Richard Branson on Decision-Making For Entrepreneurs

Editor's Note: Entrepreneur Richard Branson regularly shares his business experience and advice with readers. What follows is the latest edited round of insightful responses. Ask him a question and your query might be the inspiration for a future column.

Q: What were your most important managerial decisions -- the ones that changed your business? -- Volodymyr Kravchuk, Kiev, Ukraine

A: Most good chief executives or entrepreneurs only make three or four key decisions every year. Running your business's day-to-day operations and managing your team can take much of your time, so there are usually only a few that stand out -- the game-changing decisions that can make or sometimes break a business.

Looking back over my career, which now spans more than four decades, there were many occasions when I got it right and a few when I did not. A few guiding principles helped; these are the things I would have liked to have known when I was just starting out.

1. Trust your instincts.
There have been many occasions when I have led our team into markets that industry experts told us to avoid because the competition was too fierce or the cost of entry too high.

This was the case when we launched our airlines Virgin Atlantic and Virgin Blue (recently rebranded Virgin Australia), in 1984 and 2000, respectively. On both occasions, my fellow directors were nervous about our chances for survival, given the strengths of our competitors -- namely their market share and fleet sizes and experienced personnel. But I felt that our competitors had become complacent; that passengers wanted something different. With the right energy, focus and flair, we could make our mark.

Virgin Atlantic went from strength to strength, and now carries over 5 million passengers per year. In the case of Virgin Blue, we backed the plans of a former Virgin Express executive and entrepreneur Brett Godfrey, who first presented his ideas to me sketched out on a beer mat. After launching the business with just two Boeing 737s, we have built Australia's second biggest airline, and now have a fleet of nearly 90 planes.

2. Focus on your customers, not your critics.
It wasn't just our team that occasionally worried about our stepping into tough markets. Over the years, our critics fretted about Virgin's expansion into airlines, financial services and mobile phone services. What did our company know about these industries and how would we manage the complex issues?

Related: Richard Branson on Embracing Change

I rarely paid attention (which also drew criticism from some analysts). My answer was always to focus on the customer experience, ensuring that we offered the best service, most innovative products and best value.

This worked especially well in mobile services, where most companies still require customers to sign contracts that are difficult and expensive to exit. We revolutionized the market by offering a pre-paid model. Our position was radical, but we were selling exactly what a number of younger and newer users wanted. Our businesses grew quickly in the U.K., Australia, Canada, France, South Africa, the United States, and more recently in India, expanding our customer base and brand far and wide.

3. Always support your team.
In previous columns, I have discussed how crucial it was for me to find great managers to run our businesses. Day-to-day management has never been my forte, and my early decision to step back from operations gave me the freedom to focus on our main challenges and opportunities.

This meant that I had to learn to trust the management teams, and to support them when they saw an opportunity. When Matthew Bucknall and Frank Reed came to us in 1999 with the concept of a family friendly health club, we decided to invest. Very quickly, they impressed all of us with their innovative approach to customer service and team building.

Related: 10 Time-Management Tips That Work

Soon after we opened the first few clubs, Nelson Mandela called me, asking if Virgin could rescue a chain of South African gyms. That seemed a stretch, because we had only a handful of locations in Britain, but Bucknall and Reed were confident, and such was our trust in them and their team that we signed onto the deal. And they were right: Virgin Active South Africa is one of the key drivers of that business's growth.

4. Know when to say goodbye.
It can be very difficult to know when to sell, since as a founder and entrepreneur you become very attached to your business and your team. Look into whether selling will be good for the overall health of your company, or if you need objectivity, ask trusted advisers to do this. But brace yourself -- the answer might be yes.

We have sold a number of Virgin companies over the years. Probably the most notable occasion was in 1992, when we sold Virgin Records to EMI and used the cash to expand Virgin Atlantic and other companies in the group. It was a very emotional day for me -- at one point, I broke down in tears. Looking back, it's clear that we sold at the right time and the decision made sense for Virgin as a whole. That secured our group's future and gave us a war chest for investing in new businesses.

Selling is difficult, and you will be tempted to hold on too long. This is one of the biggest mistakes an entrepreneur or chief executive can make.

I held onto Virgin Megastores for too long. Despite the warnings of my management team, I could not bring myself to sell the business until a few years ago. By that time, DVD sales had collapsed and the whole industry had been revolutionized by Apple's iTunes store. You can't get them all right!

Finally, when you are facing a difficult choice or must make an important decision on behalf of your company, keep in mind that the answer might not always be yes or no -- sometimes there are other options. Your job is to lead your team in the search for the best solutions, which are not always the easiest ones.

Related: Richard Branson on Strategies for Success (Slideshow)