Getting rich the Richer way?
More years ago than I care to remember I visited a shop in Stockport, Cheshire, called Richer Sounds and bought a hi-fi set. It wasn't a very big shop but it was stacked to the gunnels with equipment. Two things prompted me to become a customer – the prices were keen and the staff were helpful and knowledgeable.
And then, in 1995 I saw that Julian Richer, the owner of the shop (actually the owner of a large number of shops) had written a book called "The Richer Way: How To Get The Best Out Of People". The preface to the book told me that Julian Richer, the author and owner of the shops, was in the Guinness Book Of Records for having the highest sales per square foot of any retail outlet in the world. He had become Britain's favourite retailer of TV and hi-fi equipment. The book described his extraordinary success.
It was (and still is) a very good read. It tells the story of how Julian Richer achieved his success through putting people – his staff and customers – at the centre of his business.
What has prompted me to make his story the centre of today's blog is that in May of this year Julian Richer, aged 60 and with no children, created an Employee Trust. This enabled him to pass ownership of his company to the people who had helped him build the business. He felt that in employee ownership, the business would have better stewards than if it was in the hands of some distant and financially driven investor.
350 companies in the UK have adopted the Employee Ownership Trust (EOT) model. A report by Cass and Manchester Business School in 2017 came to the conclusion that such firms had either superior or similar economic performance to non-employee owned firms. What is more, this becomes more evident when times get tough.
It is true that Richer would have received more cash if he'd sold the company outright but he will still receive many millions and additional payments over the next 15 years. This interesting business model has allowed him to avoid changing the company strategy which he had worked so hard to put in place and will enable him to maintain his involvement and interest in the business. For those socially minded entrepreneurs out there, it is a framework worth thinking about.