Look your customer in the eye
By David Thornton, chairman, The Window Company (Contracts).
I couldn’t agree more with Danny Williams’ comments on the reasons why Private Equity always seems to fail in this industry (Rear View May issue).
He is right that once you lose the essential personal involvement of the people who made the businesses investable in the first place, you are fighting a losing battle.
We all know this is a business based on relationships and trust, and nothing matters more than being able to look your customer or supplier in the eye when you sign an agreement with them or shake a hand and know that you and they will take it personally if things don’t go to plan. We certainly never sign up with new suppliers until we’ve visited their premises and met their leadership team.
It’s about integrity and reputation as much as it is about money – and I think that’s what Danny means when he says customer relationships count even more in this sector than they do in most.
The only area where I would probably take issue with him is when he says that many of the successful entrepreneurs who have sold out to PE have used a ‘seat of their pants’ approach rather than ‘sound business practices’.
We do ourselves a disservice if we think the two are mutually exclusive. We can arguably define ‘seat of their pants’ as being flexible, responsive and adaptable and that is surely what characterises all the best suppliers – in addition to sound business practices.
Entrepreneurs will always be the lifeblood of this industry, and they still have plenty to teach the anonymous PE figures who have presided over more than their fair share of failure.