Episode 205: Opportunities and Meaningful Relationships with Phil Smith
A young lad with enormous determination, it was not having the fear of taking risks that gave our guest in this episode the edge in the hairstyling business. Phil Smith, started in the business franchising his first Toni & Guy Salon at the age of 23 armed with a lot of courage and a couple of bank loans. Through the years, what made Phil successful is his ability to see opportunities and create meaningful relationships. In this episode, Adam Stott has Phil Smith talk about franchising, mentorship, opportunities, and transitioning from a Toni & Guy franchisee to producing hair products. Listen to learn more about his journey!
Phil Smith is the owner and creator of Phil Smith Be Gorgeous hair products and recipient of numerous hairdressing awards in the UK. Phil was once the top franchisee of Toni & Guy until he decided to keep just one franchise that is still being run by his wife.
Show Highlights:
- Why it was a case of being ‘in the right place, at the right time’ when Phil Smith was trying to start his first salon
- Phil Smith’s experience in opening his first Toni & Guy franchise
- On meeting Toni Mascola and how did he become Phil’s mentor and father-figure
- The challenges of opening a franchise at the age of 23
- How Phil was able to use risk and opportunities to his advantage
- The celebrities that Phil was able to meet through the years of hairstyling
- How does franchising compare when Phil was still active to today
- Riding the opportunities that the hairdressing industry is giving him
- The impetus of deciding to leave the franchising business and venture into the Phil Smith Be Gorgeous products
Links Mentioned:
Big Business Events Members Network
Phil Smith Be Gorgeous
Transcript:
Please note this is a verbatim transcription from the original audio and therefore may include some minor grammatical errors.
Adam Stott:
Welcome to business growth secrets with Adam Stott and Phil Smith. I’m super excited to be welcoming Phil on he’s going to be an amazing guest. He’s somebody that’s really traveled business in a fantastic way, where he started off his business career as a franchise owner, taking a franchise 01:16 before going on to become one of their most successful franchisees getting up to 28 franchises.
What an amazing business journey, somebody who’s been through so many different types of business which is why I’m really interested to have this chat. Also he’s recently had his product range. Phil Smith be gorgeous launched in multiple supermarkets, I mean they’re very well. I’ve bought the product recently myself, and I can highly recommend it so I’m going to have a quick chat with Phil today, and we’re going to explore that business journey and really get to know an awesome golden nugget sound.
So welcome Phil, how you doing buddy? You good?
Phil Smith:
I’m good, thank you very much for having me on, sir. Pleasure to be here and I hope I can tell you the story.
Adam Stott:
Well, I’m sure you can. So as we were talking, 02:02 a good chat backstage before we jumped on today’s podcast, you were sending me a lot about your story and I found it really fascinating that you started your business as a business franchise owner, and you know that you said that it almost kind of happened by accident so you tell us a little bit about that and what like going into that business so I can get rid of it understanding.
Phil Smith:
It was a case of right place at the right time. I’ve always been, you know, fairly lucky in what I do, what I think maybe most people are lucky, is how you ride your luck determines your future. But I’m just looking at my own shot, I was the age of 21/22, and I’d witnessed a couple of people in my hometown 02:42 they’re done really well out of owning address and sell. You know that they had courses and swimming pools in their garden and that blew me away that was achievable through 02:52 didn’t know that was possible before.
Adam Stott:
02:57 So this was a 21 or 22.
Phil Smith:
Yeah, 20 or 21. I was working for a really successful guy and 03:03 at the time, and he had those trappings you know he had a brand new Porsche. I just remember thinking, well, it blew me away, actually. From a very young age and I started working with him I was about 19.
So from a young age I always had this, I want more. I want to succeed in business, and it was him that instilled that into me.
So I tried to my own shop on Guilford High Street and this was what we had a recession in the late 80s, early 90s. So this was off the back of that, and every landlord that looks at my sort of CV background or credentials or covenant. There’s no chance I’m going to let him take a lease on my shop. The one that came, super close was I needed to come up with a five year rent deposit. It was 25 grand a year and he also wanted either myself or my parents to guarantee the rent for the next five years. Now, nowadays you take a 10 year lease with a five year break in most days it’s like a 10, 15, 20 year at least 04:05.
Phil Smith:
I hit the ground, head first. It was disastrous it wouldn’t even kick off, but a good friend of mine that just opened Tony. 04:12 I think it was the second or third 04:15 you know fairly well known Harrison brand in the late 80s, certainly within the trade. We knew them well but from the public’s point of view, maybe not so well known. They were certainly on a mission where they wanted to open, you know 50 to 100 salons overnight.
So he introduced me to Tony 04:34and I did my meeting and my tests, and so on. And we identified a small city in Salzburg, as the next Tony 04:44 so and to open. They’re already done like the 25 area, Richmond, Rockford, Tunbridge Wells, Guilford, Brighton, but they wanted to go north or they wanted to go south, southwest. So 04:56 was like, next to a big city down from Guilford that can hold this.
