Learning to be an entrepreneur - Q&A with Scottish American's Paul Thomson CA
Paul Thomson CA, Chief Gopher at Scottish American, shares how he went from professional rugby to running his own business.
Why did you initially become an accountant?
I was trying to be a professional rugby player, but I got my final contract in Australia at 21 years old and realised I wasn’t good enough. I returned to the UK, and at that point, I looked at what best be described as a real job. I knew what accounting was because my dad is an accountant and I applied to different programmes. I joined PwC and trained as a CA.
I tried very hard at accounting. I loved how the training gave you insight to businesses in the audit process where you were exposed to a different business every two weeks. I liked the job, but after coming last in the ICAS final exams, I realised, like rugby, that I wasn’t going to be a good enough over the long run.
I always wanted to be an entrepreneur, so I set out on a path to explore that. I needed an idea, though.
I applied for a job at the Royal Bank of Scotland where I was building financial models. I was only 25 years old and everyone I met who was entrepreneurial was a homebuilder or plumber. I didn’t know any tech people and didn’t have any access to them. I didn’t have any money so I couldn’t just start myself and had to work out being what an entrepreneur meant.
What does being an entrepreneur mean to you?
Being an entrepreneur means that you build something and own something. It’s no more complicated than the typical lemonade stand — you find customers and sell stuff. Ultimately, if you find what people need, you can build a really good business. It may sound simple, but I knew it wasn’t going to be simple.
How did you move towards entrepreneurism?
I moved with the Royal Bank of Scotland to London to lend to entrepreneurs. I figured that would get me as close as I could to how to do this stuff. At the time, I thought there was some kind of secret sauce. If you follow this blueprint, you could be an entrepreneur, but I didn’t have the confidence or model for how you do it.
I was looking for something that was very formulaic, but that doesn’t actually exist. In short, I was trying to find a plan for how to be an entrepreneur. I didn’t know any entrepreneurs and thought it was very special. The real insight was that there wasn’t anything particularly special and you just have to get on with it.
What made you decide to move to the US?
At RBS, I spent a year with someone who owned a Lloyds of London insurance business in London who was buying out his business. When we met, he answered my questions and helped me understand why and how he built his business. There’s no rocket science behind it — you just had to go do it. He was also the one who said: “Why do it in the UK? You can build huge businesses in America.”
How did you move to the US?
I came to the US to be an entrepreneur, but getting a visa was very difficult. I needed time to develop my idea so looked at business school. When I applied, my CA was translated to a master’s and I studied for the GMAT (Graduate Management Admission Test). I got into Harvard Business School mainly because they get very few Scottish applicants!
Once I was in, I had to decide how I’d spend my two years. I could have studied really hard for accounting class or worked on my business plan. For me, going to business school was about working out the kind of business I wanted to build and learning as much about it as I could. The Harvard network gave me access to all kinds of investors.
What made you decide to start an insurance business?
I knew insurance. I played with all kinds of business ideas and joined with other people to be their entrepreneurial partner. Insurance is really a sales business and it suited who I am. I had a small investment group and we bought a bankrupt insurance business. When I bought it, its revenues were $2.1m and its costs were $3m. The owner was 79 years old.
What happened next?
I had the business profitable within three months. The owner had built a great business, but running a business is hard and he could only work three mornings a week. He wanted it to be fun again, and I told him my plan. He turned into a good partner, and when he died, I was the main speaker at his funeral.
What are some of the biggest benefits and challenges to being an entrepreneur?
The biggest benefit is that you choose your own path. I didn’t fit very well with a corporate hierarchy. Most places you need to fit in the system and I wanted to really go after something, work hard and build a culture. The thing behind it is that I believed - and still believe - that people want to work differently. You build your job around your life and not the other way around. I also wanted the freedom to play golf on a Tuesday or whenever it suited me and to be my kids’ sports coach, but most companies don’t allow for that.
What are some of the challenges you’ve had growing your business?
In the turnaround phase, I had to do everything myself. I bought the business and then a year later, I collapsed. I developed type 1 diabetes. The stress of wanting to achieve was a thing. At that time, I didn’t have personal guarantees. People think that as an entrepreneur you’ll make millions of dollars, but you don’t do it for material gain. It’s about wanting to build something and work with a team.
The business had significant issues. Just turning around a failing business, I’ve had to build my staff and you need people who want to build the business the way you want to build it. We bought a legacy business, and you have to have the right people to turn that around.
If you get a business that’s been shrinking or stood still for 10 years, there’s a bunch of people in there that don’t want to help the business grow, as they’d rather push paper around. If you want to grow the business, you need people who want to do just that. Most of what I’ve done is attract and hire really smart, talented people. It’s easier now, but it wasn’t easy at the beginning.
Do you use your ICAS training? How has that background helped you?
Some, yes. During the training with ICAS, you’re learning a set of rules to look at a business. If you’re looking to start or buy a business, it teaches you where cash flow comes from and you learn that cash flow is king.
There are things you may never use again, like particular audit standards or certain tax rules or specific business laws, and that’s ok because it’s like when you’re in high school and learn physics and the specifics of the equations don’t matter. It’s the thought process that goes into finding the right answer, like knowing how to pick apart a P&L, what recurring revenue really is and knowing what changes to look for. I came to understand that entrepreneurialism is about taking risks, but also being aware of what can go wrong. When you understand what can go wrong, you can take bigger risks.
What have you learned about failure?
The British are quite cynical about failure. In America, they think if you’ve failed, you’ve gotten one step closer to succeeding. Once you’ve accepted that you failed at a few things, go find the thing you’re good at.
What advice do you have for people who want to be an entrepreneur?
If you want to be entrepreneur, they’re some of the easiest people to get a hold of. Plus, they have jobs for smart people and are willing to help other entrepreneurs — we’ve incubated six other startups in our offices. Entrepreneurs have accountancy jobs they need to fill too, so start networking and find an idea.
Also, we are recruiting! Come work in New York or the beach in Los Angeles — see me do it up close. What are you waiting for?