Chartered accountant Karan Bilimoria collects business accolades in the same way some people collect beer mats. Last week, another trophy joined his already crowded mantelpiece, as the ICAEW presented the founder and chief executive of Cobra Beer with its Outstanding Achievement Award for 2005.
The prestigious honour was given in acknowledgement of Bilimoria’s exceptional entrepreneurship and contribution to charity. Cobra Beer has become one of the fastest-growing beer brands in the UK since it was founded fourteen years ago. Today it has a retail turnover of £65m, is sold in 6,000 restaurants, 5,000 pubs, bars and clubs and exported to 30 countries worldwide.
In his typically understated way, Bilimoria puts his success down to ‘luck’. But there’s nothing particularly lucky about his rise up the ranks of business success stories. It’s more a case of hard work and a good head for numbers.
Despite a list of awards long enough to make any egomaniac weep (from the CBE in last year’s honours list to a ranking in the Sunday Times top 50 SMEs to work for), the 43-year old accountant turned entrepreneur, who also boasts a law degree from Cambridge University, says he’s particularly proud of the ICAEW award. ‘I was overwhelmed. The qualification has always meant a huge amount to me. It’s what brought me to the UK when I made the decision, aged 16, to be a chartered accountant,’ he says.
Bilimoria has much to thank his grandfather for, not only as a business inspiration but also for guiding him down the accountancy route. ‘It’s one of the best forms of business training to get a true grounding. Working for Ernst & Young taught me the importance of lifelong learning. In a lot of businesses, people miss out on that,’ he says.
At the same time, being exposed to businesses of all shapes and sizes gave Bilimoria what he describes as a privileged view of life on the other side of the audit fence. His objective was never to stay in practice, but the experience of life in a Big Four firm helped to cement the business principles still in place today.
‘There’s a whole ethical side to accountancy, which is crucial, and the approach is very thorough and logical. You’re constantly trained to question and enquire and look beyond what’s put before you.’
And having to deal with clients in often ‘challenging’ situations was, he says, a valuable lesson in the need for strong interpersonal skills in business.
At a time when the profession faces something of a crisis, Bilimoria is a great role model, all the more so for not shunning his accountancy heritage. ‘More and more it’s perceived as a business qualification and a training for business. In my view, you’ll only be a good practising accountant if you understand business.’
Bilimoria rejects suggestions that the UK has failed entrepreneurs, although he’s the first to admit things have come on a lot in the last 20 years. ‘When I was at Cambridge in the mid-eighties, the word entrepreneurship didn’t exist in the university’s vocabulary,’ he says. ‘I do believe that 20 years ago this country didn’t encourage entrepreneurs – it had a Del-boy, secondhand car salesman image.’
It’s one reason why his family back in India were so discouraging when he first touted the idea of leaving the relative safety of employed work to set up on his own at the tender age of 27. ‘I was told by my family and friends, “if you’ve decided to stay on in the UK, you’ll never be able to make it to the top”.’
Despite a distinct lack of encouragement for business startups, a notable dearth of senior Asian role models (‘there was just one Asian partner at E&Y at the time’) and being more than £20,000 in debt, Cobra Beer Ltd was born.
With no knowledge of the marketplace, Bilimoria had entered the most competitive beer market in the world opposite long-established, giant brands and at a very difficult time – the first shipment of Cobra arrived in the UK in 1990, at the start of the recession.
At a time when offshoring production to India is increasingly the norm, Cobra has since moved production from Bangalore (where the product was brewed for the first seven years of its life) to the UK. Today the beer is brewed under licence by Charles Wells, the UK’s largest independent brewery, which also brews other international brands including Kirin from Japan and Jamaican Red Stripe.
More recently, Bilimoria signed a deal with Polish brewer Browar Belgia to boost production for the European market. And a partnership with Mount Shivalik Group, the largest independent brewing company in India will, almost a decade and a half after the Cobra brand emerged, again brew the beer under licence in India, but this time for India’s rapidly growing domestic market.
Bilimoria’s accountancy background stood him in good stead when it came to raising finance for the business, of which he still retains a 72% stake. ‘I used a variety of different sources – text book instruments like bills of exchange, loans, overdrafts and invoice finance. Giving away shares would have been an easier route, but the challenge was raising finance without losing the shares.’