And so I was shocked, I was always a little bit skeptical because I knew the population of Salzburg was you know, fairly small I came from Guilford which was 100,000 people. Tunbridge Wells were doing fairly well and they had the same sort of level of population. Richmond was flying, they had a much bigger population as a source we had a population of about 35,000.
So I thought if anything’s gonna fail it’s going to be because of that, but I didn’t speak out now. And I was too young to have an opinion, but that was in the back of my head, but you didn’t I mean I was just delighted to be having the chance.
Adam Stott:
05:31 to get again.
Phil Smith:
So I remember trying to raise the money for this thing, so the government had a thing called small firms guarantee scheme. I needed around 150,000 to open the shop. I mean even to in today’s money that’s, you know, a significant amount of money, but in back in the 1990s, early 90s years about 05:48 .So I remember my parents, and that they weren’t wealthy by any means but they lent me 30,000 pounds. But it wasn’t a gift, it was a loan, and my dad stressed I need this back so I need it back as soon as possible. This is my retirement money, so they let the 30,000 pounds I needed to get the 120,000 pound loan.
Adam Stott:
And they say you were 22?
Phil Smith:
22, so yeah, I’ve been 06:12 23, so a couple months after my 23rd birthday, and so on.
Adam Stott:
06:17 at this stage, that is a huge risk, right, to be fair, if you’re talking the 90s, 150,000 pound in the 90s I mean I don’t know what it was, 06:29
Phil Smith:
06:30 You were doing something. I know it sounds quite ballsy but you were doing something, you know Tony got sound looked amazing. No one else was doing anything like they weren’t professional shoppers coming yet all these marble, workstations beautiful ceramic tiles.
There was special new going to get something well, and up until I opened, everybody was sort of doing well, you know, Guilford was down well. Richmond was flying, everyone was doing okay. But then along came Saulsbury and it bonds you know it was a disaster. Again I wasn’t so okay with business. I didn’t I sort of knew it, and I knew that if you bring in that and you spend that much you’re gonna be there for that much.
I just got caught up in the whole war machine of 07:17. I think it’s five or six months in I’ve got my first sort of profit and loss accounts through. The bottom line figure was showing 15000 and some odd pounds, but it was in brackets and I didn’t understand what the brackets. I thought it was profit, then it was just hopefully display profits, and I asked myself well where is this problem, where is that 15 grand because it’s certainly not in my bank account.
Phil Smith:
So I started reading books about P&Ls and to try and make sense of it. Within two weeks, so we can have that profit loss coming in, obviously my bank manager got sight of it as well. He said, basically, the on this trend, sort of a new running, you’re going to be out of business by Christmas. We’re gonna foreclose on you a couple months prior to that, to make sure that the bank gets some of their money back, which scares the living daylights out of me.
Honestly, I knew at that point, you know what everyone’s gonna have to work hard on this, because for the sole reason that my parents needed their money back. I couldn’t let this fail and so I really sort of went into not panic mode but you know I’m really studied how many heads pay we kind of want to pretend. How much sugar we had to buy wasn’t the case of buying things on a monthly basis. I mean what without almost buying daily, where you buy a pint of milk and by God you made that pint of milk last day for clients teas and coffees. I’d make sure that lights were turned off in that staff room.
Adam Stott:
08:38 in the hard knocks based 08:41
Phil Smith:
Absolutely, like passed with flying colors out degree if there was one in hard knocks. But the one I did know classic coming in they were happy. It’s not like we were losing clients who were doing things bad, but new things about watches put it down to the fact that we didn’t have enough people coming in. It was that simple, there wasn’t enough people 09:00 because the shopping 09:01 looked amazing responses far and wide, the best looking hair salon.
The brand is starting to grow a little bit. By this point was 10, 11, 12 salons, tell you guys were advertising in Mary Claire, Vogue, Health magazine. So the brand was getting traction and that’s one of the best things about the franchise is all that is take care you know, I would never have had a clue how to do the PR marketing for myself.
Phil Smith:
So I think you know from a young point of view in franchising is a fantastic way to get an intro into a business, so I was still a year and a bit in now, and we’re going to see Tony Mascolo, and I became good friends with him you know he was like a second father to me.
And I said, I’ve got this thing in my head about if I could open another shop in 09:47 that had 110,000 population, good student population as well. I said I think I can prove that my theory is correct and if not, I think he would do three times.
Turnover, the 10:00 and therefore, it would actually be a tool to keep stores reopen until we get into profit. Tony said and looked at me and smiled and Eddie in his lovely little soft Italian voice he said you’re a fast learner. He said, look, you’ve lost so much money so far I can’t let you go any deeper. So he actually 10:18 and he said that if you can get the money together, you can do the shop. So I remember going to like Tesco’s, Marks and Spencer’s Lombard anywhere where you get leaflets until 10:30 they’re borrowed six grand here, seven grand there.
