Roger Trapp: Good and bad lessons from the big players

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The Independent Online

One need look no further than the troubles currently being experienced by the retailers Marks & Spencer and Sainsbury's to understand just how difficult it can be to sustain growth. Not so long ago - although to those involved it must seem like a lifetime - both were among the most highly regarded companies in Britain, leading their sectors and winning plaudits for their managers. Now, they have not only been knocked off their perches - Sainsbury's slipping from first to third in the table of supermarket chains and M&S on the wrong end of a takeover bid - but it seems that the more they try to sort out their problems, the worse it gets.

Some might argue that these episodes stem from the particular circumstances of retailing, where customers are notoriously fickle and the line between success and failure is extremely fine. But that cannot really be true. In their heyday, both had fantastically loyal customers. The problem was that although the managements were rightly proud of this loyalty, with the benefit of hindsight they probably did not do enough to retain that loyalty once other companies started to smarten up their acts and to woo these customers.

Recent weeks have seen much analysis of the woes of these companies - from inside and out. But it is difficult to deny that the decline of each can at least partly be attributed to what actually goes on in the stores. In M&S, for example, just "popping in" for an item is almost impossible since it is extremely difficult to find your way around; while at Sainsbury's the presence of all that wonderful produce, complete with tips from Jamie Oliver on how to make a quick healthy meal out of it, counts for little if it takes an age to get it through the checkout. In other words, both seemed to have not cottoned on to the fact that these days everybody is in a rush (even if they have no reason to be).

Now, you can suggest that these are big companies and that that is why they lost touch with their customers. But you do not have to be big to forget this crucial part of running a business. It is well known that only about half of all small businesses survive for more than four years - and it is a good bet that a significant proportion of the half that fail do so because of some problem in this area.

It is a point worth bearing in mind at a time of year when much of the country is thinking of summer holidays. Owners of growing businesses always stress how they can never go on holiday - and that is largely true (at least until they are big enough for the founder to share the management). But when the sun is shining and there are other distractions, it is still possible to take your eye off the ball for a brief period and suddenly find yourself struggling to keep your business alive.

This is understandable. After all, we customers can be a tricky lot: rarely knowing what we want and even when we do frequently changing our minds. But satisfying our needs and - even more importantly - anticipating them is what being in business is all about. Nobody pretends it is easy slaving away to meet ever more stretching deadlines in return for little short-term reward, but this is the sort of thing that the successful business - large or small - does.

Which brings me to another company attracting a lot of attention at the moment: Virgin Group and, in particular, the prospect of its mobile phone business being floated on the stock market with a price tag of up to £1bn.

Views differ on the reasons for this development - opportunistic fund-raising, producing cash for Virgin founder Sir Richard Branson's other businesses, or whatever. What there is no argument over, though, is the Virgin brand's ability to keep itself in the spotlight.

Nor can there be much doubting of Sir Richard's zest for business. Though he has shrewd and tough managers running his various companies, Britain's best-known entrepreneur brings all these activities together under his own apparent enthusiasm for delighting his customers (apparently, one of the reasons for Virgin Mobile's success is that it enjoys a much lower customer churn rate than competitors) and confounding his rivals in equal measure. The fact that he can keep doing that long after the initial buzz must have gone - and long after he acquired enough wealth to sit back and enjoy it - is a lesson to all growing businesses.