croissant-matzZGQk4o4-unsplash

The 3 Cs: Designing Office Space to Represent your Culture

In around 2012, Cake was still in the same converted cotton mill in Manchester that we’d started out in. It was ideal from a travel perspective, from a cost perspective and gave us the ability to move into a new office as the size of the team changed. We had moved to various offices within the building as we’d grown and by 2012 we were in the ground floor office. We had about 17 staff at that time and we were beginning to outgrow that office too.

At the other end of the mill was an opportunity for a much larger office space of 4,500 sq ft, which for 17 people is ridiculously large. However, we felt that it was an opportunity to build an office that was fit for our future and that represented our culture. When we first looked at this space, it was like an office out of the 1980s that needed not just updating, but a complete refit. 

There are various ways you can approach this, one of which is to hire a professional interior designer, and we did talk to a couple, but in the end, we decided that we would design our office ourselves. Money wasn’t the overriding factor in this decision, it was more that we believed we were in the best position to think about how the office would work because we had built the culture and the company and we knew it better than anyone else. We were confident that we could design something that not only looked good, but that also represented the culture and facilitated that culture. I’ll explain the thinking behind this in the rest of this blog. 

Tell your story through your office

We took a gamble and designed our office ourselves, rather than using a professional service, but it was one that really paid off. The measure of that was whenever we showed people around the office after we had finished it, we were telling the story of the company. It was never just an office tour, it was the perfect way to not only show people our workspace but also to talk to them about our ethos and culture, which was represented in the way that we thought about the office. 

By walking people around the office and explaining the layout, it taught them a lot about our thinking and the reason why we did certain things. This became a really nice story and I think everyone who walked around was impressed because they would arrive at our office which wasn’t really in the nicest area of Manchester and just looked like an old cotton mill from the outside and then they would walk into this really modern, forward-thinking environment. 

Our office wasn’t flashy – we didn’t have a slide in the middle of it, or beanbags all over the place, or a foosball table – but it was incredibly well thought out from a creative and practical point of view. 

Encouraging collaboration

One of the things we did was think about how we could create a space that would encourage collaboration. This was really important to what we did, because we would usually have small teams of around seven people working on the average project. We might have several teams on the project, or it might only be one team on a project, but we always made sure that the whole team sat together. 

That meant that whenever we started a new project, we would move people around the office. No one had their own desk per se, but what we did give everyone was a set of drawers on wheels. That meant when you moved desks, you could wheel your drawers to your new desk and still have everything that you needed in one place. This also helped to keep all the desks tidy. Projects lasted for different lengths of time. Some might only be three months long, others could be 18 months or even two years long, depending on what we were doing. The reason we encouraged everyone to sit with their teammates was to encourage collaboration. Everything we did was based on collaboration. 

When you keep teams together it’s just easier to turn around and tap your teammate on the shoulder and ask them a question, rather than having to walk to the other side of the office. 

Encouraging creativity

We also wanted to make sure people had space to be creative and do what they needed to. That meant there were different areas of the office that you could go to depending on your mood and what you were trying to achieve. If you wanted somewhere quiet we had offices where you could shut the doors. We had less formal areas where you could go and sit on a sofa to work, there were places where you could have some self-thinking time for creativity, and there were spaces where you could collaborate. 

The idea was that you could move to different areas of the office depending on where your mood took you. There were quiet areas and there were social areas. So, if you were in the quiet area you could stick your headphones on, listen to your background music and concentrate on what you were doing. Some of our engineers were working on really complex stuff and just needed that quiet space to concentrate for a while. But it was also really important to us that there were spaces where we could all go when we needed a break from that deep concentration, whether that was to get a cup of coffee, sit in the canteen and have some lunch, or go for a walk. We wanted to allow everyone to do whatever they needed to free up their minds and then go back to whatever they were doing at that point in time. 

We also made sure that there were plenty of meeting rooms. Not having enough meeting rooms is often a problem in many offices, and I’m sure it’s one you can relate to. We didn’t want people to need to wait three weeks to arrange a meeting. At the Cake office, if you wanted to arrange a meeting in a couple of hours’ time, you could book a meeting room and it would be available. 

Encouraging communication, collaboration and creativity

One of the most important features in our office was dry whiteboards. We put them everywhere. They were nicely branded, good quality, glass dry whiteboards. We had two or three in every meeting room, we had some around the open office space on stands that people could wheel to where they were if they needed to just huddle around one where they were sitting. All the glass partitions in our meeting rooms could be used as dry whiteboards too. So you could scribble on the walls and then just wipe it off when you had finished. That was a deliberate part of our thinking when we were designing the office.

We also had a glass dry-wipe table in what we called the boardroom. We got the largest dry-wipe board we could buy and put it on top of an IKEA table frame. This table could seat 12 to 15 people and you could use it as a table, but because it was a dry-wipe board you could scribble all over it, write down ideas here as well as on the whiteboards around the rest of the room and be really creative and collaborative in that space. 

Simple steps that make a big difference

Although we weren’t really strict about keeping the office tidy, we did encourage people to have clean desks. We did that in a few ways, I’ve already mentioned the drawers that each person had, but we also did simple things like ensuring there was plenty of locker space available. 

The two main reasons we promoted clean office space were that, firstly, we found that a clean office is just a better environment for everyone to work in. Secondly, when clients come and visit, it’s important that everything looks organised, professional, clean and tidy. 

We also thought about providing secure bike storage for everyone. As I said before, we weren’t in the nicest area of Manchester and you probably wouldn’t want to leave your bike outside for a long period of time, so we built a space for people to store their bikes in the office where they would be safe and dry. We wanted to encourage people to cycle because it’s healthy and environmentally friendly. 

Another very simple consideration was just making sure there were lots of toilets. We also set up a separate place to eat and we encouraged people not to eat at their desks. Instead, we would encourage them to go out for lunch, or go to the canteen and sit down, have a break and socialise with their colleagues or friends. The idea being that when they came back to the office they’d be able to get back to work and concentrate on what they needed to do. 

I’ve also mentioned that we had some couches in the office so that people had somewhere comfortable to sit if they wanted to. But we also had standing desks. We bought a number of these second-hand from a client who was selling them and we positioned them strategically around the office. That meant that if people weren’t sitting at a desk that had the ability to raise and lower, they could go to an empty one around the office if they wanted to stand up for two or three hours while they were working. These were really well used. 

Our office featured a lot of glass, some of it was frosted to give a degree of privacy, but this meant that there was plenty of light coming in.

Sharing our process

One final point that I’d like to mention in relation to our office design is how we shared our process. At Cake we had a very well defined and thought out process for building software. This became a key differentiator for us and it was something that our customers liked. The engineering team also liked it. This process wasn’t rigid, but it was an important part of the ethos and culture at Cake. I’d like to say that I had nothing to do with creating this process. We put a team of five of the engineering team together who spoke to their colleagues and put the process together over a three week period.  The process was a live document which was refined as required on an ongoing basis as technology changed and our thinking changed. That said, the main crux of the process remained the same over many years.

In this office, we had the process printed on perspex and hung it on the wall so that everybody could see it. The idea being that whether people were experienced existing team members or new staff in the office, everyone had a reminder of exactly how we did things and that kept everybody on the same page. This process was about collaborating really closely with our clients, making sure that communication channels were good and ensuring we were doing things in the right order with the right people involved at the right time. 

This process was flexible and from time to time there were minor changes to it, so we did our best to keep the perspex versions on the walls up to date. 

This was also combined with a flexible working from home policy, which I felt worked really well. The process helped make this policy work efficiently. We adopted a hybrid model where people could work from home if they wanted to, but they were also encouraged to come into the office and work with their team and it was the team who decided when people could work from home. That gave everyone the flexibility to work from home if they were expecting a delivery, or had a doctor’s appointment, or just wanted to have a day or two a week where they didn’t have to commute. But it also meant that our teams were able to collaborate effectively because there were periods where they were working in the same space together in the office. 

Time for coffee?

I remember going to a high growth forum at Lord’s Cricket Club, where I spent a day listening to eight entrepreneurs and CEOs talking about either having taken their company through a really high-growth period and then selling the business or their experiences of being in a high-growth period at that time. There was one common denominator across all of their talks: coffee. It was literally mentioned in all eight talks!

This was what I took away from that forum; that coffee was a focal point in the office and if you invested in a decent area for people to relax, socialise and even have informal chats among teams where they could also get good coffee, that was beneficial. 

I would say that it was a great investment of ours and we created quite a sizable space where you could get good-quality, freshly ground coffee. We had a couple of sofas in this space, as well as a big kitchen work surface in the middle with bar stools where people could sit. Of course, there were several dry whiteboards in here too, as well as a TV. 

It was a cool area where you could go and chill out, or have a bit of a creative or informal chat with colleagues. Often we also sat down with clients in here and had a chat, because from our ‘coffee shop’ you could see the whole office. This kind of space worked really well for us and I would recommend  creating a similar space in your office to encourage creativity, communication and collaboration. 

Remember the three Cs

We built an office space we were really proud of, which had lots of light, different areas for different things, plenty of meeting rooms and lots of dry whiteboards. But all of this stemmed from our focus on the three Cs: communication, creativity and collaboration.

ben-sweet-2LowviVHZ-E-unsplash

Ignore Personal Development at Your Peril

There’s a temptation when you start a company that you put everybody before yourself – that is exactly what I did.  Up to a point, there’s nothing wrong with that, because it shows that you’re selfless, that you really want the business to work and you are prepared to invest in your team before yourself.

Looking back I think that was misguided from a personal development perspective. You’ve got to stand back and say, ‘My personal development is really important’, because if you don’t do that I think it can slow down the growth of your company and slow down your ability to deal with stuff. What happens if you don’t focus on your personal development is that you end up learning slowly by making mistakes. The difference when you do personal development is that you find good techniques and speak to other people about mistakes they’ve made and how they’ve avoided mistakes. It will help you get things done more efficiently, more quickly and by making fewer mistakes. 

At Cake, I feel that probably for the first five or six years, I used to send other people on courses, to conferences and to user groups. It was all in the interests of the company because whenever those people came back, they’d improved themselves personally and, hopefully, that would have a knock-on to the rest of the team and the organisation as a whole. I was really willing to spend money and put effort into improving other people’s development. But I largely ignored my own personal development and, looking back, I think that was a mistake and one that probably held me back. I wish I’d done some of the things that I’m going to talk about in this blog earlier than I did, and I think if I had done that, I would have learned more quickly, made fewer mistakes and the company would have grown more quickly than it did. 

