Being a founder and a worrier
I know what you're thinking, surely its a typo and should say warrior. Nope, my name is Chris Mole and I'm a worrier.
Founders often come across as risk taking pioneers, and my guess would be the vast majority of them are. But I would consider myself as pretty risk adverse. I was able to start, scale and sell a business with this risk adversity though, and I needed to use various tactics along the way. So I thought I'd share them, in case they could be useful for you, whether you're a worrier too, or in fact a warrior.
I was always taught to spend within my means. And the good thing about an agency business is it's pretty easy to follow that ethos. You sign a new client and then hire someone to service it (ideally for less cost than you're charging the client!). We built up Molzi in this way for the first couple of years without much issue. I had a good handle on all costs that the business incurred and what revenue we should expect from our clients.
Two things made this more difficult to keep control of though. The first was our size. Once we got to 20 or so employees, there were people incurring small costs that I wasn't in control of. Of course that was the right thing, otherwise my time would have been taken with just approving little things. But one day I spotted an invoice that we were about to approve for a lot of money. I think it was for translation work. And if we had gone ahead it would have caused us some big problems financially. It was a wake up moment that we needed some processes for expenses, otherwise my life was going to be filled with these shocks.
We created a central planning sheet within our business that was affectionately named the bible. It contained our P&L, and was fed by our existing customer forecasts, weighted pipeline, anticipated future costs, client budgets etc. Quickly we had full visibility of our business health for 3 months ahead pretty accurately, and 6 months ahead fairly accurately. We were able to share elements of this sheet with the teams, so they could understand the reason why client work needed to be profitable, how much budget was allocated to external contractors etc.
And because we had a fairly accurate future forecast, we were able to model out cash flow expectations, even with some 'worst-case' planning for clients paying late.
This visibility of what worst-case looked like, allowed me to keep my inner worrier at bay as our revenue (and costs!!) started to scale.
The second thing that made the growing numbers difficult to control was the fact that we took some investment about two years in to our journey. While I saw that as a lovely safety net sitting in the bank, the investors were rightly keen to see us actually deploy the funds into growth driving activities.
I decided to allocate a % of revenue for these 'bets' and it sat as a line on our P&L This way, I could tame my worrier brain because I could still monitor EBITDA as I had before, and a bet budget would accrue as revenue grew. So it felt like we were spending free money on these new investments as the full budget was being removed from EBITDA. And if revenue dropped for any reason, the budget we could invest in new activities dropped too. This worked really well for me, but also for the wider management team as there was full visibility of what budget we had to invest. This made sign off processes super quick.
The £100k rule
If ever an employee or a client resigned, I would often go into panic mode. My assumption that something must be fundamentally wrong with the business and the way we do things.
This constant striving to get better was a key to our success, but sometimes this was reactive rather than strategic. I used to get so nervous when I saw there was a new Glassdoor review. The idea of people being unhappy working for us made me feel terrible.
I hated looking at new Glassdoor reviews. Although I have just noticed 100% approve of the CEO. Maybe I should have looked at it more often.
Once we got to 70 people or so, I remember getting a message that 'everyone is unhappy' from one of the team. OK panic stations. We were in the process of starting to sell the business and the last thing I needed was a mass walk out. The management team assembled and we started digging into the detail. It took about an hour of each of our time to figure out that actually a couple of junior members of the team weren't happy about something. Not exactly everyone. And although it was just an hour of our time, it meant we'd lost momentum with whatever we had been working on.
I thought about it, and we had grown to the stage where really no client or employee leaving would have a material impact on the business. It takes real sweat and tears to get a business to this size, but I was still reacting the same way I would to these notes that I did when we were 15 people. So we developed a £100k rule. Basically, the teams were empowered to handle themselves any issue that was worth below £100k to the business. If an employee resigned or wasn't happy, but it would be possible to simply hire a replacement then they were encouraged to do that. If a small client resigned that was worth less than £100k to the business then the team handled the fall out.
The head space that this freed up for me and the management team to just really focus on the big needle moving projects we were working on for our future growth was game changing.
I've never looked at Glassdoor since (apart from to get the screenshot for this blog of course).