The leadership lessons of Theo Paphitis

Theo Paphitis

The serial investor has a well-earned reputation for seeing potential in ailing brands and putting them back on track. In an exclusive interview, he shares what he’s learnt from these turnarounds, his time in Dragons’ Den and leading in the ‘barking mad’ world of football

Business is all about common sense. My earliest entrepreneurial experience came at 14, when I ran my school’s tuck shop. I loved the logic of it. At the time I didn’t even realise that I was doing business – it was just a few simple challenges: buy goods and sell them for more, maintain cash flow, secure customers and make a profit. It’s no different with the multi-million-pound companies I run today.

I’d rather back an average business with good leaders than a good business with poor leaders. I’ve made lots of successful investments inside and outside Dragons’ Den. All of these firms have the same ingredients: people who’ve done their homework and understand their business; people who have a passion for what they do and the will to succeed.

The customer comes second. When I bought [lingerie retailer] Contessa, I brought everyone in the company together in an auditorium and asked: “Who are the most important people in this business?” Their first response was “our customers”. I told them that they were the most important people, because they were running a £100 million business. If I could make them happy, I said, they would take care of the customers.

Not all businesses can be saved. My golden rule for turning around a company is: find the right one. Some have passed their sell-by date and others have no reason to exist. I like to think I chose well. In the early 1990s, at the time I bought Ryman, the paperless office was starting and Mr Sugar was selling his Amstrad computers by the bucketload. There was no longer a requirement for stationery – or so investors thought. I was very comfortable with where I saw the business going. Nobody else wanted it, so I was able to buy it.

Invest in a venture as if you’re going to own it forever. Buying a company halfheartedly is a bit like going in for a weak tackle when you’re playing football: you’ll get hurt. You might need to hang on to the business for years. This is a massively challenging time for retailers. It’s unprecedented in my lifetime – irrespective of what some politicians might say – but we are still investing. It is incredibly painful to be investing in retail right now, but we still are, because I’m pretty sure that those businesses that aren’t spending money will soon be gone.

I don’t have an exit strategy in mind when I acquire a business. Venture capitalists will probably gasp at that, but I don’t have one simply because I don’t want one. I do what I do because I enjoy it. If I weren’t having a good time, I’d sell the lot and go and sit on the beach. But there is a logic to not thinking about your exit at the start: if you nurture a business and grow it, you might not have to hang on to it forever because someone will want to take it off your hands.

I’ve taken a lot of good advice over the years, but all the best tips have concerned cash. Ensure that you have enough. A lack of profit is like a cancer for a business – it kills it off slowly – but a lack of cash is like a heart attack. If you can’t pay the bills at the end of the month, it doesn’t matter if your firm has potential. It will fail.

Never stop trying new things. When I discovered Twitter, I couldn’t believe I could reach so many people so quickly. I had an idea to share my followers with small businesses every Sunday evening and ask entrepreneurs to send me tweets about their firms, offering to retweet my favourite one. I was inundated, so I chose six. The same thing happened the next Sunday and soon I had people working on it. We created a website and an annual event. Small Business Sunday has grown from that simple experiment.

It’s never one single thing that gets a business in trouble. It’s usually a combination of ingredients, so it’s important to identify all of them. For a clear picture, be honest about your sources of feedback. It’s no good seeking out people who’ll tell you that everything is great. My ideal source of information is the disgruntled customer who’s complaining.

Running a football club helped me to become the leader I am today. The business is absolutely barking mad, but I had an amazing time as chairman of Millwall FC. I wouldn’t have changed that for the world. It’s up there with the other major business experiences I’ve had. I learnt nothing about commerce whatsoever there – absolute zero – but I did learn a whole load more about people.

Theodoros Paphitis moved to the UK from his native Cyprus as a child. A dyslexia sufferer, he left school at 16 with no qualifications for a job as a clerk with an insurance broker. After stints selling watches and then mortgages, he started a property finance business that earned him enough money to buy mobile phone supplier NAG Telecom, which had concessions in Ryman shops. He rescued the stationer from the receivers in 1995 and earned a reputation as a turnaround expert when he acquired other struggling retailers, including Stationery Box and La Senza. After chairing Millwall FC for eight years from 1997, he became a mainstay of Dragons’ Den until 2012. Today he still chairs Ryman and also owns Robert Dyas and Boux Avenue

About author

Dan Matthews

Dan Matthews

Dan Matthews is a freelance journalist and author working for titles including the Telegraph, Forbes and the Guardian. He is the founding editor of the business thought leadership website His interview credits range from William Hague to Joanna Lumley via Will Gompertz.

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