Lessons learned: Michael Norton
Article Date: Nov 23 2009
Michael Norton, Paypoint.net
Paypoint.net managing director Michael Norton reflects on setting up a fresh pasta business and running a pineapple factory in Costa Rica.
I was a salesman at Masterfoods, a division of Mars, for nine years. We were diversifying and I wrote a business plan for a pasta company in the UK, but they opted to take a different route. I was 26 and arrogant, so I decided to resign and do it myself.
A couple of friends wanted to be involved. We went to Italy and learnt how to make fresh pasta. I put my house on the line, bought some machinery and set up a factory back in the UK to start The Pasta Company in 1987.
All of this was completely alien to me; I was a sales person. Getting into production was a massive leap of faith, but I had this absolute ‘can do’ attitude – I wasn’t frightened of anything because I didn’t know what the problems could be.
That changed pretty quickly. I knew nothing about production, plant maintenance, distribution – I was a great sales person but I had never paid attention to all the other elements of a business that add real value. We learnt as we went along, and over four years we built the company up to be a market leader.
Learn to say no
The hardest thing was managing growth as you tend to overtrade. Back then, fresh pasta was an innovation and we kept pitching for new business, with interest from Tesco, Morrisons, Sainsbury’s and Asda. It was a steep learning curve. Soon, you realise one factory isn’t enough, so you run it in three shifts. But there isn’t any plant maintenance so machinery is breaking down. And the night shift isn’t as efficient as the day shift, and you move to a second factory. Then you’re running two sites, but you don’t get the economies of scale because it’s two sites. These are all specialist areas that you have to learn about. If we’d had someone on the team who was a production director, we wouldn’t have run into these problems.
It was a great time – the ultimate game of Monopoly but, don’t get me wrong, there were moments when it’s so dark you can’t see the end of the tunnel. For me, that’s what makes the difference between people who succeed and those who fail. You keep on going. You innovate. You find a way. And you get there.
The wrong price
We were acquired by Geest Foods, a massive fruit and veg business, which was looking to broaden its range by getting into chilled foods. The enterprise value of the company was about £5 million, but we got a small percentage because we were very naive in terms of funding and how you structure deals. You’re young and spending all your time running the business, and not enough time planning the business, talking to advisers. When you first start your own company, it’s a bit like building your first house – you learn how not to do it.
I worked in the food industry for 22 years. Around 2000, I saw what was happening with mobile phones; I had the view that if you’re a business person, you can work in different industries. I was hired by the billionaire entrepreneur John Cauldwell.
'I had a fat salary, but there was no actual business'
I had a great title and a fat salary but, in the beginning, there was no actual business as such at Cauldwell Communications. There were loads of people from corporate backgrounds who were like rabbits in the headlights, thinking: ‘Where’s my team?’ The average life of a director in that company was six months. It was entrepreneurial – you had to build the business from scratch. We grew from nothing to having sales of £500 million in two years.
I’ve worked for many companies and lived in different countries, including two years running a pineapple plantation in Costa Rica. For sure, I have changed a lot over the years, but what I have learnt is that communication, or a lack of it, is the biggest problem you can have in a business. If your employees aren’t aware of the strategy of the business, then they won’t be pulling in the same direction – the right hand has to know what the left hand is doing.
