From market stall to millionaire|uk|ireland

7 minute read time.

We interview Steve Smith, the founder of discount retailer Poundland who sold his share of the business for a cool £50 million in 2002 after opening his first shop in Burton upon Trent just over a decade earlier.

 Steve explains his early background working on his father’s market stall as a young child, to building up Poundland and now his latest business ventures, as well as his advice for any would-be entrepreneurs starting out today…

You dad was a market trader, what did you learn from him about doing business?

When I was a little boy I used to help my dad out on his market stall in Bilston Market, in the West Midlands. I learned so much from him. Each stall would have a 6ft pitch and it was all about how you presented it: what could you do to attract customers?

Then, once they were interested, it was about understanding how much they’d be prepared to pay for a product. How low could you drop the price and still make a profit? It was a real learning curve. I learned how to buy, sell and make money.

Where did the idea for Poundland come from?

My dad had a cardboard box at the front of his stall where he sold old stock and things that had lost their packaging for 10p. The box was hugely popular and made me realise that people love a bargain.

My dad went from having a market stall to running a successful cash and carry business supplying other traders. I worked for him doing that for a number of years. When he decided to retire and move to Majorca, my wife and I decided to stay in the UK.

It was then that he reminded me about the bargain box on his stall – where you sell goods at a fixed price – and that’s where the idea for Poundland came from. I opened my first shop in Burton upon Trent in December 1990.

Did you have any idea how successful it would become?

On the very first day of opening my first store, we took £13,000. The customer reaction was huge and it was clear there was a real demand for fixed-price products.

My initial goal for the business was a turnover of £10 million; I managed to turnover close to £200 million. We employed more than 5,000 people and had more than one million customers a week.

My goal was then to achieve a turnover of £1 billion and I’m pleased to say that this has been achieved. Poundland was the first pound shop on the high street, now there are a few similar chains and it’s estimated that the combined turnover is around £3 billion.

How did you deal with the rapid expansion?

 It all happened really quickly and, to be honest, it was quite daunting. I’d be going to cities, finding shops and recruiting managers, and handing over the keys. I remember an ice cream man once said to me, ‘Would you rather have one shop running at 100%, or 100 shops running at 90%?’ That really stuck with me and helped me realise I couldn’t control everything.

What I did do was put all my energy and skills into creating the best possible systems for business efficiency. I built programmes for transport, supply chain, managing staff, and so on. It meant I could sit at my desk and monitor stock, turnover, logistics etc. The processes we put in place were second-to-none at the time.

Why did you decide to sell Poundland?

When I set the business up I’d loaned £50,000 from my father. When things were going really well, one of my top suppliers approached me and handed me a cheque for £20 million to sell. My dad told me to take the offer, but I wasn’t ready. There were still things I wanted to do, like build warehouses and set up new suppliers. I didn’t cash the cheque but I kept it in my pocket and looked at it every day, especially when things started to go wrong. It was a reminder of how far I’d come.

A few months later, the supplier came back with the intention of buying but the profits weren’t as good as they could’ve been so he took back the £20 million cheque and ripped it up in front of me. I was gutted, but then a short while later someone came along and offered me £50 million. I decided to sell but stay on as a shareholder, which paid off when the company was finally sold for £200 million.

You could’ve retired after selling Poundland, why did you decide to stay in business?

I’m just really passionate about what I do. As I mentioned before, the key to Poundland’s success were the systems we set up to run the business. I wanted to take those skills and apply them to other sectors.

One of my new ventures that’s doing very well is called Maxtime, which supplies workforce management software. It helps employers to monitor and enhance workforce productivity. I’ve also moved into recruitment with Temps.co.uk – an online recruitment agency for temporary staff – and Kind Consultancy, which focuses on recruitment for top-level positions. Another thing I offer is short-term loans for property developers via GreenField Capital .

I’m the chair of a number of different businesses now but what they all have in common is effective systems, which are software driven. We’ve got dedicated teams working within each company that report in to me.

EstatesDirect.com, a property website that cuts out the middle-man, launched earlier this year using money raised via crowdfunding. What was the crowdfunding experience like?

It was very good and wasn’t just about raising money, it was about giving the people who invested the opportunity to become shareholders in the business. We managed to raise £700,000 and it’s doing very well; it has been rolled out nationwide. Again, the business is all systems led.

With so many business interests, what does a typical day look like for you?

At the minute, one of my main focuses is on developing software that allows you to make payments using your smartphone. But, I keep in touch with all my companies and make sure I know what’s going on. There are always so many opportunities for growth and expansion, so it’s never dull.

I think to be successful you also have to have a life balance. I’ve been with my wife 30 happy years; we have three children and two grandchildren. I enjoy spending time with them.

What traits do you think make a successful entrepreneur?

Have a dream and don’t take no for an answer. When I was starting out with Poundland, I saw lots of landlords who didn’t think it would work. They’d say, ‘What about inflation? What about your rent? What about staff?’ I ignored them because I believed in what I was doing. Twenty-four years on Poundland is bigger than ever – it’s a high street brand. It’s all about making it happen. And remember, it’s not just about money; it’s about passion.

What advice would you give to someone looking to expand a business?

Ensure you have the cash flow right and the funding in place. A good business plan and strategy are also key. Also, make sure you recruit a team that shares your vision, and trust the people who are working for you. Spend time with them and get them onboard. Finally, ensure that there’s a market for your product or service before you expand.

What three pieces of advice would you give to someone starting out in business

1. Learn from your mistakes – We all make them. I remember when I owned Poundland, ordering 300,000 Christmas cards with the wrong design on them. I had to bin the whole lot and lost money but I learned from it. If you make a mistake, identify it quickly and stop doing it – otherwise your cash will be gone.

2. Know your competition – Keep an eye on what your competitors are doing and don’t get complacent. Stay ahead of the competition and always think of ways you can differentiate your business.

3. Market your business – Lots of people launch businesses online and then wonder why they get no orders. Marketing is important be it via social media, advertising, or word of mouth. The internet is all about leads, you have to think about how much it’s going to cost per customer to get to your site, because you can’t rely on passing trade like a high street shop.