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Andrew Reynolds Accountant and Bank Manager get some flack

April 16, 2014
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Andrew Reynolds: They don’t teach you this stuff at school.

There was a report done a couple of years back by the, I think it was the Federal Reserve in the States. They did a study of 100 school children, 100 average school children going to a normal kind of state school like we have over here and they projected those people through to the age of 65. One hundred of our kids, they found that less than 4% would ever have an annual income above $35,000, £35,000.

Twenty percent of the kids in that class would end up living below the poverty line. More than 50%, half the class would be wholly dependent on relatives, social security and the welfare state, what kind of bloody school system is that?

When I went to college… first person that sends me an email by the way after the weekend they can work out from the DVDs which one is Andrew Reynolds, you get a prize….

That’s me at college, that was our group at college, I went to college because me dad thought it would be great to get a business diploma. “You want to go into business son.”

It was a two year course and that was the biggest wasted two years of my life. Why? Because I was taught by professional teachers, I was taught by people that had failed in business.

The guys teaching me business couldn’t run a business if their life depended on it, so they decided to teach it.

In that photograph, and I’m not going to point them out I went on one of these friends reunited sites recently to do some research and see what happened to my old classmates.

Andrew Reynolds: There is a guy there, this two year course had a slot in the middle where they sent us out to work to get some work experience. This guy because they like to pigeon hole you when you are at college. I was a pain the arse for them because they couldn’t pigeon hole me into any particular trade. But this guy said “I want to go into banking.” It was right, pigeon hole him. He went to work for Barclays Bank on the friends reunited type site that I looked on he was proud to say that he has been with that bank now for 30 years. He went to college, halfway through his business course he went to work for a bank and he is still there.

The guy standing next to him in the photograph on his friends reunited site, it says “I’m a bit happier now because I’m off the anti depressants but I am still unemployed.” What kind of business course was that?

I learnt nothing on that business course because I was being taught by people that had failed.

Andrew Reynolds: It’s weird and if you know my history you will know that my dad when I was a kid he ran a hardware shop and he kind of failed in business, he kind of bounced along the poverty line. But I actually learnt a huge amount that I was able to take forward into the next generation by learning from my dad’s mistakes.

And you might want to just jot some of these down because this is useful stuff.

My dad when he had a great business idea and he was a bit like me, he was always coming up with these wacky ideas right. The people he would go and talk to were his bank manager and his accountant. They were the only people he knew in business.

I remember he would come home for his tea and he would be so excited he would say “I’ve been to see the bank manager; bank manager thinks it’s a great idea.” But I just said that they guy I was at college with, he was in his business course, he went to work for a bank for 30 years, he’s never run a business, he doesn’t know a good business idea when he sees it.

My dad used to go and see his accountant, he used to come home and he used to say “Oh John thinks it’s great. John’s advised me not to do that one, John’s advised me to do this one.” What do accountants know?

Andrew Reynolds: I apologise to any accountants in the room, actually I do have to be so careful this weekend because my bank manager and my accountant are in the room.

So Jane, my bank manager I do apologise in advance darling, Jane has been so helpful, she is the best bank manager I’ve ever had.

We are currently renegotiating the rate on my credit card services so she is fantastic.

Accountants, God bless them. Accountants get their kicks, and Andrew if you are in the room I do apologise mate, accountants get off on getting a row of figures and another row of figures and balancing them. And they get all stressed out if they don’t quite balance. They work the magic and all the numbers, that’s how they get off, they get their kicks from adding up bits of numbers and things.

Don’t ever ask your accountant for directions in business. Accountants keep the score, they don’t play the game.

You should see my accounts bill next month, Jesus.

Andrew Reynolds: Just jot down, you need to get a mentor. You need to have a mentor who you can look up to who has got business experience. Don’t do what I did and go to college and learn how to run a business from people that had never run one for themselves.

I learnt from my dad about bricks and mortar businesses. My dad started off in his shop, he used to rent the shop and then he decided it would be a great idea to actually buy the freehold, to go and get a bank loan, huge great mortgage and buy this thing. And they had a survey done on the building and found that it needed loads and loads of repair and my dad thought “That’s good because I can go and negotiate the price down with the owners and get it cheap. Fantastic.”

So he took out a huge great bank loan and he bought this thing which was in dire need of repair, but he hadn’t quite sussed that the business model, the margins were so small there was only just enough to keep the Reynolds household fed and watered, there wasn’t enough to pay for the repairs.

I remember the frustration on his face when it used to rain because it had an asbestos roof on this thing and it had come to the end of its useful life. It had holes in it and every time it rained my poor dad would run round with buckets putting buckets under the drips to stop the stock getting wet. It was pitiful to see just the rage on his face.

Imagine the disappointment when years later the council said “That’s an unsafe building.” And he had to demolish half of it.

Andrew Reynolds: My dad, he couldn’t afford to go in the high street. You can see on the chart here, the big red area in Winchester there where he had his shop, that’s the high street area, that’s where the public are, that’s where the people are congregating, that’s where the shoppers are.

My dad had his shop in a secondary location. which was kind of okay because it was a DIY shop, people would be prepared to travel a bit. People used to take their cars and they would pull up outside and they would load up their bags of cement and all this sort of stuff. Until the powers of darkness from the council decided to put down some yellow lines. Screwed. Because my dad had pitched his business there, he’d got his shop, he couldn’t move the shop, I’m buying that, I’ve got a bank loan out for it, I’ve got to keep it going.

But the business dried up because somebody somewhere else took a decision which impacted on his business.

The business we are teaching you this weekend, the lesson I learnt was to be flexible. If something happens in a particular part of my business like for example if there is a big postal strike and it stops the direct mail side of my business, no problem because we go onto the internet side of the business.

You have to be flexible enough so that if something interferes you can move on.

Andrew Reynolds: My dad used to have huge stocks; he used to have 16,000 items of stock in his shop. He’d stock the shop and then hope that somebody would wander by and wander in and that he would have the right size screws to sell them.

I learnt from my dad about wholesale and retail. He used to get a manufacturer who used to make something, he would sell it to a wholesaler, my dad would buy from the wholesaler. So there was a middle man. My dad’s margin was about one third. So if he’s got something selling for 99p he is paying 66p for it and out of the 33p left he has got to pay his rent and his rates and his light and heat and everything else. It wasn’t a business model that worked.

He also, he was in the market where the B&Q’s and these sort of people were just coming to the fore and he tried desperately to battle against the B&Q’s. He couldn’t compete because he is buying from a wholesaler, B&Q are buying straight from the manufacturer and getting everything cheaper so B&Q can afford to sell cheaper than me dad. So his margins disappeared.

The note you want to make there is that you don’t want to have a product which is going to compete with the big boys.

We’re not going after Microsoft or something here, we are going to compete in little niche markets.

Andrew Reynolds became a self-made Millionaire at the age of 45 after starting a small business in his spare room at home - and became a Multi-Millionaire by the time he was 50, using a technique for making money that he shares in his book, Copy This Idea.

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