Chancing it all
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Entrepreneurs are well known for their risk taking strategies, an important part of starting up any business. GrowthBusiness meets five business leaders to find out how taking the plunge paid off in the long run.
John Sollars, CEO, Stinkyink.com
‘I remember when the full enormity of the situation sunk in’
Being on the verge of bankruptcy is a frightening situation for any business and when John Sollars, CEO of Stinkyink.com found himself in that position he knew he had a major decision to make.
‘I remember sitting with my dog in the office when the full enormity of what had happened sunk in,’ says Sollars. Only a few months after setting up his online ink shop in 2002, he was hit with the blow that most of his orders were fraudulent and there was nothing the police could do to recover his stock. Faced with bills to pay of over £32,000, there seemed few options open to him other than bankruptcy.
Sollars’ gamble was to remortgage his home, pay his debts, and carry on. ‘What really drove my decision was all the work and time I had put into setting the business up in the first place,’ he explains. ‘I had been putting in 12-hour days seven days a week and perhaps if I had looked at it in a cold business light I wouldn’t have made the decision.’
While he admits the first year or two afterwards were difficult as his weak balance sheet made it hard to get credit from suppliers, a few years down the line the risk certainly seems to have paid off. Now Stinkyink boasts sales of over £3 million and it’s still growing. ‘I couldn’t have imagined this success,’ says Sollars. ‘It was a really tough time and it shakes you mentally, financially and emotionally but deciding to go on was definitely worth the risk.’
Phil Cameron, founder, No 1 Traveller
‘I was told that I would be frustrated by losing control and working for someone else’
‘You can only sell your company once, is this the day you want to do it?’ That was the question put to Phil Cameron by a close confidant when he was debating one of the biggest decisions of his life.
Cameron set up airport lounge operator No 1 Traveller and had been running it for three years when he decided to sell a majority stake in the business to bring in a far greater level of investment.
‘I remember being told that I would be frustrated by losing control and working for someone else,’ recalls Cameron. But what bothered him most of all was his fear that investors might get in the way of the growth plans he could clearly envisage for the company.
Having received assurances from the investor, a private Qatari fund, that his views would be listened to, Cameron sealed the deal and his stake in the business fell from 80 to 40 per cent in return for the funds he needed to pursue a more aggressive expansion strategy.
Cameron says the business was growing before the deal, but incrementally. ‘I wanted to say to the likes of Heathrow, “I want 10,000 square feet asap”. That just wasn’t possible before.’
The company will open seven or eight lounges in the coming year; only one a year would have been possible without the funding.
‘The attraction of future growth is massive,’ Cameron notes. ‘I am more comfortable being less involved in a company that is doing far better and is worth so much more.’
John Gambles, founding partner, Quadrangle
‘All my instincts were telling me to do it, but it was the scariest decision I ever made’
Living up to his surname, John Gambles has taken a series of risks since setting up consultancy firm Quadrangle in 1987.
‘Starting up was a big decision in itself, in 1989 I went ahead with a management buy-out and in the mid 1990s I bought back all the equity,’ says Gambles. ‘But this was by far the riskiest and scariest decision I ever made.’
Gambles followed his gut in 2005 and started to shift the company’s focus from consultancy to research, but did not officially relaunch Quadrangle as a research firm until 2007. ‘They were the scariest two years of my life,’ he recalls. ‘Even though all my instincts were pushing me towards research, I had no evidence that there was real demand there for it.’
One of the most daunting elements of the decision was the need to halve Quadrangle’s workforce to a core 12 staff members. Now though, the company has over 60 employees and has tripled sales to £10 million since 2007. ‘Our ambition is to triple the size of the business again by 2015 and we are actually a bit ahead of that target at present,’ says Gambles.
Five years on, Gambles admits that the strategic shift seems crazy, because he was going on pure instinct with no proof. ‘I felt for years there was something we could be doing but were not doing and I let that instinct take me on a journey,’ he explains.
David Fishwick, founder, David Fishwick Vans
‘It was the beginning of the future, but it could all have gone so wrong’
‘It was like risking the Crown Jewels for something that might never happen,’ David Fishwick says candidly. The entrepreneur, who runs van and minibus company David Fishwick Vans, is going back over 13 years to when he took a gamble on an empty piece of land in Lancashire.
‘I was running my business from an old garage with a portacabin,’ he explains. ‘I wanted to expand and make my mark but I could not afford a big shiny new premises.’
What Fishwick found within his price range was an unused piece of land off a busy main road, which he believed would be a prime location for his business. The problem was the site had no entrance and no planning permission.
Though he was advised to go nowhere near the deal, he somehow felt he could sort these problems out and he bought the risky site, which he says could only be legally reached by a helicopter. Over the next year, he firstly secured the right to an entrance and then after some hard graft was granted planning permission. The rest, as they say, is history.
Now David Fishwick Vans supplies new and reconditioned vans, minibuses and minicoaches across the UK. The building that was eventually constructed on the risky land has turned out to be the first of three large buildings that make up the growing company.
‘Buying that land was the beginning of the future,’ states Fishwick. ‘It was the turning point of my career and business but it could have all gone so wrong.’
Antony Ceravolo, CEO and founder, ECNlive
‘It was a huge financial risk – it was going to cost a seven-figure sum’
One of the entrepreneurs behind movie rental business Lovefilm, Antony Ceravolo was no stranger to risk-taking when he set up ECNlive in 2009.
Twelve months ago, he felt the firm, which creates digital display networks, had made its mark on the market and it was the time to take on more risk. ‘We had been licensing a platform in order to distribute media,’ explains Ceravolo. ‘I decided to go back to square one and design and create brand new software of our own that would distribute the media.’
He admits it took many board meetings to convince directors that this risk was worth it. ‘It was a huge financial risk, it was going to cost a seven-figure sum and their view was that we did not necessarily need it when we could outsource it,’ he explains.
But convince them he did. ‘Now we have a new internet-distribution system that allows us to get content out in real time and build content from scratch,’ notes Ceravolo.
The system was implemented four months ago and the entrepreneur states it is already paying off. ‘We are gathering much more interest and have gained big name clients such as Eurostar,’ he comments. He notes it was definitely the new technology that won ECNlive the lucrative contract, as the transport giant needed a firm that could offer real-time data displays to show its timetables and updates. ‘We are targeting cities across Europe and having this new software makes it easier to expand quickly.’