Failure to hit target was blessing in disguise

Dec 2 2008 by Karen Dent, The Journal

We ask successful North East entrepreneurs how they deal with issues in their business.

JAMES Robson of Exwold Technology Ltd, an agricultural chemicals company based in Hartlepool: “I spent 11 months trying to raise the money. As time went on it began to look less and less likely that I was going to manage it.

“A company said they would be very interested. But then, in 1993 that company did its first round of downsizing its offices. I got close to signing another deal but that fell through as well. I got near to packing it all in each time the deal went bust, putting it all down to a pipe dream but I dug deep until I was successful.

“You really need tenacity and determination to get through that difficult period and also learn to not accept ‘no’. ‘No’ isn’t an answer.

“I got introduced to a venture capital funder in Middlesbrough. What I should have done though during those 11 months is gone to all three companies at the same time, then they would have been competing with each other for my business.”

Phil Renton of Newcastle IT company, Croft Technology plc: “I had been asked to organise a Management Buy Out which would transfer ownership to me and my new team. I was faced with meeting potential advisers such as Deloitte, PwC and Ernst and Young to convince them to support me to raise the necessary finance to allow my fellow directors to exit the company.

“The fact that they all wanted to leave together caused raised eyebrows and took some explaining. There is no doubt that this was one of the most exciting moments of my career and keeping both feet on the ground definitely tested me!

“Although Croft were enjoying a rich vein of success, unfortunately the market we were being successful in was heading towards becoming commoditised.

“The VC view at that time was they wanted to invest in organisations where a flotation was an objective or an early exit could be achieved, where in both cases their capital invested had a sizeable return.

“The real defining moment for me was that I was unable to raise the target amount. This proved to be a blessing in disguise. Due to market consolidation, improved reliability and price decreases still prevalent today our history of making 25% profit year on year ended, to the point where today 5% is seen to be a good return. Had I been successful in raising the desired amount Croft would not be here today, at least not in our current state, as we would have been unable to achieve the VC objectives.”

This column is run in association with the Entrepreneurs Forum. For more How I.... tips go to www.ifwecanyoucan.co.uk