Adam Stott:
10:34 at this stage because I’m really enjoying the story but, you know, in terms of the lessons here, one of the things that I say to our clients you take out risks. You certainly take out opportunity and say that you know you need to get until we finance, these things I was this quite natural to you. What was going through your mind? Did you ever have some stages where you’re like, oh my god, did you just think the.. 10:59
Phil Smith:
11:00 opposite nowadays but I had no 23, 24 years old, and I just knew that if this done completely disastrously wrong. I’ve got plenty of time to bounce back. But I still was well aware that I owe my parents 30 grand that they could not afford to lose that sort of money, so that was my pressure in the background.
So I managed to raise all these fraudulent loans by saying that I needed the kitchen doing my home. I didn’t even have a home for five months. By car so anyway I amassed about 65,000 pounds, and I opened tightening 11:35 is a great city and it should have been done much better in the early days but that’s how I did it.
Phil Smith:
Sure enough, from day one, it was a huge success, but it turned over three times one source returned over a day one. You can always draw a graph and the graph slice will run in parallel with each other, from day one, week one, month one and so on. Like I said it then survived and kept 12:02 alive and taking over. Of course, in my edge, I got my theories, right. So, first time you got franchisee tattoo shops and totally I mean let me have to because I was in dire straits, I was going to go bankrupt. Before we’ve got going really, so I was the first to get to.
I went back and said look you know, what sorcery here got 12:24 which is just north of Saulsbury. I could do this perfect triangle shops, I can feed the staff because in Perth, we have some great stuff. But a lot of pages that one’s come and work with us, because Tony guy was on an upward trajectory now. So he looked at again and he said well you can do it but you have to bring in a business partner, you can’t run through shops yourself. You just got yourself out general.
Adam Stott:
Would you say he was a mentor to you in some ways?
Phil Smith:
Oh yeah without shadow of doubt, huge I mentor my whole life.
Adam Stott:
12:54 you know I’ve never really heard much about obviously know the brand, big brands.
Phil Smith:
13:00 no longer with us, he passed a few years ago now, but yeah. Do you know what he spoke, other times he would give you nuggets of advice. Now you’re completely off the scale. 13:11 has gotten older, wisdom kicks in. So the man has been every single thing he taught me, and he taught me an awful lot and very blessed that I have to spend time with him, but I also knew that he was good at what he did and I was not good and I would try and get as much time as I could.
Adam Stott:
A lot of people don’t do that, right. It sounds like a very hungry man, very young.
Phil Smith:
I used to see opportunities what one of the things that blew me away from a younger point of view when I was with John Carney Guilford working. He used to cut Phil Collins hair, and that’s it there’s sort of a heightened Phil Collins fame if you like he just done live a few years ago, but he had. But seriously, was now just bought out, you probably too young to know that but it was a great album 13:56 and I was blown away by this whole celebrity thing.
So when I first moved to Salt Berry, staying in his wife Judy, they had bought a house just outside of Salt Springs sort of north of Salt Lake Country state. And I just wrote a letter saying if you needed any help with hair or 14:13 I had nothing but a couple months later they got married, or they were getting married, and they invited me along to do all their guests for their wedding.
I had a team of about 10 people that day we were looking after so many people. And then, then became you know good friends was thinking through over the years and was a regular doing their hair two, three times a week, blow drying hair for work. And again, it’s an opportunity, why did that I don’t know. It was the same Elizabeth Hurley move just outside of 14:46. We wrote her a letter and, and just things sort of worked. So why would you not do that again.
Adam Stott:
Is she an entrepreneurial spirit?
Phil Smith:
Well, you know, I think, when people describe entrepreneurs, I’m still quite humbled and that was very much wind, it’s so long my life.
Adam Stott:
Isn’t that I’ve trained, that what I do is I train business owners, I’ve trained 1000s of business owners now, and what you’re talking about is a lot of what he’s missing, a lot of time is just, to be honest, the balls to go for it and also not having the fear of rejection, or the 15:28 you can get rid of the fear of failure and 15:31 let someone, and don’t care whether it’s coming back or not and not think about it and just crack on. You know, occasionally, It’s going to come in, isn’t it? Because you 15:39 you’re going fishing enough you now think if you throw you throw your rod in and off you, you’re going to get some fish.
Phil Smith:
15:46 you’re talking about, I have experienced failure so many times, and I’ve got it wrong so many times, I’ll still get it wrong, but you don’t dwell on that, you know, you can sit back, you feel sorry for yourself 15:59. You know, you’ve got to keep going, there’s still things I want out of life now by age, you know, not such material things, but obviously my children with everything so you could get in and you keep going, get knocked down again saying is getting ready to get get back up, get back to the solid story so we got Swindon open because they had a population of 300,000 people. My little theorems working well, and it just rocketed and died, my business partner in Swindon, remember in saw five or six, and he paid cash for himself, 16:36 there was the ladies cards, and he bought himself a new box during he bought his wife, him and his wife a new house, and he was so grateful.
You know one of my favorite franchise partners, he was always thanked me and always send the case of wine every couple of weeks in which is nothing but a success story. Obviously we’re riding on the tails and tiny guy, investing huge amounts of money in their PR campaign machine, and they were winning awards now the British Fantasy was used to feature on all the morning TV programs Lorraine Kelly and Tony 17:08 always had representation in those programs.
