How we built a business out of recession - chapter 24 - a series of unfortunate events
The story of CitNOW*
This is the 24th 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.
Running my own business was the best choice I could ever make. But I was biased. Watching my father’s experiences with Unilever in the 1960s - 70s growing up gave me a healthy disregard for other people’s businesses, which was only confirmed further when I left university and entered the job market. I soon realised that working for others was mostly a mug’s game. Poorly run and poorly managed companies seemed to be typical. Not all of them were small and insignificant either. I was happy to put up with them, for a while at least, believing that I could certainly do better.
The one exception was Alan at Sony. He was a great boss. Not only did he hire me out of the food industry - thank god; he did it despite pressure to hire internally. He was a consummate professional who knew how to manage, always popular with his staff.
I didn’t work for Alan for much more than a year. It was nice while it lasted, but he was promoted and joined another division of Sony. After one more year, I left to enjoy an expensive lesson on how not to run a start-up. I paid back the £15,000 loan to my parents over the next 4-5 years, having obtained gainful employment with one or two of those poorly run companies I was trying to avoid.
I’m happy and lucky. Being a persistent asshole who didn’t take no for an answer, never quite satisfied with my situation, served me well. I’ve failed** in business twice, which gave me plenty of time to think, brush myself down and go again until CitNOW was finally sold in February 2018.
I finally did make it, whatever that really means. I certainly scratched an itch that had been driving me mad since I was a teenager, and now I have something to show for it. It worked if we’re talking about money, although that never drove me to do what I did. I always got a much bigger buzz from the people we employed; the careers launched - the first proper job for some, and the customers who used our products. Plus, I wanted the freedom to do what I wanted, even if that sounds like a petulant 5-year-old.
I’ve had plenty of time to think while writing this story, trying to make sense of what happens when you’re in the middle of it all. I don’t think it would be inaccurate to describe it as a series of unfortunate events***. It certainly felt like we were constantly being tried, with new challenges never far away. Some were immediately elevated to a fix now, defcon 1; others were allowed to drag on, annoyingly nagging, unresolved until someone found the time. Occasionally, they even worked themselves out without our interference, and we wondered why we’d been concerned in the first place.
I’ve touched on entrepreneurship being a game of survival before. In our ten-plus years, the one constant was the regular appearance of these new events. As the business grew, the challenges changed. They all came with a degree of urgency which couldn’t be ignored, or you did so at your peril.
Identifying what needed our attention was sometimes a challenge in itself. If you can’t agree that something is wrong, time and effort must be spent reaching a consensus on what to do next. What many business books say is also true: it’s okay to make mistakes. The critical point is to recognise them and to act accordingly. Try to avoid making the same mistake twice. Sounds easy. You’d be surprised how often we didn’t learn our lesson, especially when it came to people.
After our first flush of cash with BMW dealers and stock sold to eliminate our software development debt by buying Codevio, we decided to approach the banks with renewed vigour. Working capital continued to remain one of our biggest challenges.
Previous experiences had been suitably disappointing but typical. An early approach to the Business Banker at Barclays in Wokingham resulted in a no, but I expect we’d already exceeded his pay grade.
On the other hand, Lloyds had taken the rather old-fashioned view of employing Bank Managers. Ours was excellent, but called time when we reached his sign-off limit of £120,000. It was odd, given that the overdraft was secured against properties with plenty of upside for the bank. To get to this point, the bank had a charge on Donna’s house in Cobham (which we rented out for years in order to rent in Wokingham) and Colin’s house near Stirling. Alistair and I couldn’t help. We didn’t own homes anymore because of our respective divorces. It was certainly a brave move by Colin.
The way forward was to develop relations with more senior bank staff above branch level. We needed more credibility, which had to be bolstered beyond our limited sales success. The path to start the process came from hiring Steve, our first Finance Director, and appointing an accountancy firm in Reading that promised some sort of bank approval.
It still didn’t stop HSBC at their Reading regional business hub saying the computer says no. The humans seemed to think our requests for a larger overdraft wouldn’t be an issue, but the computer red-flagged a lack of assets on the balance sheet a few days later. Warm-fuzzy turned cold automaton. We were dismissed.
Our quest for a bank with reasonable expectations was set to continue for some time.
*CitNOW was our company’s trade name before we sold it in 2018.
**In the US, trying and failing is not considered a failure, at least not like it is here in the UK. Attitudes are different. I remember one vague competitor to us in my second start-up in the TV industry actively sharing his joy at our demise. It was a valuable lesson.
***A Series of Unfortunate Events is a series of thirteen children's novels written by American author Daniel Handler under the pen name Lemony Snicket. The books follow the turbulent lives of orphaned siblings Violet, Klaus, and Sunny Baudelaire. A film was released in 2004 starring Jim Carrey, worth a watch if you haven’t seen it, and there is also a TV series.