This is why I always advise entrepreneurs in startups to invest in themselves. It’s really important that you don’t forget about yourself and your personal development.

It was 2007 when I eventually felt that I needed to invest in myself, six years after I started the company. This process was instigated by me attending a seminar where a colleague of mine told me about a development programme he was a member, run out of Toronto in Canada. This colleague told me it was a programme for entrepreneurs that was run by an inspirational personality, Dan Sullivan, who was a coach to many successful entrepreneurs. He also told me that there were many entrepreneurs on the programme who were building their businesses, who were already successful to a point, but who wanted Dan’s help to get them to the next level and further. He told me that he’d really enjoyed the programme and that he thought I would benefit from it too. 

At that time, Dan Sullivan’s Strategic CoachⓇ programme was only available in Toronto. This colleague told me they were hosting a seminar at a local golf club and that I should go. So I went and I listened to what these guys had to say. 

What I really liked about it was that it wasn’t a one-off sales seminar or a one-day event where you learn stuff and then there’s no follow-up. Strategic CoachⓇ is a program with check-ins and follow-ups which act as reminders to implement the key takeaways until they become a habit.

What I often find with seminars is that you spend a couple of weeks afterwards being energised but very quickly you go back to reality, get straight back into what you were doing and the things you learned on that seminar get deprioritised. You don’t get the benefit that you should from it.

The Strategic CoachⓇ programme revisits things. There’s a constant reminder of what you should be doing. Every three months you meet up and go through the new stuff, as well as going through some of the things you’ve done previously and it helps hold you to account, as well as acting as a reminder. 

I also think that if you travel further for these types of programmes then that travel time gives you out of the office thinking time, both before you get there and about how to implement what you’ve learned on your way back. 

My first steps into personal development

I went to the seminar my colleague recommended and I really liked what they had to say. It was aimed at entrepreneurs and, back in 2007, that was the first programme I’d seen that was aimed at entrepreneurs. Although it was a lot of money for us in those days when we weren’t making a huge amount, I decided to join the programme. I can say, hand on heart, the benefit was way in excess of the money I paid for it. I have been part of the program since 2007  and I continue to benefit from the continually evolving thinking that benefits all its members.

In fact, I joined the first programme they were running in London. As you probably know from my previous blogs, we were based in Manchester so it wasn’t too far to travel. I would just jump on the (in those days) Virgin train and go straight down. That train journey gave me time for thinking and this all worked really well. The programme isn’t sector-specific, which I liked, and, as I’ve said, I really liked the fact that it focused on entrepreneurs. The other benefit is that there are different levels to the Strategic CoachⓇ programme. 

That means there’s the opportunity for progression. You might find that as your business develops and you’re in a position where you’ve been doing the stuff from the initial programme for the last few years that you’re ready for the next level. In 2015, that was the stage I reached and I joined what was called their 10X programme™. 

The initial programme I’d done in London was run by one of the associate coaches who is great, however, the 10X programme was run by Dan Sullivan, the owner of the company. I really enjoyed it. All the content produced for the programme at that point was produced by Dan, and you heard it directly from his mouth. 

Benefits of personal development

For the 10x programme™, I had to travel to Toronto. That meant it was effectively a four-day commitment for a one-day course. 

However, this was actually really useful because it took me out of the business. I would say it was one of the strategic byproducts that was especially beneficial. It took me away from the business for a few days, I’d turn my mobile off, leave my email alone. That was part of the programme on the day, to make sure that your brain was free to think creatively, to focus on what was being talked about and how that could benefit your organisation. I found it incredibly useful. 

It gave me confidence. It gave me tools and frameworks to deal with various things that, as an entrepreneur, you come up against on a day-to-day basis. One thing that it taught me about was time management and making sure you have enough free time. One of the aims of Strategic CoachⓇ, which sounds counterintuitive but I promise you absolutely isn’t, is that you must take enough free time. The idea being that when you are working, you can be focused, work really hard, be really creative and be really on it. You’re in a far better position to do all of that if you’ve taken some time out. If you don’t have any free time and you’re tired then your brain won’t be functioning as well as it could. I found this really useful and I still, to this day, make sure that I have at least one free day a week where I literally do not do any work. It refreshes you and gets you ready for the next week. 

On the programme, you also look at strategic planning and you’re given various tools to help you with that kind of thinking. They help you process your thoughts and come out with an outcome that is actionable and helps you deal with issues, such as if you find yourself procrastinating. The programme teaches you to be aware of this, and Dan gives you a tool that really helps you get over this issue and actually use it to your advantage because it helps you make decisions and use procrastination to your advantage.

Another benefit to joining a programme like this is that you meet a lot of like-minded people, who you can speak to, run ideas by, get ideas from and just talk to about the issues you’re facing. Some people talk about the issues they’re facing, and others offer solutions. You pick up on all of this and it gives you ideas. One of my colleagues would always say that when I came back from this programme that I’d have a head full of fairy dust because I had so many ideas that I wanted to look at. 

If I’m honest, probably 80% of those ended up not being anything massively worthwhile, but those 20% that were worthwhile were often gold nuggets. They’re the things that change the way you do business and can change the face of your business.

Starting your personal development

I strongly recommend joining a programme like Strategic CoachⓇ, which was the one I used, but there are now a number of other programmes out there that are offered by different organisations and that are awesome. They are a very worthwhile thing to do.

I would recommend that you look at these types of programmes and pick the one that you think is appropriate for you and invest in yourself. These programmes will help you. They will preempt some of the mistakes that you would otherwise have made. They’ll also help you frame your thoughts, refine your strategies and just do everything better and quicker than you would have done without this guidance. 

Another important thing that I did from a personal development perspective, which I talked about in some of my previous blogs, is work with a non-exec. I’m not going to talk about this in detail here, because you can read that blog, but I will just say that having someone who has the badges and scars of building a business can be an invaluable part of your own personal development.

At Cake, Ian Brookes joined us in around 2010 as a non-exec director and the experience he brought was invaluable. A non-exec will use their experience to ensure you make fewer mistakes and that you do things bigger, better and quicker than you would have without their involvement. You can learn from them very quickly, they’re there to bounce ideas off and you benefit from their experience and their specialism. That was certainly the case with me. I consider a non-exec to be someone who can help you run your business better, improve personally and just get that high growth moving very quickly. 

andrew-neel-TTPMpLl_2lc-unsplash

Self-Managing Company

In my previous blog, I talked about personal development and mentioned that I use Strategic CoachⓇ for personal coaching. I also explained why I feel personal development is so important for every entrepreneur. I truly believe that every entrepreneur should look for a company, organisation or person for their personal development. 

One of the concepts that I learned from Strategic CoachⓇ, and this is straight out of their playbook, is the concept of a self-managing company. The reason I want to talk about this is because I have absolutely used this concept in my thinking for the strategy and development of my company. Therefore, I think it’s important to talk about it. 

The concept of a self-managing company, like a lot of these management concepts, isn’t necessarily something new. But sometimes you need someone to talk to you about a concept in a particular way and provide you with tools that allow you to get your thinking down on paper with some outcomes and actions. That’s what Strategic CoachⓇ did for me with self-managing companies. 

What is a self-managing company?

A self-managing company does what it says on the tin. In fact, I’d say most entrepreneurs and business owners aim for this. You want to build a company that doesn’t require you on a regular basis. You want to build it so that you’ve got the right team, the right structure and the right process in place. When you’ve got all of those key ingredients in place, it will allow your company to run and continue to thrive when you’re not there. 

When you get to that point, you’ve got options as to what you want to do next, which I’ll come on to a little later in this blog. The self-managing company concept really resonated with me. I realised that it was what I needed to work towards and to achieve so that I could sell the company and not have to work with the new company for a long period of time as part of the handover because the company would run without me. This was important for me because I wanted to minimise the amount of time I was with the new organisation. 

Selling the company is just one option though and that isn’t for everybody. The other option is to run it as a lifestyle business. It could be that you get to the age where you want to put your feet up a little bit, work fewer hours and play more golf. Personally that wasn’t for me. It might be that you want to go away and work on another project that either is or isn’t related to your existing business. If you’ve built a self-managing company that might mean that you’re moving into a chairman-type role where you’re there for the board meetings and to advise, listen to issues and help deal with those issues, but this actually doesn’t take much of your time and the business runs very well on its own and continues to develop and thrive. 

If you get to that stage, you can certainly put your feet up and play more golf, or you can look at another idea that you’ve had burning inside you for the last couple of years, just waiting for the opportunity to go and pursue it. Either way works. 

Start with the right-fit team

The first thing that I looked for, and what I feel is the most important thing in terms of creating a self-managing company, is the right-fit team. At Cake, we knew what we were aiming to do. We knew we were going to go for growth and we had a three-year strategy in place ready. The first part of that strategy was to make sure we hired the senior team that I felt we’d need for high growth.

It’s far better to do that at the start of that growth period than it is to do it halfway through. The problem if you start doing it once you’re halfway through that growth period is that you’re under pressure. That means you might hire the wrong person, or you might not find the right person quickly enough. By contrast, if you’ve got that person in place to begin with and you’ve thought about the structure and what the senior team needs to be like for you to be able to grow, then all you’ve got to worry about is building the teams under those people as you’re growing. 

For me, building a senior team and thinking about who that’s going to be ahead of any high-growth period is a really smart way of approaching it.

As an example, at Cake as well as myself I had a Commercial Director who looked after the operations in the company and some of the account management. But we were missing someone who could handle business development on the corporate side. I’ve talked previously about how we didn’t really have a sales team. We built our sales pipeline by sharing expertise, generating expert content and pushing it out there. What we didn’t have was any kind of corporate experience and there comes a point when you need that to engage with corporate entities. 

We were a very entrepreneurial-led company and, as a result, we didn’t really have anyone in the business who had worked in corporate for any length of time. One of the things I tried to do was hire someone who had that kind of corporate experience and who understood how corporate structures work, including the kinds of people they have to engage with to get things done, the job titles and all the kinds of things that perhaps as a startup or entrepreneurial-led company you wouldn’t necessarily know. This was a good hire. 

