How we built a business out of recession - chapter 28 - lets get personal
The story of CitNOW*
This is the 28th chapter about CitNOW, the company started from a kitchen table in Winnersh, Berkshire. If you’d like to read from the beginning, here’s a link to chpt 1. Each chapter is a 5-minute read. It’s an early draft of a book.
CitNOW was founded by Andrew Howells and Donna Barradale in 2005, although the company was only registered in 2008. In February 2018, we sold the company to Tenzing, a UK private equity company. It has been sold again since.
When a start-up gets busy, many more bases need to be covered. As a small company with few employees, a lot of what you do is proactive, and you forget about the stuff you can’t afford. There aren’t a lot of customers, and the sales pipeline needs constant attention to prevent it from drying up to nothing.
When we weren’t on new business, we spent too much time encouraging reluctant participants with our sales app to see things differently and enjoy the benefits of a change of thinking and process. It was a blend of account manager and trainer, which we were only too happy to hand over when we started recruiting the support team we so desperately needed.
The job is more complicated than you think and was well illustrated by Jason and one of his sales team when he was in charge of Land Rover, Llandudno Junction. It’s funny and so frustrating at the same time because Jason was such a massive advocate and evangelist. Often, we found that the biggest obstacle to change was the busy manager who refused to make time.
During one of my many discussions with Jason, we often talked about the performance of his salespeople and why they still needed daily reminders - don’t forget to send a personal video on the vehicle in question after the call. Even though leads could come through email, there was still a lot where the first contact with the customer was on the phone. If Jason got busy away from the dealership, the number of videos sent would often drop off.
At least three of Jason’s salespeople at the time were middle-aged journeymen salespeople. They were perfectly capable of selling a Land Rover to a Welsh farmer and tempting others to make the journey down the A55, away from the bright lights of Chester and Liverpool. They all said how much they loved CitNOW and used it all the time. However, they also seemed to forget that their performances were counted, part of our stats package, which managers could access whenever they wanted.
On one occasion, after plenty of reminders, one of the forgetful trio sold several vehicles on consecutive days, having sent videos according to the agreed-upon process. He was delighted to receive his boss's congratulations at the next sales meeting and the commission.
The following week, Jason found him on the forecourt phone in hand with a customer, trying to describe the features of the vehicle being enquired about. No thought to suggest that he could have gone one better and sent his enquirer their own personal video, especially after his recent success.
You couldn’t make it up.
One of the key hires during our tumultuous expansion phase was Steve, our Finance Director (FD). A friend of a friend recommended him to Alistair. We needed an FD to start presenting the business in a more bank-loan-friendly way, and Steve needed a job.
I liked Steve, we all did. It didn’t put us off that he’d been running his own prefabricated homes business, which had finally failed. It was a great idea and could easily have been a success if he’d had deeper pockets or the market had been kinder. He’d also been a CEO before that, working on behalf of a major shareholder running a small manufacturing business in East Anglia. That had also been a tough ask, as he had to wind the company up. The fact that he had scars and experience with the muckier end of what often happens to small businesses was all good news. It meant he’d be a good scrapper in our fight for more cash as we continued to grow.
Donna and I were especially grateful for the discipline an FD would bring to the board. A meeting with financial reporting, written and presented by an accountant, meant our lack of discipline, especially around forecasting, was quickly exposed, as were the consequences.
At every board meeting, our recurring monthly revenue continued to grow. It sounds excellent, and it was, but with forecasting constantly wrong and the lag between purchase orders and cash in the bank, the strain on cash flow grew tighter and tighter until it finally happened. Steve informed us that we were unlikely to pay salaries next month. We were over-trading and needed to sort it out quickly.
You can take many actions at this point, the most critical advice being to sort it out quietly and avoid ever going there again. Steve managed to bail us out by calling on a high net-worth individual acquaintance, who lent the business £120,000 at 10% interest per month. I can’t remember the onerous penalties if we defaulted, I shudder to think. But we didn’t cross that line, overcoming our hump, repaying the loan, and returning to an altogether calmer situation.
It had never gone away, but the focus to find more working capital intensified, whether from a bank or from selling shares to a private investor.
I was surprised and disappointed when I saw the number plate on Alistair’s latest car - C17 N0W.
When he joined, he’d been driving around in a white Golf GTi, but it didn’t take long for a new 5-series to arrive after the BMW business was won. It made sense. We owed them a lot, and he still took plenty of meetings at BMW’s Bracknell HQ. No one would be clocking the car as he drove into the car park, but it was good to avoid early embarrassment with our new client. Be respectful. Plus, you never knew when someone might walk out to the car or see him in a conference car park.
It was a lesson I remember well from school days when the newly elected Conservative MP for Ellesmere Port, Barry Porter, insisted on keeping his Toyota despite General Motors (Vauxhall) having a manufacturing plant in his constituency. It created quite a lot of steam at the time, or perhaps it was just in our household.
The personalised plate was now attached to the front of a 7-Series a year later. Some naughty Sales Manager at Halliwell Jones had talked him into it. Of course they had. And he couldn’t resist adding the new plate, even though we were still embryonic.
You can argue it both ways. This is surely not a heinous crime. It’s fine to be bullish and put it all out there - look at us. Equally, it invites unnecessary negative attention when we should be more mindful of building our business quietly. It’s the difference between hard lessons learnt and having experienced the consequences of being screwed over or not. The alternative is to remain ill-disciplined, unaware of the consequences, and unable to resist the opportunity to pander to a hungry ego. I knew that feeling. It simply isn’t worth it.
Several weeks later, at a rare golf day for Alistair, someone senior from a dealer group called him a wanker when they saw the number plate as he wrestled his clubs out of the boot.
It was just a bit of banter. Wasn’t it?
*CitNOW was our company’s trade name before we sold it in 2018.
banter or fair comment :-)