2: The Funding Gap…

… conservative investors and a lack of access to venture finance.

A continuation of this post and this post where I’m exploring what positives we may have gained from starting a business in a recession.

It’s worth reiterating that I’m NOT suggesting the recession led to a positive net effect on our companies. We’d be further along had it not been for a challenging climate, although I do believe there were some important lessons from it all… ever the optimist, perhaps!

We bootstrapped our early years.

(In fact, we’ve never accepted investment, so I guess we’re technically still “bootstrapped”.)

That wasn’t a deliberate decision, but the state of the funding market when we launched didn’t lend itself to an investment campaign. We were forced to accept that early doors, but the journey without financial backing has afforded us several important lessons:

1 — We had to be creative.

When you don’t have piles of cash, you have to work differently. We couldn’t throw money at problems — we couldn’t even throw it at opportunities — so we had to think hard, fast and outside the proverbial box to compete against those who had plenty to spend.

Hanging ideas on a shoestring can be frustrating, but it also taught us the value of our own thinking and how to be inventive. If we had bigger budgets we could have chosen easier routes, but the easiest routes aren’t often the most original (or the most fun).

I’m convinced this has bred a virile approach to creativity in business we may never have found if we had deeper pockets. As a result, our decisions are always centred around how best to achieve an outcome, not how to spend a budget. The latter is lazy and I see it too often.

2 — Accelerated learning.

We could only hire into our team based on what was coming into the bank, and so — particularly in the early years — Ben and I had to do a lot of (varied) jobs ourselves… quite often, quite badly.

We were too tight to hire accountants so filed VAT returns and kept the books between us. We couldn’t afford legal fees so we learnt (largely from my long suffering legal eagle Dad!) how to draft our own client agreements, what to look out for in a contract and how to pick the right battles in negotiations. I am the proud owner of a Food Hygiene Level 3 certificate… long story, but you get the point.

In many ways, this crosses one of our principle beliefs —invest as much time building your strengths and outsource/hire where you’re weak— but that hasn’t always been possible.

I feel we now have a more rounded appreciation and understanding of all the roles within growing a company. I’ve no doubt we stretched our brains more, made stronger long term decisions and can better lead the processes and people who are now responsible for redeeming our weaknesses… but thank feck I never have to see the insides of a VAT return again.

3 — Profit or die.

We’ve been profitable since year one. There wasn’t another option. We had to make money or — quite simply — we couldn’t stick around.

That doesn’t mean we didn’t take risks, but they had to be well calculated. Every pound spent was justified. It fostered a profit-focus discipline that’s given us cash to reinvest and grow each year without taking on outside money too cheap.

Managing the need for profit, especially in a tough market, gave us a financial rigour that’s become the bedrock of our business model. It’s left us on a sound footing with a record of keeping our head above water when many couldn’t, and there’s value in that.

4 — Complete control.

Perhaps most obviously, Ben and I have complete ownership — and so complete control — over our companies.

Whilst we’ve lacked the stewardship and accountability that might have come with a board of investors, it’s given us the freedom to make mistakes and plough on with our own convictions. We could chose what advice to heed and what to dismiss, and ultimately decisions were on our head.

There’s a liberty in that which one day we might come to appreciate.

With all that in mind, and somewhat ironically, we’re currently exploring funding options for new ventures due out of the studio imminently… so the days of playing only with our own money are numbered.

Raising funds brings a new challenge but, perhaps most excitingly, an opportunity to be joined by some weighty brains with experience, expertise and a lot more than just their wallet to contribute.

And we’re always happy to welcome smart people to the party…