Quite early in our preparation for our high-growth period, we moved somebody into a part-time FD position. We already had a book-keeper, they did a terrific job of all the day-to-day accounting work and helped put the monthly management accounts together as well as a weekly cash flow. We had that as a process and it worked well. The FD was also the person who provided strategic advice around the financial side of the business. That meant whenever we wanted to go out and spend significant money, the FD would be part of the team who would discuss that before we made that decision with the board. It was really important. In fact, bringing in an FD was one of the first things we did ahead of our high-growth period. It is so important that I’ve written a separate blog about the value he brought to the business. 

We also worked with a non-exec director who added a huge amount of value, experience, knowledge, badges and scars to the thinking within the company. On the technical side, we had a CTO, but we also thought carefully about the structure and how it would work. We didn’t want to become corporate, we wanted to remain quite flat and non-hierarchical, but we needed some kind of structure to grow and provide accountability. As a result, we appointed a Head of Engineering. In the end, we actually had two Heads of Engineering who oversaw all the different technical teams within the business. Each technical team had a team lead, and that was the structure we put in place. 

The important thing is that we thought about, and acted on, all of this stuff before we hit that high-growth period. We hired most of the people I’ve just talked about before our high-growth period, which meant we were actually top-heavy for six months. However, what it meant was that we could move really quickly, win more and more business, and have more and more people working for us because we had the right team in place to cope with that and manage it. It didn’t hinder our growth or put us individually under so much pressure that we couldn’t cope and let things slip. I think this was the right way of doing it.  

Introduce the right partners

Putting the right partners in place is something that I think is sometimes overlooked in these kinds of situations. But the right partners can also take the pressure off. So, where you don’t necessarily want to hire a full department ahead of high growth, you can have partners in place who you assign some of the tasks to as a supplier. If you work really closely with partners, treat them well and build up a really strong relationship, they almost become part of your team. I’ve discussed this in a previous blog too. 

Developing strategic partnerships was an important part of what we did at Cake. For example, we had a good team of lawyers who we always used, Bermans. We had a great marketing company, The Realization Group. We had a good set of accountants. We used Standby Productions as our video team, at a time when videos were only really coming to the fore on the internet. 

We also partnered with a number of software as a service companies like HubSpot, Harvest, Xero and, on the technical side, Atlassian and GitHub. We had a lot of these things in place ready for the high-growth period and they grew with us. 

Harvest is a great example. An HR system isn’t necessarily at the top of the list for most startups, but it very quickly becomes important as you start to grow. You need to have a central repository where you record any interaction with the team, as well as their personal details and any of the documentation that you need. At Cake, we had quite a high percentage of people from abroad working for the company, and we would have spot checks from the Home Office, so having all that information to hand and presented properly was absolutely key. 

Get your processes in place

Having the right processes in place is also key to creating a self-managing company. We spent quite a bit of time working on processes, some of which were so important that we published them so that they could be seen by our clients. In fact, some of our clients even used our processes, particularly our technical ones. 

What we didn’t want to become, however, was a typical corporate which is process led. We wanted our processes to guide the way we did things and make things easy for people. That meant when new people came on board, they would have something to refer to. It meant when clients came on board, they could see what our process was. Those types of things are really important, but as I discussed in my previous blog, you don’t want your processes to restrict creativity or innovation within the company. 

There’s a fine line to tread when it comes to processes. Processes are absolutely critical to any high-growth organisation and any self-managing company. If you walk away, you don’t want to be the person who has to be asked how to do something. You want to have a process in place that people can refer to, or a person that they can ask. It’s important to look at processes alongside culture. If your culture is to encourage creative and innovative thinking, you don’t punish mistakes unless they are continuing to be made and are absolutely careless. Sometimes people make mistakes because they’ve tried something and it hasn’t worked. That’s not a mistake, that’s a learning opportunity. Processes help you build a self-managing company. 

Culture is key to a self-managing company

I just touched on it briefly then, but culture, which I’ve talked about extensively in previous blogs, is essential for the creation of a self-managing company. I believe it can only be achieved when you have a combination of things and culture is a key component. If you have a defined culture that you live and breathe, and that is geared towards empowering your team and helping them to do the job quickly, efficiently, comfortably, creatively and effectively, then it will help you go a long way towards creating a self-managing company. 

People coming on board will be absorbed by the culture, but actually you’ll probably take them on because you think they’re a good fit for the culture in the first place. Your culture guides recruitment, which ultimately helps with a self-managing company. 

Don’t neglect your finances

You could argue that finance is just a process, and to a certain extent it is, but I want to call it out because it’s such an important element of what you do. 

I mentioned before about having an FD in place, as well as a non-exec. Ian Brooks, our non-exec at Cake, really helped me professionalise the way we dealt with the finances of the company. We did okay on that front, but it wasn’t as professional or as rigorous as it should be. You need to know what the cash flow is at all points. You need to have management accounts within a week or so at the end of the month so you know exactly where you’re up to with the various figures in those accounts, whether it be sales, net profit, gross profit, expenses or something else. Whatever it is, you need to have your finger on the button of finances. 

The single biggest reason for companies failing is that people do not have a grip on their finances. I can’t stress enough how important this is. If it’s not something that comes naturally to you, and it wasn’t for me, it is important that you have processes and people in place to look after that side of the business so that it’s not ignored. Without it, you won’t be able to build a self-managing company. 

Another important element within your finances is cash flow. It’s a well-known fact that cash flow is the biggest killer of most startups for various reasons. At Cake, we would always aim to have three months’ cash in the bank. That’s something you’ll have to work towards as a startup, you’re highly unlikely to have that to begin with unless you’ve got substantial investment. The bigger you get, the more cash you need in your safety pot, so it’s a continual thing. 

As well as being on top of that, we also had some rainy day money. We were in a position where, if the worst-case scenario happened, we were probably okay for 12 months. That was through a combination of knowing that you were never going to completely run out of work, so you would have some money coming in, but also having cash in the bank as our rainy day money.

COVID is a really topical issue related to this at the moment. A lot of companies who haven’t looked after their cash properly and who haven’t built up that kind of reserve will be hit by something like COVID that comes out of the blue and all of a sudden see their turnover drop. Their sales drop and then the outlook isn’t so rosy. At that stage, having that rainy day money in the bank is what you need to get you through those kinds of unexpected, unpleasant surprises. This cash allows you to trade your way out of this kind of situation and prevents you from having to suddenly shut up shop. 

It could also allow you to gain a competitive edge because at a time like this there’s less noise in the marketplace. That means you should go out and make some more noise, rather than withdrawing to a safe place. If you make noise, when you come out of it you will come out quickly and be stronger than you went in.

The ultimate aim of a self-managing company

When you’ve built a self-managing company, you should ultimately know that you can go away and that your team will continue to drive the company forward. You’ll know that they can lean on the people within the company and the people outside the company that are part of your network for support in your absence. 

You are no longer critical to the development and running of the organisation. That gives you options. You could decide to really grow the company and spend time strategising and doing what you need to achieve that. Or you could decide you want to put your feet up and only work three days a week. Or you might decide you’ve got another itch to scratch, so you’re going to leave the team in place, sit on the board as the chairman and be there whenever they need you, but have the time and space to go off and do this other project that you’ve been thinking about for the last few years.

The whole point is that, once you have a self-managing company, you have options. 

The final point worth noting about self-managing companies is that they are considerably more attractive to an acquirer than a company that relies very heavily on the owner. There are two reasons for this. One is that when a company acquires you, there is the likelihood that you’ll leave at some point. If the company is totally reliant on you then the acquirer will be nervous about letting you go anytime soon, which might not be what you want. You could end up working for this new organisation for a lot longer than you’d hoped for, whereas if you’ve got a self-managing company you can make that clear from the outset and be more realistic about the time you have to continue working for them. 

You might want to work for the new organisation on an ongoing basis, in which case, fantastic. But in my experience, a lot of entrepreneurs want to use this opportunity of being acquired to go off and do something new. 

If you have a self-managing company, it will be more valuable to an acquirer too. Acquirers work on risk, so the higher the risk, the lower the value of your company, it’s as simple as that. 

A really well-run company with an amazing senior team, a bunch of partners in its network and all the other elements I’ve talked about in this blog, is going to have a much higher value than one that relies too heavily on the owner. But the other reason your company will be worth more if it’s self-managing is that there will be more competition to buy you. You shouldn’t underestimate that. 

When I was at Cake I always used to say that I didn’t want to have to chase someone to come in and buy us. I wanted it to be a natural situation, where someone looked at us and thought that we would really supplement what they were doing. That was what happened.

There are two reasons why I feel that someone approaching you to talk about your value is beneficial. The first is that they’re more likely to be an appropriate partner for you. The second is that you’re on the front foot at that point in terms of the value of your company because you’re not looking to sell and this company that has approached you really wants to buy you. That puts you on the front foot when it comes to an acquisition.

Burda_process

The Importance of Process

I think people often have the wrong idea about process. To many people, process is boring and corporate, but I actually believe it’s essential to make you efficient and to prepare you for high growth. Every organisation, no matter how entrepreneurial they are, has to have processes to be able to grow with speed. It’s really important. If you look at your organisation, you’ll see that you have a whole bunch of processes in whatever you do. It’s up to you how much detail you want to go into with each process, but what I’d like to share with you in this blog is how we created our processes at Cake. You can then decide how you want to approach your own processes. A good process will not affect your ability to be agile, creative and innovative. A good process provides flexibility and your culture should ensure that you do not lose your creativity and innovation.

Creating your key process

Cake was a software development company, so the key process for us was our software development process. I’m a big believer that process should always be owned. Not only that, but it should be articulated and owned by the people who are carrying it out on a day-to-day basis. It’s no good me, or another member of the senior team, coming up with a process and forcing people to use it. When you do that, there’s no ownership, and the process is probably wrong and not fit for purpose because you’re not close enough to what’s going on. 

The way we developed our software development process at Cake was to put together a panel of five people that went right across the software development team. There was no hierarchy or anything like that, it was just five people who volunteered and said they’d be happy to help because they felt it was an interesting and important task to work on. This team put together a process. Then they circulated it and discussed it with their colleagues. After about three weeks, we had a really detailed process that had been developed by the team. 

