BQ Breakfast has launched a series of BQ Breakfast Live forums to bring together entrepreneurial people of North East business, in convenient and friendly surroundings, to discuss and receive expert advice on major issues vitally affecting them. The first BQ Breakfast Live centred on Finding Funding For Entrepreneurs. Ninety people attended this joint presentation by the BQ Breakfast website, North East Finance, and South Tyneside, Sunderland City and Durham County Councils.
If you were unlucky and couldn’t attend the Quality Hotel, Boldon, on the day, you can catch up here and now. This website is running a series of extracts. The second one follows…
The audience at the BQ Breakfast Live forum heard first hand how four local entrepreneurs in sectors as varied as dentistry and offshore health and safety, overcame any difficulties of funding. Scott Hopkinson (Moneygate Group), Craig Huntingdon (Dentist Direct), Stephen Lovely (For Sale Sign Analysis) and Richard Pargeter (Green Marine Solutions) were interviewed for BQ by Caroline Theobald and also answered delegates’ questions…
On covering both fronts
Richard Pargeter says three partners actually set up his company. "The biggest difficulty has always been delivering the job at the same time as running the company. You’re off on site and working offshore. Sometimes you’re overseas for long periods. I’ve just come back from three months in Uruguay for example. Developing the company and putting its strategy in place cannot be done while you’re doing the job. It was a test for us. We were working on the Teesside offshore wind farm at the time. All our resource was going into a team that was doing a great job for Siemens. So it was important we pulled one of the guys out while we put together the business plan, market identification, the business case, and it took us a lot of time because we were regularly dropping in and out of the process." They pulled in favours from friends and people who were going to be involved and who had experience in doing this previously, people with a financial background, "We got private finance and help with putting documents together. North Star were very patient with us. Instead of us having to put a document case together they visited us on site. We could then explain the market and the area we were working in."
Andrew Mitchell (North East Finance): "That’s a very important point, I can confirm having been on the investor’s side but also having been on the other side raising money as owner of a small business. One of the most difficult things to manage is that balance of continuing to run the business to keep profit and sales moving in the right direction, and finding time to go through all the inevitable hoops and due diligence and legal considerations. I have seen so many companies that didn’t manage that balance and within six months they were off negotiating with venture capitalists or business angels or banks and the business started to slide. Of course you were then on the back foot in terms of valuation and all that kind of stuff." He advises, before finding the money to get venture capitalists, try to find a good non-executive to give you that good advice. " A lot of people in the region retire early or may have sold a business and can add value to yours, and would be keen to do so – if I may say, probably a little cheaper than some advisors. That’s not to say avoid advisors altogether because you get them in eventually anyway. But the other people can help you during that critical period when you are spending time in Uruguay while at the same time there’s a huge commitment to the investment process."
Stephen Lovely: "You can spend too much time involved in running the business at the expense of the financial side, and vice versa. Neither works well. You must be willing to do both and it’s a continuous process. You must always be preparing your next business plan and be sure at the same time that you are fulfilling the promises of the last one. You must keep that relationship going all the time and run the business. It’s difficult. We overcommunicate and send more information than people ask for. We tell them when things are going wrong and we tell them when things are going right. They probably ignore half of it but they can never say then that you didn’t tell them."
Communication is important, it is suggested.
Stephen Lovely: It’s very important to understand just what is required. In terms of due diligence process, it was a lot more intense than we envisaged. Every claim we have made, every figure produced and every document potentially signed has been inspected. So you need to be absolutely mindful of that. Transparency, too. I think we’ve been very prudent about business planning. We’ve been as accurate as possible, extremely cautious and that made the due diligence quite simple and straightforward. If you can minimise that aspect you’ll save a lot of time.
Scott Hopkinson: "You’ll probably take twice as long as you think you will. From start to finish the process should usually take three to four months in terms of doing that and running the business at the same time. It’s hard work. Between 30% and 50% of my time in the last two years has been spent on fundraising. Management credibility is essential too. People buy management, not product. We are businessmen running an IFA business. We’re not run by egos which is very relevant in the financial services market. We approach it differently, as a business. We looked at where others did things well and couldn’t do things well. What they couldn’t do, we did and took it on. We generated leads for advisors, leaving them to sell which is what they do. We did everything else and got profit out of it. As the business grows, more financial advisors are going to come and work with us. The more success we get, the easier it is to attract firms."
The tricky step
Richard Pargeter: "Sometimes you need to take that step that’s just a bit tricky. The offshore industry has a comfortable lifestyle. It’s warm and fuzzy. Then you jump into the cold and prickly. It’s a constant battle. You think you can step across then you come into this competitive world. It’s been a full turnaround for us. The offshore industry is very risk averse. Nobody wants pollution, sinking ships or turbines falling over. It’s all very expensive assets. So for them to engage with a SME with very little money backing it represents a high liability. So we have to ensure we put the right processes and management systems in place – insurances and so on. We must show how we will mitigate risk on behalf of our clients. Not easy when you’re dealing with £1.5bn wind farms and you’re a small minnow. You have to turn their risk assessment on its head and show how you’ll mitigate all their problems and all their concerns. Supply chain. Personnel and recruitment. Plan for growth. Demonstrating how you do your job is the easy part. But we knew that from the start and implemented it accordingly. Now we’re clawing our way up the ladder. The cold and prickly place is lonely. I remember when we sat down in the pub knowing we were going to form Green Marine and we started discussing structure of the company and who was going to deal with what. I could run a business by myself but I was never going to do that. It was great having a team round you to share the workload and give other skillsets as well. That again is where you get the mentor in and the support from North Star and the non exec. It’s brilliant for us. Even on the most sleepless nights and even if you have 26 years of experience just being able to pick up the phone to say ‘this is the plan, what do you think?’ is good."
Craig Huntingdon: "Leaving the warm and cosy corporate world of Aldi, a multi-million pound cash rich company, to a self-finance start-up is incredibly difficult to do. It was a leap of faith going into dentistry and we did generally believe we could make a difference in the dental sector. We started asking patients and friends and people in the pub: ‘What is it you want with a dental practice?’ We thought we’d built it from the ground up. We compiled a list of 10 things that people disliked or would like to see more of in dental practice. Number one was that bills should reflect the NHS a bit more. We looked at strategies in other European countries. Number two was that people hate the drill and the needle. That set us travelling the world trying to find a solution to that problem. Then it was a case of using my retail experience in dentistry. Weekends is when people have time available to visit the dentist. So we opened on a Saturday, and on Sundays in some cases. We opened at eight in the morning and closed at eight at night. So it was bringing aspects of my retail background to a dentistry arena which really is unconsolidated, and still reflects some practices of 100 years ago. You can go to Beamish Museum and see that some things set up in 1912 haven’t changed in a lot of practices. They are two ups, two downs. Sometimes the practice is upstairs, sometimes down. We decided it could be much more retail orientated in delivering a service, and if you can remove the pain and the discomfort it’s hopefully a win-win, though it’s still a leap of faith. We have three franchises to date and it’s working."
Stephen Lovely: "Among the four of us Craig is not a dentist, Scott is not an IFA and I know sod all about digital signage but we all four know something about what we do. You surround yourself with people who have skills you don’t have. I’m particularly poor with people. I make sure I surround myself with people who have people skills. Whatever skills you lack, you have to surround yourself with those who have what you need."
Second in a series of four articles. The next in the series will be published tomorrow. Get the articles direct to your inbox by registering for BQ Breakfast - click here
First article - Finding funding for entrepreneurs
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