Sir Richard Branson, that dashing English visionary with a seemingly voracious appetite for launching new ventures, saw his entrepreneurial skills begin early, as publisher of a student magazine when he was just 16.. Branson did not graduate college but in 1970 his now famous ‘Virgin’ brand had its start as a discount records direct mail business.
Virgin Records was sold to Thorn EMI for one billion dollars in 1992, but today Sir Richard’s internationally recognized brand is splashed across everything from credit cards, to airlines, soft drinks, mobile phones, music “megastores” and futuristic space tourism.
Sir Richard is continuously seeking new business opportunities and loves a good challenge, especially when he enters a market that is dominated by a relatively few big players.
In this month’s Entrepreneur Sir Richard shares his secret for evaluating new opportunities, the “Art of Calculated Risk”, and how you can apply it to your business –
Branson: To many people, the number and variety of businesses that the Virgin Group operates is unusual: We’re involved in everything from music to railways to alternative-fuel development. People often ask me to explain the rationale for our group’s approach, especially how we decide which sectors and countries to invest in. It comes down to our distinct approach to risk.
In life, it’s better to stick to a few simple values and aims; the same holds true for business. One guideline that we rely on is that if a new business has the potential to damage your brand in any way, you should not invest in it.
At Virgin, when we assess new businesses, our first step is to submit every business idea to our “brand test.” We are constantly presented with new and exciting opportunities that might make a lot of money, but if they fail the brand test, we always politely decline and move on. For example, we wouldn’t start a cigarette company or a defense contracting business. After all, life is short – we want to enjoy the experience.
Two related guidelines are deeply linked. We think that there is little point in entering a new market unless it provides the opportunity to really shake up an industry. Almost all our new ventures come about from our thinking up a product or service that we believe people really want. Then, if our entry has the potential to make waves, we’re going to look at it very closely.
You’ll notice that making a profit hasn’t entered the picture yet. It’s rare for me or the team to consider only the money that can be made. I feel it’s pointless to approach investing with the question, “How can I make lots of money? We must bring in the numbers guys and work out some business plans.” No one will ever agree on exactly how to make money. The consultants will say your idea will work, while the accountants will prove that it cannot.
When it’s time to decide whether or not to go ahead, the decision must come from your heart. If you must pursue your passions, your ideas will be more likely to succeed.