Once we had the process at the point where we were going to use it, we took it to a design company who made it look really nice, simplified the way it was presented and added some creative flair to it. Over the next six months, this process was refined slightly. But I would say that usually after this initial period, your process settles down. As the business develops and as the business world develops, there will be changes to your process. It might be that new technology comes along, that you have to build a new product, or offer a new service. In these cases, some things may have to change along the way, but the fundamentals will probably remain fairly consistent for a reasonably long period of time. 

Always have your process in a live document

It’s really important that your process is a live document. This document should continually be reviewed, tweaked and updated. That said, there’s nothing wrong with printing your key process on a perspex frame and hanging it on a wall in the office once it’s pretty stable.

I’d say you could do that once you have a key process that’s been around for six to 12 months and is pretty stable, which is not to say it’s set in stone, because they never are. But the fundamentals of the process aren’t likely to change drastically. 

Having your process on the wall in the office can help new employees, for example. It’s also useful for established members of the team, just to have it in the background as a reminder of the way that we want to do things to ensure that we maintain our edge, maintain quality and are doing everything in the right way. 

We found that customers also like to come in and see that you have a process. Clients love it when a company has processes because it makes them feel like you’re organised and know what you’re doing. 

At Cake, we used to have our software engineering process on the walls of the meeting rooms, as well as on our engineering area wall. It made sense to have it where our engineers sat, because it acted as a nice reminder to everyone. But we also put it up in our meeting rooms because we wanted our customers to see it. Your customers aren’t likely to look at your process in great detail, but the fact that you have something will give them confidence that you’re organised and know what you’re doing. 

Look at all of your processes

As well as creating our development process at Cake, we also looked at our sales process. This process went all the way from spreading our notoriety as an organisation, through to what we’d do when we received a phone call, and then to when we signed a contract at the end of the process. This was also important for us as a business.

We had a finance process too, which changed over time as the business grew. In this case we needed more management information and we needed more strategic support to change the finance process, so we worked with our FD and non-exec on our finance process and the strategic planning for that finance process to make sure we got it right.

One of the key things we benefited from as an organisation as we grew was having a recruitment process. In the end, once we had about 40 to 45 people working for us, we hired an internal recruiter and they developed a really great recruitment process. In a competitive area like software engineering, where there are more vacancies than there are people to fill them, you, as a business, have to be pretty impressive. 

Once we had a job applicant that we wanted to find out more about, our recruitment process kicked in. We began by getting the applicant excited about what we were about as a company, what we focused on and what our ethos and culture was. We talked about all of this, not in a salesy way, but just in terms of explaining who we were and what we were about. On the whole, this got people excited about joining Cake and then they wanted the job even more. We took them through quite a detailed process after this, but we did that as quickly as we could. This process involved some technical work with the engineering team, where people were assessed by the team using pair programming and an on-line technical test. But we also had a non-technical chat, usually with a member of the senior management team, where we would find out what that person wanted from a career point of view, what their aspirations were and what they were trying to do in life. Our aim with this part of the recruitment process was to get a feel for what they were about and make sure they were a good fit for our culture and the way we thought as a company. 

By combining those two elements, I would say that we made very few bad hires. Don’t get me wrong, we made some, but I think in comparison to a lot of companies we did pretty well on that front, but I believe that was because we had a very well defined recruitment process. It just goes to show why having processes in place is important.

As well as these bigger processes, there are also other smaller processes that you’ll require.  

Different companies will have different key processes

I’ve talked about the key processes that we had at Cake, which were our software development process, our sales process, our recruitment process and our finance process. These might be the same key processes that your company needs, or your key processes might be different. 

It’s important to remember that different companies have different key processes. Or it might be that the key processes fall broadly into the same area, for example sales, but that your sales process will look very different to the one we had at Cake. 

For example, there’s a leasing company I’m working with at the moment and its sales process is one of its key processes. It’s far more important than the sales process was at Cake, because this company is selling lots of smaller items, whereas we used to engage with customers on big projects involving tens of people and lasting for a period of maybe six to 18 months. 

A leasing company may receive 40 to 50 phone calls a day. Their business is leasing equipment to offices. That means their sales process is the most important one. Whereas at Cake, our software development process was the key.

This leasing company also has a logistics process, which was never something we needed at Cake. This logistics process is really important to them because when an order comes in and they get the sale, that’s all good, but to get another sale from that client they need to fulfil their order in a timely and efficient manner. To do that they need a logistics process. 

My point is that every company will have slightly different requirements and priorities for their processes and for the process itself. Where sales is concerned, the difference in process should reflect the different kinds of products that you’re selling, for instance. 

A process is a guide, not a set of rules

It’s important to emphasise here that processes are there to guide and support, they’re not there to drive the innovation and creativity out of the business. Good processes should support innovation and creativity. That’s a really important point.

What you often find is that more corporate processes kill creativity and innovation. They’re the kind of processes that force you to work in a particular way and if you don’t, you’re in trouble. 

We absolutely didn’t work like that at Cake. Our processes were there to guide and help people to follow a general direction, but there was every opportunity at various points in that process to think outside the box, be creative, come up with ideas and challenge things. We encouraged people to speak to the Head of Engineering if they came up with a good idea. Anyone in the team could come up with a good idea and if we felt it had merit we’d try it. Our ethos was, ‘What’s the worst that can happen? Let’s give that go.’ 

You need to have that flexibility within your process. It’s part of developing a culture of continual improvement, which is what you should strive for. Doing this allows you to tap into your team’s creativity and ideas. You should make it clear that you want them to come forward with suggestions and let them try new things. Failure, to a point, should be embraced because there’s nothing wrong with failing when you’ve tried to do something new. What is wrong is doing the same thing three times and failing at the same thing three times because you didn’t do anything differently. Of course there is a line, but failure should never be punished. You learn more from failure than you do from things going right. 

If you don’t try new things then I just don’t think you’ll stay ahead of the field that you’re in. You have to keep coming up with new ideas, doing things differently and trying new tools, techniques and processes. That’s how you continue to improve and that’s how you keep your team interested in what you’re doing. 

Find the right balance

There’s a real balance to find when you’re developing your process. Every company that wants to grow has to have a process. But I think that there are different types of processes. When you’re an entrepreneurial, agile company, you need a process that does a few things. The first is that it continually evolves. You’re growing all the time and your process is going to change because the scale of what you’re doing will change. It might be that you grow the number of services you offer, change the number of products you sell, or change the number of people you employ. As a result, your processes are going to have to evolve constantly.  This is why it’s so important that your process is in a live document that is updated on a regular basis and available to the whole team at the push of a button. Using collaboration software like Google Docs is a good way to store it so that everyone has access to the latest version of the process.

Secondly, because your process is continually evolving and because you’re an entrepreneurial, agile organisation, you can’t get too hung up on your process. You have to allow it to flex as and when required. You don’t want it to stifle innovation or creativity. 

On the opposite side of the scale, you don’t want things to descend into chaos because people aren’t following any process at all. You need to find that nice happy medium. I sometimes feel that at some of the bigger corporates they lose this balance. They have maybe tens of thousands of employees and they have very defined processes that people are scared to deviate from. 

What I’m saying is that your processes should act as a guide and if people feel a need to deviate from the process from time to time for a particular reason then that should be fine. Your process should evolve and if you need to update it because you’ve found a better way of doing things then brilliant. You want to keep it fresh and fit for purpose. That’s the difference between what I’d describe as a static, corporate-type process and an entrepreneurial, agile process. They are very different things. 

proxyclick-visitor-management-system-aLK9LiX69nA-unsplash

My 5 Must-Read Blogs If You’re Thinking of Building a Tech Startup

Over the last few months I’ve published a range of blogs about starting and growing a tech startup. I thought it would be helpful to pick out my top five posts if you’re at the beginning of your own journey as a tech startup. 

1. Setting Up a Startup on a Shoestring

In this post I delved into my experience of setting up my own tech business, Cake, on a shoestring budget. It’s a great blog to read if you want some simple tips on how you can get started without having to spend a lot of money. I’ve talked about everything from software as a service and business banking to marketing and building your product – there are some really practical tips in there to help you get started.

2. Building a Cultural Platform

This blog is all about laying the right foundations for your business. If you can do this when you’re just starting out then so much the better. In this post I’ll explain some of the basic elements you need in place to set up the right company culture to help your business grow and enable everyone on your team to use their talents. Businesses are only as successful as the people they have behind them and you’ll find some advice in this post about building your team and retaining key people.

3. I Need a Tech Guy

Since I left my role working for the company that acquired Cake a year ago, I’ve been approached many times by people looking for a ‘tech guy’. In this blog I talk about the importance of developing partnerships to help you get a tech startup off the ground. There are also a few tips on how to get to an MVP with your tech product in this post too.

4. Badges and Scares of Running a Tech Company: Part 1

I’m a big believer that you learn more from your failures than you do from your successes. In this blog I shared some of the badges and scars I picked up running a tech company. If you’re planning to set up your own tech startup then the scar I talk about in this post is particularly important: cash flow. Cash flow issues can and do sink a business. In this post I talk about how we navigated cash flow issues in the early days of Cake and what we did to make sure we didn’t have the same kinds of issues again.

5. Want to be an Entrepreneur? Why Now Could Be a Fantastic Time to Start a Company

This was the first post on my blog and while it was written at a very specific point in the Covid-19 pandemic, much of what I talked about in March still holds true. We are a long way from returning to what many people would consider ‘business as usual’ and it’s highly unlikely that we’ll go back to working exactly as we did before. This is still a great time to find talented people who are seeking a new challenge, as well as build your personal brand and start building momentum for your business. You’ll find some suggestions of how to go about that in this blog. 

Starting any new business is a steep learning curve, but hopefully some of my experiences and insights can help you avoid a few of the pitfalls. Feel free to get in touch for a further conversation about building and scaling your fast-growth tech startup: guy@skyblueconsulting.info

thisisengineering-raeng-sbVu5zitZt0-unsplash

I Need a Tech Guy

‘I need a tech guy’ is a quote, and it’s one I’ve heard a lot. Looking back in just the last 12 months, since I left my role after working for the company that acquired Cake, I’ve been having conversations with people about what I’m doing now. One thing I’ve noticed is that certainly in the tech world, there seems to be a dearth of people capable of running complex software projects, and everybody seems to need a tech guy. 