Again, in my head, you know, we’re paying a royalty and totally games 10% of your turnover will be paid to them. I looked at the Channel Islands, and of course on Channel Island, you have no VAT, because it was classed as an overseas salon Tony said, be able to the wall sees at 5%. So, because I’m doing the math see I’ve got a lower population 60 70,000 degree guarantee that’s my first stop guarantee. And I thought, but those 60 or 70,000 people, they can’t go anywhere else. It’s like having a towel that’s half a million people on a ratio basis.
Phil Smith:
So again, that one did really well. And it just this thing kept steamrollering, and before I knew it, we had a couple of sounds in Toronto, you know we had some Canadian staff working for Saulsbury and their dream was to open TV in Canada so again I became the investor lend them the money to get the shows we buy live with the money from the bank and we open two shops in Toronto in nothing that was 1998.
It just happened really quickly thereafter as opening three and four shops, a year, there was another guy and my friend in Guilford I mentioned that he attorney by Guilford. I think totally played this off against each other, he saw this entrepreneur, no fear thing both of us. And every time I will see Tony hitting on Tim’s with enemies gonna open another shop. 18:29 he’s not going to get gold out most shops were having that friendly battle. Just go out in case he does watch this 18:39 because I think anyone that strives success or wants to do well in life, you’ve got that winning thing, you know you can’t lose second means having third means actually less than second. Got to it’s all about the width and whatever you do, that I love.
So, like I said I then had a young lady working for me at 19:02 that was from Australia, and we opened I ended up opening eight salons, with a partner in Australia, seven in Sydney and one in Melbourne, had a fantastic time. Now, in these days as a franchisee, our rents were made great shopping by paying 30,000 a year, was that same shop where hundreds 120, 130.
Phil Smith:
So, it was a right place, right time, wage costs are a lot lower, utility bills are a lot lower, business rates are a lot lower. Everything was the business model of the franchise was amazing because every person was being successful, nothing this is a really important thing for any franchise or regardless of the industry that you’re getting into, but the franchisees have to be successful for the franchise laws to make it work and sell it.
And I think the last few years the franchises I hear of where they’re not as successful as they used to be you know, they’re making maybe 10 or 15 cents more than they would as a good hairdresser. Yeah, it’s not enough anymore, you know, I think people want success, they want to drive sports cars, you get into you’re running your own business. Through passion but also because you are, I think materialistically driven in more cases than not. You want the trappings of success, you want to live in a big house, you might walk children through, you know, slightly better education, you want to holiday.
Well, regardless of what it is everyone’s different and everyone wants different things. So franchising business models have changed over the years but in those days, listen 20:34 had it, bang on they were really good.
Adam Stott:
I remember growing up that was their place, you know, there was one in Chelmsford, and I’ve you know, that was literally the place where people wanted to get their hair cut, you know, I didn’t get my hair cut. At the time, I remember being in that place, you know, my accounting there once my show I remember once you know that yeah it was amazing and I mean that journey was the during the franchise years some ups and downs, Phil, were there, you know, were they years with your badges with the franchises or generally, was it quite a smooth.
Phil Smith:
21:15 I think it was probably up until about three or four, we were just lonely, we were doing well, making great money, everyone that I was involved within business was doing well. Now there was one guy that I set up in Shrewsbury so we opened 10 21:31 and then we went on to open 21:33 Telford and he had a second sound issues but you know the 21:37 is a millionaire, he started for being part time because he did carpentry is was his main thing and he needed to earn more money so he realized hairdressing. Same with the guy in Guernsey short he was an ex pro-footballer, had a bad injury while he was at Glasgow Rangers, had a bad injury, move down south, learn hairdressing 21:57 Guernsey.
Adam Stott:
Did you want to be a hairdresser? I read there was a place 22:01
Phil Smith:
22:02 that was in the military. I didn’t want to join the army but I wanted to do something uniform base. And that just in place was similar decent career, 22:13 short and then I failed my exams than my last year of school. My last year…
Adam Stott:
You’re passionate about hairdressing, I mean how do you feel about that? Obviously we’re gonna talk about the product so we want to hear about the product story so are you actually passionate, would you say you’re passionate about hairdressing?
Phil Smith:
22:29 about the hairdressing industry, because it’s been very kind to me. I’ve taken every opportunity is thrown at me and I’ve written it. So, actually creating yeah I guess I have it was one of the things I just fell into by accident. And again, there’s this wanting to win thing, you know, I turned in guy invited me to the British Chamber of singles in 1990. And then I went again in ’91. The first one representing 1991 And I was blown away by these 22:59 war, I never really wanted anything at school, I never won anything, I saw these people with these things I thought when I began this tiny guy had all that available to us, you know, we had the use of a photographic studio, clothes, they have Vivienne Westwood clothes.