In hindsight, he believes it was a wise decision, allowing him to give something back to the employees he values so highly with a share option scheme for everyone in the company that is currently being implemented. ‘You absolutely don’t have to be ruthless to be successful in business,’ he says. ‘The most important thing is people and building a fab team. I really believe that if you give trust and respect to people, they give it back.’
One of the biggest barriers to growth for entrepreneurs, he says, is the challenge of letting go. ‘I never had a problem with that,’ he jokes. ‘The skill of delegation is something I learned as an accountant with Ernst & Young.’
Still, Bilimoria admits that relinquishing the FD role was a bit more of a wrench. It was only three years ago that he handed over the financial reins to Dynshaw Italia, former financial controller of Ebookers. Since last year, Italia has also taken on the role of COO. ‘The FD role is core to the business but also I felt I needed to grow the business to a certain size before I could hand it over to someone else,’ Bilimoria says.
Apart from being young and dynamic, it was Italia’s experience of floating Ebookers on Nasdaq that clinched the deal. A listing for Cobra is definitely on the cards. ‘We could do it at any time. In fact we nearly floated a couple of years ago but we were advised against it. Grant Thornton has been our corporate adviser for 10 years now. Without its support, we wouldn’t be where we are today.’
Today Bilimoria spends an increasing amount of time encouraging others to grab opportunities and put their business dreams into reality. ‘Britain has become a meritocracy. The opportunities are there,’ he says.
In fact, Graham Ward, chairman of the ICAEW’s award selection committee, said Bilimoria stood out in the nominations for this year’s award, not only because of his charity work (see box), but also because of the way he uses his business and accounting skills to help others as well as his involvement in a number of SME and entrepreneur panels.
‘It’s very important to have role models when you start out,’ Bilimoria explains. ‘We want to encourage people to set up on their own. You can do that by spreading the spirit of entrepreneurship at university – once that seed is sown and they take it into the wider world, 20 years down the line, they might just do it.’
But he remains modest about his good fortune. ‘Success is a journey – we still have a long way to go – but the most important thing when you’re starting your own business is your vision. That should underlie everything you do.’
Bilimoria’s vision for Cobra – to brew the finest-ever Indian beer and to make it a global beer brand – is well down the road to being executed, as the ever-growing list of brewing awards more than illustrates. Luck?
I don’t think so.
GIVING BACK TO THE COMMUNITY
Corporate social responsibility may be the latest buzzword to make companies feel better about themselves, but for Karan Bilimoria, founder and chief executive of Cobra Beer, giving back to the community is not just about feeling good about what you do – it’s good business sense.
‘Wherever your business is, you must reach out and be outward looking and give back to the community,’ he says. ‘Every business can do that. From our very early days we’ve been able to support events by giving away our product for free as a donation in kind.’
Over the years, Cobra Beer has given away around £100,000 worth of beer at a variety of charitable events. But the generosity also serves as a good marketing opportunity. ‘It’s a win-win situation,’ Bilimoria explains.
Bilimoria also supports a number of charities and acts as a business adviser. These include the Thare Mache Starfish Initiative, which fights prostitution and slavery in the developing world; Rethink Severe Mental Illness; The Memorial Gates Trust; and the Shrimati Pushpa Wati Loomba Memorial Trust for the education of children of poor widows in India.
‘More and more in Britain we are demonstrating that it is not just important to be the best in the world, but the best for the world. So many businesses are putting back into and engaging with the community.’
Just last month, the Institute of Fundraising and Business in the Community joined forces to urge employees to ‘PAYE less, give more’ by supporting their favourite charities through Payroll Giving – a tax-effective payroll donation scheme that allows employees to give to charity straight from their gross salary and to get immediate PAYE tax relief of up to 40%.
It means that £10 donated each month by employees will only cost those paying basic rate income tax only £7.80, or £6 for higher rate taxpayers. For SMEs that make Payroll Giving available to staff before the end of December 2006, the Payroll Giving Grants programme will match the £10 donated by each of their employees every month for a period of six months, plus give a cash payout of up to £500. This could be worth as much as £20 a month for six months to the charity.
Any employer can sign up to Payroll Giving, but only SMEs with fewer than 500 employees are eligible for the Grants programme.