and Steve dive into what it takes to be successful business owner. Discover how to start, scale and exit your business? How to sell products for a pound and make a huge profit? Additionally hear the insider story of how Steve sold Poundland and what he’s doing now in the world of business.
How do you learn when you want to figure something out? I never read the instructions. I always try and figure it out without reading instructions. If it is something in business that I need help with then because I am into people I know. I just pick up the phone…
How did you invest the money that your dad loaned you to start the company? The first thing was we had an office to work from. Get the products in... We didn't need to spend any money on marketing because we have a lay of customers coming past the door. Because the products were really good, people would tell people. And as we were opening shop after shop, the important thing was the buying power. As the buying power came on, it's allowed us to do lots more with the product. So as soon as our turnover way 10 million pounds, we was importing which allowed us to get better buy products to make a little bit more margin.
After your initial finance from your dad, did you borrow external money or was it funded through profit and cash flow of the business? It was all through cash flow in the business. The bank oddly loaned very little loaned us. So from the initial loan from my father, we grew everything, give it to cash flow. As we got better, landlords started giving us rent-free. We can open another store for less cash. So opened shop after shop. As we got bigger, Dave started working more on the shop side and I worked on the distribution on the supply chain and on the finance side. I spent so much time on systems. Our systems are fantastic. Always remember, KPMG came in to see us and said, "God, the top supermarkets would love your software..." So, from me and Trace in an office 1990 to employing almost 6000 people.
Can you remember what the rough average margin was at the point maybe of selling that you sell for a pound, can you remember the margins on those? So, it's all about something that we created. Because always remember, everybody keeps saying you need more margin. And for me, it's not just about the margin, it's about the margin, it's about the margin, we come over the phone, come with the margin right to sale. Example, imagine we selling 4 package roll for a pound and let's say it costs us 50p, the 60p, we can sell 6. And they'll still be selling hundreds, you sell thousands of pack of 6, I make more money. I always press on value.
Can you remember the best advice that you ever got? There are no by-products only bad prices.
When the business was sold. How do you feel right then? It was like somebody has died in the family. So it was like somebody's died in the business and you never think about the money when you're growing a business, the money is always, yes it is what you are doing at the end of the day. The end result but as long as you are enjoying doing what you're doing, the money normally follows.
Do you regret then selling? It would have been nice to see that business go through from 200 million to off a billion to a billion... What you regret is the people, working with the people. You miss working the people and the life that you have along with the journey.
In intensive care and you think you've got 2 and half hours or whatever to live, in addition to what you said, what else goes through your head? any regrets? It is very difficult when you got 2 hours to live and your family and children are 8 hours away.
Can you remember any bad advice that you have been given? I was remembering working in the market store, where everybody says, we're as crazy on the pricing. As we give a good vibe for money. And as so are you crazy working to achieve, you should put your price up and what we did, we think maybe we're wrong, and that maybe we should listen to him, and we put our prices up. And the first week, turnover, same turnover. Make double the amounts of money and really cough it. We're wrong. And second week, the turnover came down. The third week, came down. The fourth week, docked out the four. And it took us probably 8 months to get our customer flow back. Because people come, they buy off here. They just buy cause they are there but they don't come back.
Why were you so keen to get store after store after store after store after store? Why didn't get to 5 or 10 and say that's enough for me? I used to love buying. Buying is all about buying power. And if you get more buying power, you can do more.
Poundland, what would you say is or was unique about it? The concept. It's obviously unique that's everything is 1 pound because customer used to come into the shop and use to say, "I can't believe everything's a pound." And that is the question that drove the staff mad. And because we give such great value.
How is business different now to the 90s? My wife still doesn’t let me have a day off... So, we've really been looking since I've sold Poundland for the next billion-pound business. Mobile payments is one. Another thing is recruitment. We do financial and banking. And we involved with Max Time which is time intended systems, so you put your finger in. It is something we developed in Poundland.
Disruptive entrepreneur, what does that mean to you? If you take mobile payments, everybody used to do cash and credit cards. With mobile payments, we can totally change the way people pay for things. So, for me, I find that as disruptive.
And were you driven by just what you want to achieve or were you to some degree driven by proven people wrong? Did you like proving people wrong? I don't think about proving people wrong. I just know if it's doable then we do it... It was about the people that we got around. I believe that the people around us can do it... But I do love to look at out of the box and think how can we do things differently.
How do you juggle with these different businesses? We're involved with 16 businesses as of the moment. And it is really important that the people that you work with and the people running the business that you support them. Call them and they're there anytime time for them to pick up the phone and talk to you...
"If you've got an idea before you do it yourself, go on work for something."
"You're only as good as what you know. Contacts are so important. You might not do business now but sometime in your life, if you think a person's good, you gonna do business with them. I'm doing business now with people give me a card 15 20 years ago."
"At that time, I used to just been used to leading, making decisions everyday. It is hard to let go. Let go of your baby. But I decided to sell it."
“The money allows you to do things, but I think life is about experiences. The money allows you to more experiences. The things that you remember most are the things that didn't cost much money. The things when you're growing your businesses. The things that you laugh about.”
"For a pound, it must be rubbish. It must be seconds. People can't believe what we sold."
"What you find, if you got the right team in place, you got the right idea, you got the right contacts, you don't take much money to set things up."
"It was all about proving wrong and proving the concept. And it once we proved the concept then include the business and then sold it."
“It's all about the contacts you build.”
ABOUT THE GUEST
Steve Smith was a market stall trader at the age of 2. He became a multi-millionaire by the time he was 30 years old. As a toddler, he was brought to his father's stall in the Bilston market. He started to earn his pocket money at the age of 10. Then, he set-up his first bargain goods store when he was just 17 years old. He founded Poundland which became an empire. Then he sold it for $74.2 million in 2002. He went into real estate and bought and sold nearly 100 properties over the last few years. He then launched EstatesDirect, an online property agents website. It happened in 2013 with Darren Richards and Ben Groves. His business did not stop there. He launched poundshop.com where you can buy everything for a pound. He did this for his children. From humble beginnings to now a multi-millionaire!
ABOUT THE HOST
Rob Moore is an author of 9 business books, 5 UK bestsellers, holds 3 world records for public speaking, entrepreneur, property investor, and property educator. Author of the global bestseller “Life Leverage” Host of UK’s No.1 business podcast “The Disruptive Entrepreneur”
Rob’s official website: https://robmoore.com/