Just brilliant, we had, we could tap into, if you wanted to, we wanted to do that but I wanted to win a British Overseas award, again the first year, which will probably the worst you can look a bit cocky, 23:29 but when they get into about seven years after that, I tried it every year but 23:35 you are going to be hungry for more. 23:40 to get the second one. In those days well no still now, if you want your region three times, you will be put into this interesting Hall of Fame. And my goal was to be on this youngest person to get into the hairdressing thing which I achieved that when I got it for the first time.
Phil Smith:
So, before we had 28 Tony dice salons, And again, I’ve got this passion for hair and doing creative things and so on so forth. If I just rewind three or four years back from there, Sainsbury’s were on the hunt to do you know boots? I had the whole hair care market cornered. They had like John Frieda, Charles Wellington, Nicky Clarke and Berta Jean Eenie, 24:25 they had the corner, and I was in this thing called British hairdresser of the year so I progressed quite a bit, and I was up against people like Charles Worthington, Nicky Clarke, 24:37 and I was the only person that didn’t have one name on a product, you know, normally, to get your product range out there, you have to be either super famous, or you want great managers, which is why I was doing which is my product range.
I was approached by Sainsbury’s to say, you know, would you endorse the brand with us, and Tony and guy was a bit hesitant about this they weren’t too keen, but I said, this is natural progression from me, 25:03 in most things that I’ve done getting buying buildings and sounds to try and form a product range is my goal. I’d love to do it, and he eventually gave in and let them do it, and it was doing okay, it wasn’t setting the world on fire. And I think at one point, it’s about 09′ Sainsbury’s came to me and this was the same time where the sounds change, so go back to the second stage we said we don’t want to do as a license deal anymore. This space is now on the shelf. If you want this, you got to run it yourself so you got to buy the stock, you got to put your money where your mouth is. It’s about time we made some decent money from that.
And at that time, and we got through this banking crash, remember when all the banks were shutting down Lehman Brothers 25:48 and I had 18 salons. And the answer of what not the 18 salons all had 25, 30 grand overdraft facilities, which was just the cash flow is a small facility, but I was began to have more of those. My house is on the line. And I remember being on holiday in America with my children at the time. One of those Nokia funds, opened up and it was like a fax machine. And I’m ever getting a fax from my bank, Barclays at this point.
That’s no reason the shorts are trading capital one’s saying run fund we’re making the profits that we used to, but we weren’t saying we’re losing money, but they call it the unjust in seven days to repay. I remember looking at it between 250 and 300k and pleaded with it and this was while I was on holiday with my family. At the time, and I knew other people that were losing business left right and center.
Adam Stott:
It was incredible.
26:46 it was in Korea, I actually remember that I was in business myself at that time. It was right, and it was smaller amount me at that time.
Phil Smith:
I’m still angry at the bank’s behavior because there was a lot of great businesses that were just suck through screens you know they weren’t their assets, you know, three or four decent freeholds that I’ve managed to buy you know there’s someone’s I’ve opened up a franchisee though silence for 10 15 years. So from day one I bought the buildings as opposed to renting it. And that totally taught me that I learned from him, didn’t set out to do that and it’s just, it just made common sense to me that that’s one of the reasons I’m able to, you know.
Adam Stott:
27:27 the founder?
Phil Smith:
No I haven’t.
Adam Stott:
27:30 the founder, 27:33 the McDonald’s story?
Phil Smith:
No, 27:34 said that I’ve heard of it.
Adam Stott:
You have to go and check it out because he was Ray Kroc, yeah, turn around, similar to what you’re saying now and turns around and says, we’re not in the boat the business, we’re in the property business and we own these franchises, we’re gonna buy the land and build up and we’re gonna get this land and they and they ended up one of the most fantastic film I’m sure you love that.
Phil Smith:
Tony from Titan guy I’m sure it was well over 300 freeholds he had at one point so he did really well. I remember he bought one we were in Canada looking to for the sounds in Canada, and he got faxed through on his little Nokia fax machine, and he secure this building in New Oxford Street in central London Police Academy, and I’m not sure, you know, probably, but it was like 600,000 700,000 there’s a huge amount of money, but what is that worth now?
Adam Stott:
Millions.
Phil Smith:
Yeah, so the banks, they said you were going to foreclose if you can’t raise the money. We’ll call him and I said look at my buildings have grown in value. And they said, No, they haven’t they’ve plummeted in value over the last year that they’re worth less than half, and all our securities on for your loans on those buildings. So we now want the first charge in your house.
And yes, so I managed to talk the bank to give me 28 days to repay the jobs. And I raised the money, and I paid the overdrafts off but I vowed that I would never ever put my house on the line every I’ve got to get out this.
Adam Stott:
29:10 lesson, you know it’s an incredible story that you’re telling there’s so many business owners, but it’s different types of business I see, if you’re there’s business owners that are very risk averse, business owners that do not care about race like, honestly, I was the same as you won’t build my first business and I saw millions and millions, I’m like a million in personal guarantees one point, I just never thought I was gonna lose.
