Unlocking Business Growth: Richard Harpin's Practical Insights for CEOs and Founders

Welcome to my first LinkedIn newsletter! In these editions, I’ll be answering questions submitted through Business Leader . In this one, I’m sharing my thoughts on topics like structuring an advisory board, the differences between running a public and private company, and importance of finding the right investors. These are practical insights from my experience building HomeServe and investing through Growth Partner.

If you have any questions about business growth or strategy, feel free to ask – I’ll be happy to cover them in future posts. 

Q. What is your take on an advisory board and how would you recommend structuring one? Steve Johnson, co-founder and CEO, HOLM  

A. I would recommend that a business has an advisory board and board meetings. But those board meetings are only as good as two things. First is the quality of the information that people get in advance. There should be a board pack with lots of numbers and KPIs because board meetings should be talking about performance. And there should also be short papers on strategies and plans. I’ve seen board packs that run to more than 150 pages; they should be more like 30 pages. Second is who sits on the board. In my Growth Partner business, when I’m investing in an entrepreneur and taking a minority investment in their business I make sure that business has board meetings and that we jointly appoint a great non-exec chair who has some relevant experience and is going to help the founder grow the business. The best chairs have been a chief executive previously and maybe even an entrepreneur. 

Ideally, they have some relevant experience. In terms of frequency of those board meetings, they should be bi-monthly because they’re not designed to run the business. The business should be run by the management team, which meets weekly and discusses how the previous week has been. The board is more about strategy and plans and reviewing performance. Beyond a chairman you can have a board of non-execs, but you don’t want too big a board. You need people around the table that are going to make a real contribution, can confront the brutal facts and do that in real time. 

Q. Did you prefer being the CEO of a business with private investors or a public company? Anonymous 

 A. HomeServe became a public company in 2004. Unusually for an entrepreneurial chief executive, I ran that public company for 18 years until we were bought by Brookfield. I did enjoy being a public company chief executive. But now, being private-equity owned, it’s clear that you can focus on longerterm value creation and not worry so much about short-term profitability. I’m a big believer in private equity, because most of the sector is about investing in a business and helping that management team to grow it. I do worry about UK plc and the UK stock market. In my later years running a public company, I got frustrated by the level of governance, red tape and box ticking on everything from corporate governance, remuneration, audit and risk, to ESG and diversity. Some of those topics are important, but it should be up to the business and its leadership to say which ones they’re going to focus on and really make happen. 

Q. Did you seek investment from the start with HomeServe? Why? - Rick Smith, managing director, Forbes Burton 

A. Not initially. The HomeServe idea came out of the difficulty in getting a plumber on a Friday evening in Newcastle. I thought, that’s a great opportunity, so set up Fastfix, which was the precursor to HomeServe. Jeremy Middleton CBE (my co-founder) and I put our life-savings into it, which was £50,000. Then the money ran out and we had to desperately seek third-party investment. We went round all the UK water companies, because we thought there was a good link between a plumbing service and offering it to water companies’ customers, but they all said no, with one exception: South Staffordshire. Ultimately, it was about not just getting some money to keep the business afloat but getting some of their expertise. I think, in seeking investment, it shouldn’t be just about the money. We luckily managed to find a water company that would invest £500,000 and that was the way that we kept the business running. It gave us 12 months to find the right model. And we found a water company in Surrey that offered a plumbing insurance model that we copied and improved. That was the breakthrough that, after 12 months, meant the business went from losing £500,000 in its first full year to making £750,000 the next year. 

Q. As an investor yourself, what other investors do you like to work alongside in the businesses you back? Anonymous 

 A. I decided that I wanted to back other entrepreneurs and help them avoid the mistakes I made at HomeServe, and to share my secrets to building a billion-pound business. I’ve earmarked £175m of my own money; £75m of that is now invested in 12 great entrepreneurs running 12 amazing businesses. I like to invest alongside the founders, so my model is not to buy 100 per cent of a business but 20-30 per cent, enabling that entrepreneur to take a bit of money out of the business to derisk themselves and to have some capital they can use to grow the business faster. 

On other investors, I like to find experienced non-exec chairs who will also invest. Steve Hewitt was CEO at Gymshark and he came in as non-executive chairman of Passenger Clothing, a business I invested £15m in for a 30 per cent shareholding. Steve invested £1m. 

Thank you for submitting such thoughtful questions. I’ll keep engaging and answering them across my channels. My focus is on helping established UK businesses unlock their potential through Business Leader. If you're looking to scale your business, I hope you can join us at the Business Leader Summit, designed for founders and CEOs of businesses turning over £3m to £100m. It’s a chance to tackle the real challenges of scaling and explore new opportunities for growth.

Until next month,

Richard