Earlier this year I was in Toronto on my Strategic Coach course and I was introduced to a chap from New York. We were all having dinner and when we introduced ourselves and I said what I did, that quote ‘I need a tech guy’ was one of the first things he said to me. We started talking and afterwards, I realised that this is a really sought-after skill set. But I imagine that would be the case for anyone who’s good at what they do in whatever sector they work in. What I realised was that there will always be people out there who want your services because there won’t be many other people offering the kinds of services you do and who have got your experience and contacts. Your network is key to capitalising on this.

There are probably many people out there with good ideas for tech products but no tech product experience, as in, they haven’t got the experience in building tech products. They might be from the legal industry or the financial planning industry and have a really good idea for an app or platform that they want to build. What is lacking is people who can put teams together to build these kinds of products. 

The strange thing is that I’ve spoken to a few people about this and a surprising number of them suggest setting up a partnership, which is great. They want to set a business up with you where they look after the sector specialism side of the business and you look after the tech product side. It’s an interesting situation. 

There is a business that I’m starting at the moment. It’s actually up and running in that the tech platform is in development. I’m working with a specialist from a different industry, but I’m the tech guy. This is a great basis for a partnership, because you’re both bringing something to the equation. There’s a shared risk mentality, especially if you pick the right person. Personally, I tend to pick people from my entrepreneurial network, because I know a lot of people in that network share the same thoughts as me on risk, entrepreneurial realism and developing a business. I believe that if you’ve got this shared mindset and you bring different skills to the business it’s not only a great basis to form a partnership but also an opportunity to build something special. 

The benefits of partnerships

Although there’s always a chance you could fall out with your partner, if you choose that partner carefully and know that you’ll work together in a way where you compromise when you have to, then this kind of genuine partnership has a lot more chance of succeeding.

There are many benefits of working with a partner rather than on your own. You’ve got someone else to bounce ideas off, and someone to tell you that you’re being crazy or agree that something is a really good idea; and you do the same for that person. 

But having a partnership also works well in terms of raising money. You might have to raise the money yourself as an individual, you might reach out to your friends and family network, or you might even go to a business angel for seed funding or, if it’s a high-growth company, you might go to a VC or private equity company. 

In any of these scenarios, I think it’s always best when you’ve got two really experienced people with very defined roles in the business leading the company. That’s a much better story to tell and you’re far more likely to get the money that you need to fulfill your vision for the company. 

Getting to an MVP

As a tech product company, you’ve got your vision, which is probably something quite grand, but the reality is that you need to build something quickly, in a cost-effective way within the budget you have. This product can then start to earn you money. 

Most people will start with something called a minimum viable product (MVP). This is often something that you can sell. So, for example, if you have an eCommerce site if you have a product you can sell for one penny, that’s your MVP. It can do what it should do. It might not have all the bells and whistles and features that you want the product to ultimately have, but at this stage it will certainly get you going. If you can get your MVP to a 1.0, and if you’ve thought carefully about what the feature set for that 1.0 is, then you’ll have something that has the potential to generate a reasonable amount of money. The idea being that if you play this correctly and if you’re planning correctly, then the money that you earn and generate from selling this first version of the product will fund future versions of the product.

When you approach a new business in that way, you don’t have to start giving away large chunks of equity in your company to VCs and private equity companies who can sometimes interfere in the way that you want to run the company, usually because they have a place on the board. Of course, there are good ones as well as bad ones out there, but it’s much safer if you can raise as much of the money you need as possible by yourself. 

If you do need investment, try to get a silent partner or someone who is going to add value to what you’re doing and who brings another set of skills to the business rather than someone who sits down and tries to run the business from a spreadsheet. What you want to avoid is partnering with someone who is just looking to get the business to the stage where they can sell it, or make a profit, when you’re more focused on fulfilling your vision. 

My advice is to think carefully about how you fund the product. Instead of looking for large sums of money upfront, build the product as soon as you can and hopefully, if you get that right, it will become self-funded. That will mean you can iteratively develop it. That’s my preferred way of working, although of course, it depends on the situation. But if you follow this approach, hey presto you have a product for your new startup. And that new startup all began with someone uttering the words, ‘I need a tech guy!’.

Business man jumping over obstacles a manager race concept. Overcome obstacles concept. Man jumping over obstacles like hurdle race. Business vector illustration.

Badges and Scars of Running a Tech Company: Part 2

In Part 1 of this blog, I shared one scar and one badge from running a tech company. In this blog, I’m going to share two more badges and one more scar with you. 

The badge: punching above our weight

I would say that at Cake we consistently punched above our weight and I’m going to tell you about the first occasion when we demonstrated that we could punch well above our weight because of the people we employed and the way we promoted ourselves.

This was probably about three years into the Cake journey and we were a company of around seven people. Over the two to three years that we’d been running, we consistently submitted bids for public sector projects with both local and central government, but we never won anything. That was despite, in quite a few cases, being eminently capable of delivering a high-quality service to the brief that would have provided a good value option. 

Now, I’m sure government departments play by the rules, but in my view, the problem is that there are just inherent biases in some of these systems where there is already a preferred choice almost built-in. Quite often, no matter how good you make your pitch or how solid your bid is, you’re just never going to win that particular project. I think the other big problem with the public sector, certainly back then and I think this probably still exists now, is that civil servants are often by nature quite risk-averse. This is in contrast to entrepreneurs and the private sector in general, who are more willing to take risks just by virtue of the type of people who work in those organisations and the way they’re run. In a private company or your own company, it’s your money and your company’s money, whereas in the government it’s public money that’s being spent. 

This comes back to the old adage that you’ll never be fired for hiring IBM. What that means is that, even if the project goes wrong, people can fall back on the excuse that they hired the best in the market – or the perceived best in the market! I definitely think this becomes an issue that affects smaller companies winning public sector contracts, especially larger ones. However, it’s a shame because that kind of culture prevents the more agile, innovative and eminently capable smaller organisations pitching for work. Quite frankly, I also suspect it would save tens of millions, if not hundreds of millions, of pounds a year if departments were a little more open to working with some smaller companies. There are initiatives to try and help this and I do think the situation has improved, but it is still a bit of an issue. 

What all of this meant in the early years at Cake was that we became a little disheartened with regards to the public sector and therefore concentrated on private sector contracts because we felt that we had much more chance and the time and effort that went into our bids would be better invested in pitching for private sector projects. But that changed overnight. 

Competing with the big boys

We received a phone call from someone in the public sector who had read one of the books that we had published. I talked about how my co-founder at Cake Rob Harrop got involved with the Spring framework when it was an open-source project in my last blog about badges and scars. He had become a core contributor and was one of the key people within that project. At the point that we received this phone call, the framework was becoming increasingly popular. By 2009 it got to a point where it had been downloaded a million times. As I said before, it was a very popular framework that simplified software engineering with Java. 

Rob and another of our technical guys Jan Machacek had written a book on the Spring framework called Pro Spring, which was published by Apress and translated into 17 languages. It was one of the best-selling Java books on the market at that time. In 2006, we received a call to say that there was a government project being tendered and that they were looking for companies who specialised in Java and the Spring framework because they wanted this modern, lightweight framework to be the technology that powered this system. It was quite refreshing to see this from a government department. The project was being headed up by a very technically competent person in that government department.

To cut a long story short, we submitted a bid alongside some sizeable professional services outfits who were far bigger than us by factors of 1,000, and we won. This had the potential to be the largest project we’d worked on to date. We were incredibly grateful for the opportunity and we were completely focused on making it a success. That’s actually another reason why I believe the government should make more effort to engage with small companies where these projects mean an awful lot to them and they have the talent and agility to deal with the kinds of changes that these projects sometimes come up against. Those changes often floor bigger organisations or cost the government millions of pounds extra in change costs. The upshot of it all was that the project was a success. 

We then won significant business over the next few years with that department and every single project was a success. It was a win-win. We were focused on making them a success and it was cost-effective. We proved that engaging with small, specialist companies is very often far more conducive to providing value for money and success, and it’s a lot less risky for the taxpayer. 

The message from this is that I don’t think we’d have been taken seriously if it wasn’t for the fact that we had published this book. We were seen as the experts because we had written a very technical book on a specific technology and our CTO Rob, who was also the co-founder of the company, was one of the key contributors to this technology. Our expert status was spotted and although we still had to win the bid and demonstrate value, it was clear that we were the kind of company they wanted to work with. 

A platform for growth

This was an absolute badge for the company and gave us our first platform for growth. Working with that government department over a few years on a few projects meant that our cash flow was consistent during that period. Of course, we ran other projects concurrently, but the projects with the government were certainly the biggest ones and they provided a really solid platform that enabled us to stabilise the business, take on more people and begin to grow. 

Winning that piece of business with the well-known government department also boosted our credibility, which then helped us win other pieces of big business. It was definitely a stepping stone both financially and from a reputation point of view, but it started with having the credibility of the book. 

The scar: losing a business partner

I started the previous blog about badges and scars with the old adage that you learn more from your mistakes and the issues you face than you do when things are going well. I think that’s absolutely true. 

Cake was formed in 2001 and my business partner Rob was the technical side of the business. I had no technical expertise. I still don’t class myself as technical, my brain isn’t wired that way. Even though I am not a software engineer, I understand what is going on and I can have an educated discussion with someone about it. I bring other things to the business that perhaps the technical guys don’t. But in 2006, Rob left Cake. Because he’d been so involved in the Spring framework, the guy who led the project wanted to form a consultancy around the framework. That consultancy would be responsible for continuing to develop the project, as well as providing consultancy service, which is how they generated revenue. Rob was made an offer that, at the time, Cake just couldn’t match both in terms of salary, equity and the potential of the company.

Rob and I had a very sensible conversation and, you know, if I was Rob I would have done the same thing. He made the right decision for his career at that particular point and there’s a whole other story around the outcome of that, which was a very positive one from Rob’s point of view. 

What I want to focus on is the fact that this was a major change for the business. It was a body blow. Rob was a key part of the technical side of the business. Looking back, it could have been catastrophic. I could have given up, said how can we carry on, but I didn’t and when I think back on it, in all honesty, I never for one-second thought of giving up. I had the mindset of, ‘This has happened. I understand why it’s happened. Now I need to look at how I deal with that and how we make this company a success.’

Although Rob leaving was a negative thing, it actually ended up being a positive and ultimately benefited the company. Of course, when something like this happens you don’t see this at the time. All you see is that a big piece of the jigsaw is missing and you really need to find a way to replace it. At that particular point, we had a few really good engineers and for one of them, our senior engineer Jan Machacek, it was a real opportunity to come to the fore and take over where Rob left off. 