So, but you know there was times along the way that like that sounds to me you sure you should do that usually should 29:39 that this mentality of just gone for it. And, but you do think like you said you have to get sensible 29:50
Phil Smith:
When I bought my first three holdings the bath building did and it was 650,000 so huge amount of money, though, my house in those days was about 200,000 to buy a building. Again absolutely mind blowing, but one of the things I forgot all about the 30:05 and so we’ve exchanged contracts and that means that they were the day before, or two days before I got my completion statement from my lawyer. And I have my deposit it’s all ready to go, but I didn’t have a startup and it was about 25 30 grand. I don’t remember getting 30:20 no stamp duty and of course I’d already paid big deposit on the exchange.
So, I can’t walk away from so I met during my 30 minutes I don’t suppose any chance. And then he was like some no, absolutely not. I’d use that money to pay off our house. But he won’t be done I told him, and he 30:41 might this is my business, he went mad at me 30:45 because if your greed and if you’ve been wanting to either 30:50 reserve account for the 30,000 year which was my VAT on the 30:56 business, and at the VAT was due very day at that point. 31:00 I had no choice. I had to use the VAT money as the 31:03 building, which really annoyed me so I was looking forward to celebrating buying this building, but of course there was a bittersweet element to it because the day are completed on it is now in arrears with VAT which I’ve never really been in 31:18 was the first year so that was a real failure thing to me, I wasn’t happy with that at all.
It took me 14 15 months to catch up on that VAT. It was nevertheless, remember 31:31 in those days they would send people into on a monthly basis to see what you’re up to.
Adam Stott:
31:36 the same people and yeah if you ever if you aren’t on time yeah it was terrible, something that you said is really interesting, they’re really interesting that you said your dad said it was because of your great now. I don’t think that it was because of you’re great, right, 31:54 and know I know that you run through that, but I got a lot of people think that a lot of people think that it’s just about the money. When you’re a business owner, but the reality is most of the time it’s not about the money, and most of the time from the outside people, you’ve got more money than you have that money, I’d like to hear that in that moment, if you go back, what was actually about? What do you think?
Phil Smith:
32:19 I was trying to copy my mentor told me he was scared because I could see how his life was sort of panning out financially, It was because he was buying these buildings
Adam Stott:
32:30 this is the right move?
Phil Smith:
They said to me that’s the successful move you should go down because you can say you’re renting it for 30 35,000 a year for the next 15 years you live for you could actually next 50 years, no one would have bought it, it wasn’t making me any money it was constantly involved by profits suffered because of that, because I want us to go over 10 years so I actually ended up earning less because I bought that building.
So he’s great, but I think my dad, he always had this thing he said you should stop at two shops you shouldn’t go on and do more, but I’d say why, you know, why not? Why not open one? You know, as soon as I got over that 33:11 and I caught up on the VAT 14 15 months later.
The next thing I did was bought and sold the building, but did exactly the same way. I’ve got it through the skin of my teeth, used the VAT money 33:22 but I just knew I could do this it would make my business career given more longevity here. It’s just saying the right thing to do. My only regret, having the franchise, so what we’ve got about 2005, and you can see, wage costs are going up, rent costs are going up, utilities were going up everything was going up. So your turnover wasn’t, your turnover sort of plateaued you got into of course your profits are getting less and less and less, but this was why I decided to come out with that overdraft corporate, and fortunately I’ve got to get out, so I can’t live with the bank having a charge on my house. That’s the one thing I have got this if it all goes wrong. I’ve got a house and my children grow up in the house.
So I started selling off the businesses I sort of predicted back then that this whole thing is just going to get worse. So how the banks got away with what they did, how they got away with it. There was no come up, it’s still a really smart way you know nothing’s going to get easier. And sure enough, rents continue to rise over the next decade; wage cost double to I was paid.
So, I think, again, a little bit of foresight and vision I did the right thing to walk away from a business that was doing around 16 million quid a year in turnover, you know, over 600 staff, we had at one point.
Adam Stott:
It was lovely that you hadn’t cut off as well, and you lovely why because most businesses again that do that right and you add the ability to move around that sounds awesome.
Phil Smith:
Yeah. So I was fortunate in that respect that I could sort of carve it up, and you know on some shows, for example shoots me my partner shoot all my shows that was taken care of by 2010 I’ve got rid of them all, except for salt spray my wife who was operating salt spray. She wanted to keep it, and she said, you know what I’m too young to stop work, I would like to keep that she did. She kept telling me guys Saulsbury and she still runs it, to this day, it’s 30 years old this December, I’m proud of what she does she works very hard. She does make good profit there but she works really hard for that profit. Back in those days so 2010, we kept our souls we with the rest of the got the clear the job. And I breathe a huge sigh of relief, and I think that was the turning point I became risk averse because 35:46
Adam Stott:
35:47 right?
Phil Smith:
I got away with it, you know, I did 35:52 away just so they could pick those up. So I’ve gotten away with it, and I had a bit of a breather and then I went again so I managed to contract Sainsbury’s for the running of this business, 36:11 this might be gorgeous.
