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ITT 2014: Passion and distinctive model are key, delegates told

Entrepreneurs looking to sell travel businesses or find investment should focus on what they do really well rather than try to do too much, the ITT conference was told.

John Donaldson, chairman of XLN Telecom and a former boss of Thomas Cook who has led investments in a series of travel firms, told delegates that passion and a distinctive model is key.

Donaldson has worked with 11 firms since leaving Thomas Cook, with nine involving private equity investment, including On The Beach, Encore Tickets and ebookers.

“What you are looking for is a business model that is different and distinctive.

“I look for businesses that have a good idea and are very focused and are not trying to do too much and what they do they do really well.

“You want to be either number one or number two in your market. I want to understand what the brand stands for and get an insight into the customer journey.

“I’m looking for a strategy that doesn’t just sit on a shelf but that is alive in the business. The strategy should be described on one sheet of paper.

“You have to align the shareholder interests. They may not all want the same things but you should know what everybody wants.”

Donaldson said On The Beach founder Simon Cooper was someone he realised early on that he could work with because he was passionate and committed.

But he said Cooper had to accept that to grow the business from its start, based in a house in Macclesfield and employing 25 people, he had to employ people better than himself.

“You need to choose people who will challenge you. What I found [in Simon] was someone who was passionate about the business and courageous when things did not go well.”

Donaldson said during initial discussions Cooper was constantly distracted by customer emails – he had 1,200 in his inbox – because he was obsessed about what consumers thought.

He said Cooper would even jump up and answer phones when they rang.

“Eighty percent of what really drives value in my mind are the people. The real focus I give, particularly in the early stages, is supporting the chief executive, understanding what drives them.

“It’s not turning up from day one and telling them what to do. It’s helping them figure out the skills they need and figure out the strategy.”

Donaldson said firms looking for investment should look to keep salaries low but reward their staff through performance-based incentives.

And he said he believes in the power of a team working together to and not fighting within themselves to achieve results.

“Ideally all the staff should be sharing in the success. Reward people, particularly senior people, on a team-based approach so they sink or swim together.”

Donaldson said there were many people business owners can approach for advice, many of which do not expect to be paid unless the deal is done to sell the business.

And he said entrepreneurs should not be afraid to fail.

“It needs a hefty dose of courage, some perseverance, and a good idea or a bit of luck, but you will have a lot of fun.

“Do not worry about things that do not work out. There is nothing wrong with businesses that fail; you learn when things do not work out and inevitably the losers are the banks, so there is nothing wrong with failure. You learn by making mistakes.”

Donaldson added that the thing that gives him most satisfaction is the firms he has invested in provided employment for more people afterwards than when he first started with them.

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