Jan was a different character to Rob but a very capable software engineer/architect, and because of that, he went on to become an inspirational CTO. At this stage, we had to really think about how we moved on without Rob. Technically, Rob put us on a really solid path. The technology we were using was cutting edge at that particular juncture. The Spring framework had only just gone into full 1.0 production. It was new and innovative, and there were lots of companies beginning to look at it but we were ahead of the game. 

We continued down that road, carried on staying ahead of where we felt technology was going and made sure we continued that ethos. Although we had lost Rob, we had Jan at the helm, which worked out really well even though we lost our business partner who was pivotal to the company. It was a blow, but it wasn’t an automatic nail in the coffin. It let other people in the company step up and allowed them to actually fulfil their potential. 

Finding the positives

One of the positives of this situation was that it allowed people like Jan to do things that they wouldn’t have done if Rob was there. It was good for their development and, as I said, it allowed them to fulfil their potential. 

Interestingly, it also allowed me to take a step forward. When Rob left, I became the only one in charge. There weren’t two of us making every decision and that was good for me. It helped develop my confidence that I could do this on my own. I realised that the reality was that the way Rob and I ran the business was different and if we’d run businesses individually we’d have run them in a different way. But when Rob left I was able to run it in the way I wanted without the need to compromise to accommodate his way of doing things, and visa versa.

What this taught me was that in every really crappy situation, you’ve got to think how do we deal with this? Instead of dwelling on what’s happened, you need to take action. 

Losing Rob was most definitely a scar, but I think we turned it into the badge in the end because we came out stronger and the team members who were probably under Rob’s shadow a little bit came to the fore and really did their bit to help take the company forward. That was probably a slightly different direction to the one we’d have gone in if Rob and I had continued to run the business together, but we got to a positive place in the end. 

The badge: the largest cheque

One of the KPIs I used to measure to show how well we were doing was the size of the largest cheque. Quite often in a company’s development what typically happens when you do well and you grow in double-digit percentages is that the companies you’re dealing with and the projects you’re working on getting bigger and bigger. This was absolutely the case with Cake throughout our evolution. The cheques just got bigger and bigger.

It happened slowly at first. We gained notoriety initially through the technical books that we wrote and that notoriety grew, driven by what we introduced further down the line with the personal branding we developed and the team we built. One of the byproducts of this is that when you’re perceived as an expert, you can increase your day rate, which is always a really nice thing to do. People often worry about increasing their day rate. But what I found was that when we increased our day rate, not only did we not lose business, which is always a fear, but we actually won more business. There’s a balance to be struck. If you charge too low of a fee, you’re perceived as maybe a lower value supplier. When you charge a higher fee, you’re often perceived as a higher value supplier. Often businesses are willing to pay this higher fee and quite often will approach you with bigger projects. 

Don’t get me wrong, there’s a point where that tips the other way and if you go over the top and charge a ridiculous day rate that isn’t justifiable then you will undoubtedly lose business. So you’ve got to find that tipping point. I think most people worry about it, but I also think that most people will be pleasantly surprised to find that the tipping point for their day rate is probably higher than they’re expecting if they’re really good at what they do. 

Looking back there were probably four or five notable occasions when the size of the largest cheque rose substantially and every time that happened we used it as a platform to improve our financial position, not just with that project, but to enable us to hire more people and deal with more projects and bigger projects. We took a gamble.

To give you one example, we worked with one of the large price comparison websites for a substantial amount of time and a large proportion of our company at that point was working on that particular project. We took a calculated risk, where we said, ‘Yes, we’re going to go through a period of a few months where 80% of our company is going to be working on this one project.’ Now, if something went wrong with that project, there was a real danger to the company, so you have to be very careful. But we felt it was a risk worth taking because we had a long agreement in place and we felt things were well within our capability. That meant the risk was actually relatively low. 

But after taking that gamble, we very quickly found that with the extra money coming in from that project we were able to hire extra people. The 80% very quickly became 40% over a period of six to 12 months, because we hired and hired and hired. That then set us up for bigger projects more often. We did this on a number of occasions. 

This is about using these opportunities to your advantage. Rather than just putting the money in the bank, you can use the profit you’re making from the project to grow the company organically and you can reach high growth very quickly by doing that. The key is to never lose sight of the sales part of the business. You might be safe for 12 months with a big project, but you need to be working on winning more business and hiring more people from day one of that project. That was how we grew. And in the last six or seven years of Cake, we grew ten times every parameter, quite often considerably more than ten times.  

I think business success is all about taking calculated risks. You need a little bit of luck, undoubtedly, but there is another old adage: The harder you work, the luckier you become. I would say that the more you take these calculated risks, the quicker you can grow and hopefully those risks pay off. 

The largest cheque wasn’t just about having a big payday, it was also about increasing that largest cheque many times on a yearly basis and we never went backwards. So that was definitely a badge. 

Remember also that we hit a recession in 2008. But even then, and it was quite good timing from our side, we had a couple of quite big projects in the 2008-10 period. Again, that led to us winning more business and in 2010 we carried on growing, even during a recession. We didn’t withdraw, we didn’t decrease our activities in the marketplace. In fact, we did the opposite; we increased them. The thing with recessions is that quite a few companies withdraw and try to hold onto their cash. They are less active. But that just means there’s less noise in the market.

That time is, in my opinion, when you should be spending some money, shouting about what you do and why you’re good at it and really making a noise in the marketplace. There are two reasons. One is that you have a better chance of winning any business that is available because no one else is making any noise. The second is that, as you come out of the recession, your company is perfectly placed to grow because you’re on the tip of everyone’s tongue to win business as companies start spending again. This comes back to what I believe is part of the true entrepreneurial mindset, which is taking a positive view of even the most difficult times. 

Corporate Work Blog Banner

Setting Up a Startup on a Shoestring

I’ll begin by giving you a bit of background about how we set up Cake back in 2001, and then I’ll dig into how you can set up a startup on a shoestring.

When we decided to set up Cake, my business partner and I were relatively young and naive. We’d never run a business in our lives and had no qualifications that said we could run a business. What we did have in Rob, my business partner was somebody who was very technically talented. He has proved to be one of the most successful software engineers and entrepreneurs in the UK having bought, built and sold a number of companies. 

So, Rob was technically very capable, but I had no experience of running a company, of marketing, of sales or of anything like that, so there was lots to learn. In the beginning, there was the added complication that we only had a £15,000 startup fund that had to see us through to the point where we began to make a profit and were able to pay ourselves. Don’t get me wrong, £15,000 in 2001 was worth more than it is now, but it’s still a relatively small sum of money to start a company and for me to provide for my family.

My point here is that people often get very hung up on raising large amounts of money and worrying about that, whereas now, in fact far more so than in 2001 when we started Cake, there are so many ways that you can start a company on a shoestring. I’ll share some examples of exactly how you can do that here.

Leveraging software as a service

This is a relatively new phenomenon, in that it’s only really been used widely in the last decade. There are now thousands of software as a service (SAS) offerings. What this has done is removed the need for businesses to pay a licence fee, run their own server, or create a server operating system, upgrade the software on the server and so on. Instead, businesses can pay a monthly fee and access some really quite clever software that would probably have cost thousands of pounds in licence fees and computing costs previously. 

Google GSuite (ex-Google Apps) is an excellent example of this and was probably one of the first ones that Cake adopted in its early days. What this gave us was a really smart email client, a calendar and Google Docs, which at this stage was a very early online editing, sharing and document storage facility. 

Another example of a SAS we used was an HR app called Harvest. This was particularly important for Cake because we needed to keep all our HR records up to date. At one point we had people of 17 different nationalities working for us and we needed to keep a record of all the relevant paperwork in case we were audited by the Home Office. 

HR systems are really important for all businesses and the bigger you get, the more an HR system can help you manage a central repository relating to anything to do with HR. That can include performance reviews, discipline issues, medical histories, passport information, job applications and so on. All of that kind of information needs to be held securely and only the relevant people should be able to access it. As we got bigger, we paid a monthly fee to use Harvest to run our HR system. 

Don’t forget that the beauty of paying monthly for a SAS application is that as a new piece of software comes along that’s better, it’s relatively easy to download your data and import all of your information into this new software. You can just start using it and you’re not having to worry about buying a new licence, you just start paying a new monthly fee and stop paying the fee for the previous piece of software.

Because it’s so easy for a business to change software providers these days, it’s really important that the companies providing the software keep innovating and making progress to always be the best in the market, otherwise, they will lose customers. The onus is on them to keep you as a client. 

The accounting software Xero is a good example of that. It’s a relatively new kid on the block in terms of online accounting software as a service, but it has quickly become one of the most popular. As more businesses started looking for online accounting software, some of the most popular existing providers of software that you installed on specific machines tried to move into the space but their early versions weren’t that good and they lost ground. 

At Cake, we started using an online system called Liberty for our accounting, but when Xero came along we switched because it gave us more functionality for our monthly fee and it was ever-evolving. Xero was always improving pieces of functionality and was a really cost-effective option for us. 

There are also hundreds of SAS marketing products out there. We used HubSpot, but there are any number of really high-quality marketing SAS products available. Again, you pay a reasonable monthly fee and, again, these evolve and improve all the time. 

You also have blogging platforms like WordPress, which is what we use, but there are many others you can use as well. 

Then you have video conferencing tools, which are obviously especially relevant at the moment. At Cake we were using video conferencing 12 to 14 years ago because a lot of our clients were based in the US. So, to begin with, we had Skype and then Zoom came along. We also used Google Hangouts, and now there’s Google Meet, which is a good one at the moment because it’s free and I’ve found the speed and quality are good as well. 

The point with all these products is that they are all available for free or small monthly fees with no big capital outlay required on your part. You can choose the ones that you need for your startup. 

Other benefits to software as a service

I would recommend that you start with the ones where you can use the free version initially. Most of these companies offer a free version and then when you reach a certain size you can switch to a paid version. By the time you part with some money, you’d hope that you’re generating enough turnover and profit to justify paying the fee that’s required to keep those products and allow you to use them in an ever-increasing way. 

The other benefit to software as a service is that you’re not tied into licences and you don’t have to manage servers. It is important that you choose a reputable provider as you will be trusting these companies with your client’s and companies data, make sure you do your due diligence first.