I knew that the chief executive Sainsbury’s fairly well. Again, opportunity, as soon as I got into 36:19 as I sent him a letter, I didn’t know who he was, by imagining the chief executive, I think that same sort of, you know, an elderly man, quite stern, I wrote a letter to him, just saying if you’re like yourself for your wife’s haircut, please give me a shout. Thank you for the opportunity to have seven products in your store. And he said we 36:39 and that’s really kind of you, why don’t you come up to our house we live in 36:43 come up and my wife Claire 36:47
Adam Stott:
36:48 again which is absolutely vital you know 36:52 the podcast is the lessons, I envy so many really fantastic people, fantastic stories, and it does come down to taking risks, building relationships, you know, relationships, writer, wasn’t it, you know, and you’ve had a relationship with this, we terminate from suddenly and God kind of changed your life for it and set you up in the right way, and I imagine that the relationship has become really important as well.
Phil Smith:
The whole sort of the amount of celebrities that I managed to get to do over the years, all came from building relationships so I started by doing press appointments in London. This was in the early 2000s, you took off to like certain business editors from magazines, TV producers from GMTV Lorraine Kelly, and we invite them. Hey can you know you weren’t coming for two, three years they’d become good friends and of course when the slot came up on 37:44 I was given that and I was 37:47 for about four years, so every other week I was on Lorraine Kelly show then. Did you know one of my clients and she remains a good friend.
Now she works in Sunday Express magazine. She invited me along to do a shoe protest Bailey, for the cover of the magazine gone really well with tests, which then led me to Berlin, and you know test in Berlin, to this day remained great friends, obviously I’m seeing the last couple months but 38:11 before Christmas. Yeah, just before Christmas. And so that’s how we’ll actually and the trouble a lot of young people that they want in quickly, you know, it takes years to build these relationships and I think if you do that with the passion and the heart, and you want to be genuine friends with people then it works.
The funny thing of Justin King It sounds weird so when I turned up at the door on Saturday morning in Limington spa. It’s a beautiful country house, this woman I open the door, who was obviously his wife, and she went 38:42 and she was in a year above me at school. Just like that. You think my god what are the chances. I knew vaguely at school I didn’t know. Well, but I knew her name and we sort of knew a couple of our good friends, so they became great friends again just to the point where I managed, you know, Justin invited me to his 50th birthday party, which is a lovely private affair. And there’s some great people that I’ve done that, you know, hugely successful people in their industries.
So it just gave me that sort of platform to get going look at more opportunities that came from that Stephen Perdue, who owns 39:20 never happened, but we spent about two years working together trying to do a Phil Smith for Champneys hair care range, because he had this great spa range that he’d sold in those days in Sainsbury’s, from that point, it just sort of progressed, and I got to know people that would be at his bars and…
Adam Stott:
The product business now, how long have you been in operation?
Phil Smith:
They’ve been 15 years for sure. The brand has been out there now and can’t seem to touch with it, it’s been a great journey, it’s very different to what I was used to, because it’s all about you know we started off with nine products in the range. And there are now over 100 39:59 accessories.
Adam Stott:
And the brand looks great, you know, 40:04 they stood out, you know, the director 40:07
Phil Smith:
Like I think that’s probably the most important thing you know, when you’re in supermarket, you know people walking up and down, you’ve got them for literally split second, they go through this smell. If you’ve got those two things right, then they’ll look at who it’s buy and they’ll buy into that was always my thing. We’ve literally just re-launched the brand again as he redesigned the packaging and to be, you know suit sustainable and that’s been in the planning flight three and a bit years so it takes that long to get there.
So, literally, it launched on the 28th of this Wednesday, yesterday. Officially it’s been out for about two months but you know all the songs we stores, it’s now, but we started about six months ago, on the next redesign. Even before this one was finished, we’re starting on the next one as to where, you know, the packaging is going, so that the products, like say is one of those things where I was given this opportunity, but the difference is this was mine, solely mine and no one had steel.
So I did have to invest quite a bit of money back into it, and I was using money that 41:15
Adam Stott:
41:16 interesting question, do you feel more proud of it? Because, you do, yeah.
Phil Smith:
Yeah, absolutely. I still have these stupid little pinching moments when I go into stores and I wish I always do I have to do it on a regular basis, my own peace of mind is right. But why wouldn’t you know you know this opportunity. So, you should never take it for granted. That’s another key point is always take nothing for granted in life. I think this this whole pandemic over these last years talks about, you know, things like just going to the pub and evening to have a drink. 41:50 they’re here tonight was now, anything to go in and sit in a garden.
Adam Stott:
Absolutely. 42:00 business owners have been listening for what is your, you know, had such a great career, and that’s really two very successful endeavors in the product range and also in the hairdresser the franchise world as well. You know people that, among other things, what would your kind of advice be for business owners looking to go and build their businesses? What would you say to them? You know, from you, what would you encourage them to do? What would you kind of the things that…
Phil Smith:
42:28 I think the hardest thing is the knockbacks you get, and the setbacks, because they come at you, so frequently, you’ll know this 42:37 and it’s nice that we can laugh about it but I think those that survive in business, they take the knockbacks but they keep going, and they keep going, because there’s no get rich quick thing is there, I mean I would love to find.
