Shalini Khemka CBE on the importance of networking

The chair of E2E on why it’s important for entrepreneurs to keep an open dialogue

One of the things I’m really focused on is that we’ve got to be out there and not sitting behind a screen, especially post-Covid.

Besides, networking gives so many benefits. For instance, we live in a world where there’s always a route to market and that’s partly why a lot of entrepreneurs talk about experimentation: it’s important to learn what works and what doesn’t.

Business is about execution, marketing, getting the funding in, and tenacity. Some people know how to build large businesses, and some are better at running smaller organisations. The good news is we can all learn from one another.

Why is experimentation so important? Those who explore differing products, services and strategies do well, because they’re flexible and recognise that the world can change.  But the fact remains that some entrepreneurs have a tendency to procrastinate and are quite stubborn as individuals: it goes back to being surrounded by the right people.

You have to have a good community to talk to – and that’s what we’re trying to do. It’s that understanding that we’re all wired slightly differently, and so you’ll always get a fresh viewpoint.

The benefits of networking can show also in simple things. You might be doing a legal contract – in which case talking to the right lawyer is important. In my career I’ve often witness first-hand that the right legal advice – a small tweak in one clause in a particular contract – can make a massive difference. If you stay insular and stick with the same person you’ve always known, you might not be getting the breadth of advice you need.

Another example is that by listening to the right corporate finance boutiques some businesses have been able to raise their sales price by 20 to 30 per cent. If they’ve experimented in the market they’ve managed to get a better price and better knowledge about how to exit.

When it comes to selling, it’s about clarity and being honest with yourself as to whether it’s the right time to make that move. You have to ask yourself if you were to continue where could you take the business? You also need to be honest about whether you have the financing to do what you want to do, and whether you can get outside finance.

Sometimes it’s worth riding that wave and take your company to the next level. But again, those issues can often crystallise when we have the right network around us.

I find myself advising more companies at the moment. There is a lack of certainty around taxes and especially capital gains tax: due to the regulatory landscape it might be more prudent to sell sooner rather than later. We’ve gone from 20 per cent to 24 per cent for bigger business, and from ten to 18 per cent for smaller – and I think it’s going to keep going up.

The message which the government is sending is: “The UK isn’t a good place to be wealthy.” A lot of our members are thinking about ways to go offshore and they’re already moving to Dubai and Saudi Arabia. With Trump coming in, I suspect many will move to America too.

On the question of outside investment, I’m very fortunate as I have amazing investors. They have more confidence in me than I have in myself. If you can do it through organic growth it might take a few years longer, but it’s a lot more straightforward journey on your own. If you’ve got a good enough product you should be able to sell it, and if you can sell it you should be able to make money.

However, there are pitfalls to taking outside investment. It can be quite dangerous, as you end up thinking you have more money than you actually do: you have to know if your product is selling. One thing a start-up founder has to know is that their product is desirable and that the pricing is right. I remember talking to Gerry Ford, the founder of Caffe Nero. He started his first shop in South Kensington and he didn’t open his second one until he knew the first one was making money, and that it was fully funded.

I’m a believer in going back to basics: don’t raise money if you’re not sure you can sell. Outside investment changes the dynamics and it changes you as a person: there’s a different level of stress you go though when you have external funders. You’ve got other people’s money in your hands: it can be romantic at the beginning, but it’s a big psychological shift which entrepreneurs shouldn’t underestimate.

I would say it’s a good idea to accept money only once you’ve proven to yourself that you can sell – then you can go to other jurisdictions, with other products. Above all, build your networks – they’ll be there for you every step of your business journey.