Other ways to save money as a startup

Another thing to explore when you’re starting out is free business banking. We’ve just started a new business and we’ve chosen to use Starling, which is one of the challenger banks. It’s possible to find either free or very cheap business banking these days and that’s well worth looking at.

IP-based phone systems are another big change and one that can be especially cost-effective for startups, especially if you do need a landline number in addition to your mobile number. The benefit of an IP-based phone system is that you can plug it into any internet-enabled network. You can also choose your phone number to represent the area you’re in – for example, I might choose 0161 because I’m in Manchester – or you can get an 0800 or 08345 number and configure that through the IP system if you want. 

With an IP-based phone system, if you do go out of the office you can easily forward your calls to a mobile. All you do is put an app on your phone which acts as an IP phone for the mobile too, which means you can take calls wherever you are. 

You can also extend a system like this to your employees. They can put the app on their phones, on their computers or you can connect a physical phone in their home office or your business premises to the IP phone system. They deliver massive flexibility and are a cheap tool to use. 

Marketing on a shoestring

From a marketing perspective, and I’ve talked about this extensively in a number of blogs, you can kick start your marketing by producing expert content and pushing it out into the world using tools like Hubspot to disseminate that information across the internet. It’s a very affordable way of getting your message into the inboxes of your potential clients. 

Marketing using vlogs is eminently possible nowadays and you don’t need hugely expensive equipment either. The video quality on iPhones and Android phones these days is incredible and with a minimum of expense, that allows you to use your phone as a tool to produce some quite nice videos. Just invest in a little mic that you plug in or use wirelessly and you can get started. 

There are lots of really cool things you can do to market your business that doesn’t have to cost a lot of money.

Web design to has become more affordable by using a website templating service. These services are reasonably easy to use and they allow you to buy a domain and then build your own web presence without the services of a web designer. I would always advocate using professionals to do this kind of job wherever possible, but if you’re starting a business and money is tight then you can absolutely do this kind of thing yourself, and it can look very good.

If you’re offering a service then you can use all of these free tools to market your service on an ongoing basis and you’ll generate business in this way as long as you can market effectively and in a way that appeals to people. 

Building a product on a shoestring

It’s more difficult to build a product on a shoestring, but it is possible to minimise the amount of money that you’re spending on the product build. In a lot of cases in the tech world, the people who come up with the software ideas are actually software engineers and in that instance, you might build the product yourself. 

But if you don’t have that expertise you’ll need to get someone else to build the product for you and there are various ways you can do that for a reasonable cost. 

Business partners

One is to bring in a business partner who is a software engineer and who can look after the technical side of things like I did with my business partner at Cake. We worked well together because we had a clear differentiation of duties. 

Third-party companies

If you don’t want to do that, then you’ll need some money, but you could look for the support of a company that offers various incentives and I’m going to slip in a shameless plug for thestartupfactory.tech, a company that I’m involved with as a non-exec. 

What we do is specialise in building products on behalf of tech entrepreneurs. The beauty of using a company like thestartupfactory.tech is that we’ll use our experienced teams to build a high-quality product that you can start to generate income from. 

The aim when you’re building a product should be to get it to a 1.0 version, or to a minimum viable product (MVP) stage, that will allow you to take it to market and start generating income immediately from that offering. What you don’t want to do is keep building and building and building and still not be in a place where you can generate money. The aim should be to start generating money as early as possible. Then you can add features as you go along, which will hopefully generate more income and feed the beast, so to speak. This will mean you can afford to pay the engineers to carry on iterating and building more and more features for the product until you’ve got it to exactly where you want it. 

The key is to have a plan to get your product to 1.0, which will start generating your income, and then start the strategic development. This development will be funded by the money you’re generating through your initial product, which means you don’t need a huge slush fund to pay for development to get started. 

Using third-party companies can, therefore, be especially helpful. You could look for companies, like thestartupfactory.tech, that may offer engineering in exchange for equity. 

Hiring key people

It is likely you will need to start hiring key people who, hopefully, are going to be with you for the long term and who will eventually form part of your senior team. When you hire these people, you can consider offering them a small amount of equity as an incentive. You may do this if you can’t afford to pay them a high salary initially, you could offer a steadily increasing salary for the first few years. Often people are willing to do this if they really believe in the vision of what you are trying to achieve and will take a slightly longer-term view on compensation. That means you can start their salary a little lower in the first year while you’re trying to create cash flow by getting your products and services out there. 

Once you’ve got things rolling and are generating income, you should be able to afford to gradually increase the salary. By the third year, you should be paying close to market value and that person has effectively earned their shares in the organisation. This means they’ll grow with the organisation and are fully invested in the business. 

A note on giving away equity

While there are lots of good reasons why you might want to give away some of the equity in your company, like those I just discussed, I’ll add a cautionary note about giving away too much equity. 

Don’t get too generous with the equity of the company. Remember that you’re going to be putting most of the time in, you’re going to be shouldering a lot of the burden and risk, and you need to make sure that you’re rewarded properly for that. 

I’ve seen too many companies where the entrepreneur has given away so much equity in an effort to raise money in the early stages to the point they hold less than 50% of their company already. But that’s not the way I’d recommend entrepreneurs do it. You’ve got to be mindful that while people, whether that be investors or key members of your team, may deserve some equity, that you are properly rewarded too.  It’s you who will have carried all the risk and will probably be working long hours, at least initially, and it’s important that you are properly rewarded for that. 

This was a lesson that Iain Brooks, our non-exec director at Cake, taught me. Because of his advice, I think we struck a nice balance and when we were eventually acquired, people were rewarded with an amount that was representative of the time, effort, sweat, blood and tears that had been put into the company to get it to the point where it could be acquired. 

fixing-business-problems

Badges and Scars of Running a Tech Company: Part 1

In this blog I’m going to tell you about one badge and one scar that I’ve gained from running a tech company. I thought I’d start with the scar. 

There’s the old adage that we learn more from our mistakes than we do when things are going swimmingly well and it’s absolutely true. There’s nothing wrong with stuff going wrong, it’s how you deal with it and what you learn from it that’s important. 

The scar: cash flow issues

The reason I’ve picked this particular scar is because I think it’s something that probably every entrepreneur experiences at one, or maybe numerous, points during their journey and it’s all based around cash flow and how you deal with it. Not only how you deal with it technically, but also how you deal with it mentally. Making sure you have the right mental attitude, have that tenacity and don’t lose your cool. The right mindset is key, because otherwise it can get on top of you.

I’m going back to the early days of Cake for this scar, probably around 2002 or 2003, bearing in mind that we only formed in 2001. I’ve been honest when I’ve talked about the early days of Cake in the past in saying that we set the business up with a bit of an idea but no clear strategy and certainly no business experience or educational experience in relation to business because at that time there was nothing entrepreneurial in A-levels at school. Neither myself or my business partner Rob Harrop went to university either. 

We didn’t have any experience in marketing when we first started either. But although we had no idea what to do, what I’d say is that we used common sense. For example, one of the things I did was went and knocked on every door in the office building we were in, which was home to around 50 small businesses. I said hello, introduced myself and dropped in a business card. That generated business for the company for the next two years.  

But by 2003, we were running out of business and still didn’t have an effective marketing machine, or really understand how to do that.

On this occasion, we were a couple of weeks away from running out of money. I didn’t have a backup at that point. I had a family, a mortgage, very young kids and I didn’t have a Plan B. I had to put the wages on my personal credit card. As a business, we didn’t have much of an overdraft because we were quite a new company and we didn’t have any investment of any sort. In fact, in my opinion we wouldn’t have attracted investment at that particular juncture either. So the only way out of this was to battle through and win some business.

At this time, we only had one sales lead and we knew we had to follow it all the way through. Rob was the technical side of the business and he put a presentation together for the two of us to deliver to an organisation called NUSSL – the National Union of Student Services Limited. They were responsible for bulk buying all the products for the Students’ Union, so lots of beer basically. The project was for  a system that was going to automate what they were, at that point, doing manually. It was a really interesting project. 

We were a young company and we didn’t know how this would go, but Rob gave an amazing presentation and, to cut a long story short he knocked it out of the park and we won that piece of business. Now, not only did this solve our immediate issue with cash flow and very quickly make us solvent again, but it also became a springboard for even bigger projects. It also gave us more confidence and we were able to go out there with a bigger name in our portfolio, which helped our sales message. 

I’d like to say that it helped us avoid that particular issue again, but not quite, although it certainly helped to minimise the number of times we had that problem. In fact, there was only one other instance in the whole 17 years where we came close to running out of cash.

The 2008 recession

The second time we had an issue with cash flow was in the height of the recession in 2008. It was an unfortunate situation in that we had just won our biggest ever project, where we beat the likes of Fujitsu Siemens in a government procurement bid to win a software development project for a central government department. 

We were ecstatic when we won that bid, because we were a small company. At that point I think there were about seven of us. But we went from being amazingly happy to almost running out of cash very quickly, through no fault of our own. There was a three-month delay to the project and we never did find out the reason why. That put a severe strain on our cash flow and that was the second time that I had to put wages on my credit card.

When situations like that happen, you just have to go with it and trust that you’re going to get out of it, because in 2008 the banks were no help at all. We’d been with our bank at the time for seven years and we went to them to ask for a loan. We didn’t need much and we had a letter to say that we had won this particular project, which was for a significant sum of money and by far our largest project to date; in fact it was our first potential seven-figure project. But the bank was unwilling to lend what was a relatively small amount of money over a short period of time. As a result, we left that bank. 

These cash flow issues are definitely scars, but you learn from them and that’s the important thing. 

Learning from the scars

One of the things that these particular issues highlighted was the need for us to get to grips with marketing. This got us thinking and was the precursor to coming up with the concept of building personal brands and really putting an effective but at that time very different marketing machine together. 

There were lots of learnings in this period and they contributed to our personal development and consequently to the development of the company on an ongoing basis. This particular issue in 2008 resulted in us coming up with an idea to help us deal with it, relating to email marketing. 

At this time, email marketing wasn’t massive, but we could see how it could be of value, especially if you had a decent database, which we were building. We’d been smart enough to collect names and email addresses when we spoke to people at networking meetings or whatever and we were building up a decent database and were beginning to market to people regularly. 