Adam Stott:
I think that there’s better industries and others, I more profitable industries, I was in the car business for, You know I had a car business for 10 years and we got the business to 40 million a year in revenue was a net profit, right, so 3% net profit.
And when you look at all the moving parts to make 3%, you can easily get to 2% and actually can easily go 3% the other way. So you’ve got such small margins for operation. So I certainly don’t agree that as a get rich, as you said, you know there isn’t a get rich quick. But I think there’s better industries to be in and, you know, as you said about the sound on business like you were saying, the sound business you saw those margins squeezing. Now, imagine the product business, we don’t have to go too deep into that, but imagine it’s a more lucrative and in a way, right, you know.
Phil Smith:
43:42 the sort of product business that I do is for you. This is all based on volume, and what we manufacture 50,000 products, time of each regime, and I get orders through from Sainsbury’s you know one day it’s 10,000 units, a day it’s 28,000 units and it’s fascinating. So, if you if you get your margins right you got to keep working on the margins and sometimes this is how you control, you know, for example the moment pumps on products, there’s a worldwide shortage of pumps. So, the cost of pumps has rocketed.
Adam Stott:
44:13 kind of different hurdles to deal with, and always feels like Brexit, it’s been really impacting them as well.
Phil Smith:
44:20 we go from a Brexit, and as we’ve had more interest this year on international business. I’ve ever had in the 10 years I’ve been doing this. Literally foreign films in Australia, so new territories Australia, Finland, South Africa, and US. A great 44:36 about two weeks ago where they’ve gone ahead and place their first order, so it’s just phenomenal, and anything with the word England on it, you know, one of my ranges is called Smith England.
So you got Smith, which is the most common Western name I think in the world, and England, that’s getting great traction overseas, not so much here, but overseas now there’s that big expat community as well in some of these territories. So that’s been good, but it’s interesting you say about some industries about a really good friend of mine or my best friends, he’s in telecoms, and that’s an easy win but he makes an absolute fortune, because sometimes I just you know put my head in my hands off 45:14.
Adam Stott:
You know, I didn’t really realize this when I went into training businesses though because I’ve been training businesses for five years, And that’s been every industry, like, I’ve worked with so many different industries. And then, 45:28 oh my god, what a fantastic industry 45:32 it’s not easy, but only the beginning, nothing’s easy, but there are some that you know in telecoms, I’ve seen some some fantastic businesses in telecoms.
Phil Smith:
45:42 basis of stories of entrepreneurs come by telecoms, you know, 45:47 John Cornwell, fantastic. But then someone who was with John Paul wrote, the great story I’m following him quite a lot because it’s Matthew 45:58 and he set a business up to basically distribute, CDs, DVDs, and it’s become this, this massive health and beauty. You know, he’s the one he’s gonna make the biggest dividend directors ever own on, he’s gonna make about 950 million, I think in the next few months. It’s a great story 46:22 again sort of fell into it by accident, but, you know, hard work is a lovely story I love anything where people will do well.
So again, getting back out and my advice to anyone is you know, you’re gonna get knocked back 100 times, even when you’re successful, you get knocked back, but yeah you just, you know, your love of winning, and you’d love a success, and seeing other people succeed just keeps you going. So, you know, don’t take it as you know that was failure. Yeah, it’s not back, and you know you learn from it and you move on, and always be prepared to work super hard, you know, eight, nine hour days, they don’t exist. Every day’s a long day, but you should enjoy it because you’re doing exactly what you want to do and you’ve got your own destiny in your own hands.
Adam Stott:
And it’s much better to be in your hands.
Phil Smith:
But when my time with Tony 47:10 great in it and it was a fantastic platform to get me going, that gave me the ability to borrow money to buy the buildings, and you know, but you can’t beat the feeling of actually owning something and doing something for yourself.
Adam Stott:
47:26 what’s next for you? 47:31
Phil Smith:
47:33 two years ago I was looking to exit. You know we had a decent offer from a well-known retailer to buy the brand, and somebody just flicked me to say don’t do it you’re not ready just yet. And I’m so glad I didn’t because I had a taste of life what life would be like in a sort of semi-retired state over this last year. Yeah, well there’s nothing. I don’t think I could ever retire now, so I love what I do, I want growth, you know, I’ve got something that’s done well, there’s been quite a few hairdressers that have done really well out of products when they did exit they made huge amounts of money. I would love to, you know, have a legacy right, I was the best one.
I dropped the biggest offer, I don’t know if I’ll get that but I’m gonna have a bit of fun trying. At the moment we are on a growth path, and I’m enjoying it. I’m enjoying life. So, what’s next, it’s just yeah I hope I’m blessed with the ability to carry on enjoying what I do and I’ll certainly keep working hard to achieve that.
Adam Stott:
Brilliant, it’s been amazing chatting. I’ve really enjoyed it, and I’m sure the audience has really enjoyed it.
Phil Smith:
It’s absolute pleasure. Thanks for having me along.