If there is anyone who knows how to grow a business it is James Caan.

As well as being co-founder of The EBA he is a serial entrepreneur and runs his successful private equity firm, Hamilton Bradshaw.

We asked him to reflect on his success stories so you can learn from his lessons.

Has the value of your portfolio continued to rise despite the tough economic conditions?

We’ve doubled the value of our portfolio. I’m genuinely quite surprised because in the current climate it shouldn’t really happen.

So why’s it doing better? I think it’s because our model is quite unique. Most private equity and venture capital firms are essentially financial specialists- bankers, lawyers, and accountants. That’s great when they market is doing well. But there’s a journey between doing a deal and exiting. Regrettably, private equity firms don’t actually do a great deal during the journey.

So they’re learning from the mistakes you’ve made in the past?

I’ve lived through two recessions. In 1992 I nearly went out of business, posting our accounts we’d made £1,500.

We were technically insolvent and there was a period where I got to Friday and didn’t have the money to pay the wages.

Why was I in that position? I didn’t cut fat enough because I didn’t know how, I hadn’t faced it before.

In practical terms how do you offer the value the businesses require?

This is not about turning up once a month at a board meeting.

I work seven days a week, which is why I’m in the office on a Saturday and Sunday. I’m in the office at 8am and don’t leave until 10 or 11pm at night.

People might think that’s mad but I am really passionate about what I do so I am eternally motivated.

Describe what you do with each business

We track what they do scientifically. We’ve redesigned all the key performance indicators (KPIs) of all the businesses we’re monitoring.

The drivers for your business will always change so it’s good to review your KPIs regularly.

Give us an example

Webrecruit is an online recruitment business we invested in last year.

When we came on board it was making £100,000 net profit. But while it was doing that its free cash flow was negligible. It was literally living hand to mouth.

A year later, we’ve taken the business from £100,000 to £1m net profit.

So how did you turn the business around?

It’s the same business, it has the same management. In a market when we should have reduced headcount we’ve increased it by 50%, by getting them to focus on the markets that were performing.

It’s a bit like going into a shop and they’ve got too much stock. Sometimes businesses don’t listen to their customers.

The only person I’m interested in listening to is the guy that’s going to buy my product and write my cheque. I’m not interested in anyone else because it’s free, it’s cheap and it’s worthless.

Is this something you see with a lot of the businesses you come across?

A lot of businesses have customers that they’ve had historically and don’t make any money out of – key accounts, with low margins.

We’ve  looked at improvements in productivity, customer margin, customer concentration, improvement in focus on sectors that are clearly doing better than others.

We’ve  looked at the productivity levels within the workforce and the people that are not productive that we physically couldn’t afford to keep.

What have you learnt in the last two years about yourself, business and investment?

I’ve learnt that people are afraid of risk, because a risk is only a risk if you don’t understand it – it becomes a calculated risk if you understand it. If you can’t take risks, you’ll never move on.

So I’ve become obsessed with understanding risk on every level. I analyse it to death because once I’ve got to the root of it, I understand it, which means I can take it. It’s had a profound impact on my mindset and how I think and manage my business.

Finally, what rules should the businesses you mentor abide by to move forward?

There are two things.

Firstly, the skill in business is not to know the answer, but to know the right questions to ask.

Secondly, the thing I’ve taught any entrepreneurs or EBA members I’ve had the pleasure of meeting is that it’s not all about winning the battle; it’s about winning the war.

Too many entrepreneurs become obsessed with the battles – and then they lose the war.