At this point, we scratched our own itch and came up with and built a product called Easy Emailer. It wasn’t software as a service as these systems now are. It was a server-based product, but it was a mass marketing and email system that you could use to create templates and build emails. This was in the days before Mailchimp or Constant Contact and all the other online marketing systems that are available now. We didn’t take that product much further other than selling a few licences to it, because we had to concentrate on our main business. 

All of this came out of the scar of having issues with our cash flow. 

The badge: developing personal brands

I’ve alluded to this already when talking about the scar, and I’ve talked extensively about this topic in a previous blog, but I want to put a slightly different slant on it now because this concept came out of our early days of Cake, whereas what I’ve talked about previously goes into more detail about how we developed the concept from 2009/10 onwards. 

The badge I’m going to talk about comes from 2003 and came off the back of us really struggling with our cash flow, not having a strong enough pipeline of business and trying to come up with a viable marketing plan. I’ve mentioned Easy Emailer and knocking on doors, which was really effective, but there are only so many doors you can knock on. It’s not a scalable solution in this day and age. 

It’s fair to say that we stumbled across this rather than it being part of the plan from the outset, but when we realised how effective it was, it became part of our plan.

I’d like to rewind a little further to 2002, when Rob Harrop, my business partner and the business’ technical expert, became really interested in a new framework in the Java world. The framework was called the Spring framework. 

At this point, Spring wasn’t even a 1.0 version, it was a 0.5 alpha version working towards something that could become commercially viable. It was an open-source project, which means you get many contributors working on these projects most of whom did it in their free time. They don’t get paid for it and at the end, the product is made available to the software development community for the good of the community, using an Apache licence. 

Rob began spending time on this project. He was a really smart software engineer/architect and he became one of the core contributors. We started to use it commercially as soon as we were able to. This became a key differentiator for Cake; it became the most downloaded framework in the Java world and it helped ensure that we followed our mantra of always staying at the forefront of software engineering. The Spring framework was our first opportunity to differentiate ourselves on that mantra. 

This developed to the point that Rob and one of our other software engineers (who later became our CTO) Jan Machacek decided to write a book on the Spring Framework. Rob had already made several smaller contributions to books and the Pro Spring book, which was all about the Spring framework, was the fourth one he was involved in. But this time he wasn’t just involved, he was the lead author and Jan was supporting him. It was the first book that was purely written by Cake employees and the first example of where we used the premise of producing expert content to share with the community as a way of promoting ourselves. 

I’ve spoken about this on a number of occasions and it became one of the key attributes in the Cake arsenal and the main way that we generated sales. We didn’t have a sales team, it was all about generating expert content and building personal brands. This book was the precursor to that. 

Pro Spring became a really popular book. It was published by Apress and Pro Spring 2 was published in 17 different languages, including Mandarin, which was really cool. This was definitely one of the badges that we got and the technical team became quite prolific book writers, which then led onto the blog writing and all the stuff that I’ve talked about in previous blogs. 

More badges and scars

In my second blog about the badges and scars of running a tech company, I’ll talk about the badge of punching above our weight. I’ll share some examples of how we started working with some major brands even though we were still quite a small organisation. The scar I’ll discuss in the next post will be about losing a business partner, when Rob had an opportunity he couldn’t refuse and decided to leave the business. I’ll explain how that affected things. 

I’ll also talk about the ever increasing larger cheques, in relation to how we were working with bigger and bigger organisations that provided us with the financial platform to really scale the business and achieve high growth in the last few years. 

iStock_000016662401Small

The importance of strategic partnerships

I talked in one of my previous blogs about the Free Zone Frontier, which is effectively where you have a product or service where there’s very little competition. For obvious reasons, this is a great place to do business, assuming there’s a demand for that service or product. What strategic partnerships do is multiply the effect of the Free Zone Frontier. 

In this blog, I’m going to explain two of the different kinds of strategic partnerships you can develop: company partnerships and supply partnerships.

Building company partnerships

At Cake, we began to form partnerships naturally, generally with the technology companies that we engaged with. For example, when we were predominantly a Java engineering organisation, we tried to get close to a company that’s now called Pivotal, although at that time it was called SpringSource. To a degree, we had a successful partnership, although it wasn’t as successful as I think it could have been. 

But at the time it was still a positive step for our organisation because it allowed us to name them as a partner on our website, which gave us a degree of credibility.  We also did a few events with them, which also improved our credibility. It was an important partnership, but as a company we became much better at working with partners further down the line.

At Cake, the pivotal moment came when we started to transition from Java technology to Scala technology. It was at this point that we started to form really deep relationships with  some of the technical companies that we dealt with on an almost daily basis. The reason this came about is because we believed that Scala and functional programming was the way that computing and software engineering was heading. It solved a lot of the issues we were facing around scaling systems. 

As I’ve mentioned before, we evangelised these technologies because we really believed in them. We talked about them at conferences and in user groups, we wrote blogs about them. These were all great things we were doing as a team. That obviously caught the eye of these companies. They knew what we were doing at Cake and saw the way we evangelised their technology as us doing them a big favour, because we were talking about the technology in such a positive light. 

What’s really important though is that they saw us as the purveyors of and experts in their technology. They also recognised that we added a degree of commercial expertise to the development of their technologies. 

As a result, we started to help them commercialise what they were doing. They were building frameworks and components that made engineering in the Scala world far easier and quicker, and therefore more commercial. Through our work with our clients, we were using that technology in the real world on some pretty big systems. This allowed the technology companies to use us and our clients as examples of businesses that were using their technologies commercially. It was a natural fit. 

Lightbend were the custodians of Scala and they built various frameworks and the tools and components that really helped. Then there were other companies like DataStax and even Amazon, with their cloud platforms and the other technologies they were using. At Cake, we believed in all of these technologies and they became part of our toolkit. 

This allowed us to form deep relationships with these companies, to the point that we would work really closely with them at conferences. We’d also sponsor them at conferences and in return would get lots of exposure and mentions. When their key people visited the UK, they would often come up to Manchester from London to give a talk to our team, or to deliver a talk to one of the groups that we were involved with.

We’d also produce joined up literature and would be mentioned in the various publications that they were writing. Likewise, we’d mention them in the publications that we were writing. We developed really healthy relationships with a number of the tech companies whose technologies we used.

How do company partnerships help?

The most important outcome of these partnerships was that they generated some really important leads for us. In fact, all of our big leads were referrals from partners. It was as simple as that. Our other source of leads was the work we did in the community, so the blogs, talks and those kinds of things. 

We did nothing in terms of being proactive and chasing opportunities in the way you might expect. But we had plenty of opportunities coming in off the back of a conference, a blog, an open-source project or from the relationships we’d developed with the tech companies that built the technologies that we used. 

In evangelising their technologies and proving that the technologies worked in the real world through our work with some major clients and big systems, we developed a healthy relationship with them. This gave us immediate credibility with new clients. Our expertise was never in doubt. That’s the importance of a strategic relationship. 

It’s important to state that I don’t ever recall exchanging money with any of our company partners. We didn’t use referral fees or anything like that. That wasn’t what it was about, it was all about the relationship. Equally, these companies never charged us for being their partner, which some did. It was purely relationship based, with huge benefits for both organisations. 

If you manage to find a product or service that sits in the Free Zone Frontier, which means you don’t have a huge amount of competition, if any at all, and you can develop some really important strategic partnerships, that will drive your growth better than you could hope for. 

Developing supply partnerships

Supply partnerships sit in a similar bracket to the strategic partnerships you’ll develop with companies. I’m a great believer in bringing key suppliers into my company’s ethos and culture. I know all the suppliers I dealt with while I was at Cake will testify to this, but we brought them all into the Cake family. We introduced them to our way of working, our culture and our ethos. 

There are a few partnerships that I’m going to call out in this blog and I’m sorry if you’re reading this and I haven’t mentioned you. I’ll start with Write Business Results, who I’ve worked with to produce books, as well as these blogs. Other supply partnerships I’d like to mention are the ones with Standby Productions for our videos, and The Realization Group for our marketing and branding. Then there’s HardSoft Computers who supplied our hardware in a way that worked for us. We were great for them, because as we grew at Cake they grew with us and they go more business out of us. We also paid all of our bills on time, so from that point of view we were a good partner.

But we also helped raise their profile, and equally they did exactly the same for us. They would recommend us just as we’d recommend them, and it was a really beneficial relationship. 

I refer people to all of my suppliers because I believe in what they’re doing, I know they’re doing a good job and consequently I’m more than happy to put my reputation on the line to recommend them. This should work both ways.

I don’t understand companies that treat suppliers like something they’ve stood on in the park. I just don’t get that at all, because you’ll never get anything other than the service they offer, but suppliers can offer so much more than that. It’s all about building that relationship, that trust, and working out where the benefits are for each other. 

Much like with the company partnerships, no money exchanged hands in relation to building supplier partnerships. Of course, we pay suppliers to do their job, but when you have a great relationship they’ll go over and above, just like we would for our partners. 

There are times when everybody’s cash flow is challenged for whatever reason. It could be that a big client has delayed paying you by four weeks, for instance. You know that the money is coming, but it’s coming a little late. In this kind of situation you can call your suppliers, explain what’s happened and ask if it’s ok if you pay them their money in four weeks. Ten times out of ten, those suppliers will say ‘yes, that’s fine’. When you have that kind of relationship with a supplier, trust is never an issue. They’ll appreciate the fact that you’ve spoken to them about it rather than simply ignoring it. 

Another partnership that I’d like to talk about from my time at Cake was with TRG Fitness that was located near our office. I joined that gym when it opened and I got to know the owners. Membership when I joined was £25 a month. At Cake, one of the perks we offered to all of our staff was that we’d pay for their gym membership there if they wanted to join. During the 16 years that I was a member of that gym, I think 30-40 of our team members joined the gym and the price they charged us for membership never went up from £25 a month. 

That wasn’t something I requested, but I think they appreciated the fact that we gave them sustained business over the years and we always spoke highly of them because it was a great gym. We had a great relationship. 

You don’t want to beat your suppliers down on price, but you want to trust them to always give you a fair price. If they want to take that a little bit further by offering you discounts or no price increases over the years then fantastic, but you have to let them decide to go the extra mile. 

Building a trusting relationship is important on both sides. I’ve got to trust that they’re always going to give me a fair quote. They’ve got to trust that I’m always going to pay them on time and treat them in the right way. You build that solid foundation and then see where that relationship can take you and how you can help each other.