James Robson

Name:

James Robson

Business:

Exwold Technology Ltd.

Web site:

www.exwold.com

Years in business:

16

Number of businesses:

1

Entrepreneurs' Forum member

I’d always travelled about a bit when I was younger. But when I graduated from university with a mining and engineering degree, I couldn’t find a mining job in Canada or Australia which was what I wanted. My only options were to move to South Africa or join the Coal Board in the UK, neither of which sounded particularly attractive to me.

I wound up taking a job with a chemical company in Middlesbrough, selling chemicals to process industries. It turned out to be a great start for me. I was selling, which I hadn’t really thought I wanted to do but I grew to be quite tactical with my engineering knowledge.

After four or five years I moved into a new company which they had acquired and I was dealing with much bigger clients. The bosses then thought it was a good idea to send me on a part time MBA. I applied what I’d already learnt in my job, came back after two years and said, now what? They said they hadn’t really thought about that, didn’t have any suggestions for me.

At the time they were having a bit of difficulty with returns and decided to have a voluntary redundancy programme. I wanted to leave the company but they said no, you’ve just done this MBA, we need you. But after a couple of months nothing really transpired so I applied again and said I really did want to go and in the end a deal was arranged.

That’s when I had the idea of starting Exwold. I’d met a lot of people through my previous job that I trusted a lot and they trusted me. I thought a supply and demand opportunity was available. To that point I’d never really wanted to start my own business and definitely never dreamt about leaving the safety net of a big employer. But the company I’d been working for was making a bit of a hash of delivering the product and I knew how to make it well. The only missing link was the venture capital to put the plant together.

I spent eleven months trying to raise the money. I’d committed myself as I wasn’t doing anything else. I worked from home in one of the spare bedrooms, writing a business plan and taking it to various potential investors.

As time went on it began to look less and less likely that I was going to manage it. A company called 3i said they would be very interested. I needed £350,000 from them; the rest could be raised from small firms loan guarantees, RSA grants and my own equity. It looked like it was going to work. But then, in 1993 3i did its first round of downsizing its offices. I was dealing with their Hull office which got closed two months before our deal would have gone through.

The guy in Hull who’d been backing my deal actually left that company and said to me, don’t worry, you’ve got this far down the track, you’ll be able to find other investors.

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 through a friend I’d met on the MBA to a venture capital funder in Middlesbrough. They had £5m they needed to invest and the guy who ran it was from the chemical industry. We met, talked through the proposition and they said they could be very well interested. The only snag was at the time I lived in Doncaster and planned to open the plant in Scunthorpe. They said the only way they could do the deal was if I moved it to Middlesbrough, otherwise they couldn’t invest.

I’m really glad we did move. Scunthorpe wasn’t actually the right town to open up a chemical factory because it was a steel town. Exwold has grown stronger and better because it’s based in the Tees Valley so it was a bit of a blessing in disguise. For me personally it was great as well because I’m from Stockton originally.

What I should have done though during those eleven months is gone to all three companies at the same time once the proposition was written. Then they would have been competing with each other for my business, with more determination on their part for the deal to go through. Also, the best offer would have got it.

So I was a bit naïve really. I didn’t know where to look to get venture capital. I didn’t really know what a business plan was; I wasn’t an accountant so I needed someone to help me with the cash flow forecast. I was comfortable with the work, the technology side of things and the market opportunity, but the original business plan looks a bit pathetic now compared to some of the things we’ve produced since. It wasn’t written by some fancy accountant, it had mistakes and errors and looked a bit amateurish, but it was for real and I used it as a base to build upon.

I knew I had to get the image right and I got a logo created in those eleven months to write to prospective investors. People who got back to me said it was a very good process and they didn’t know anyone else who’d done that so that was definitely an advantage. Coupled together with a brushed over business plan, it eventually made a serious proposition which I think is one of the reasons why it ultimately got funded.

In the first couple of years we didn’t grow as fast as my business plan had intended. It was interfered by an event outside of our control. A large chemical company had a contamination issue where they had infected two types of protection products. They ended up paying huge amounts of damages to US farmers.

The industry decided that herbicides, the weed killer that we did, couldn’t be made on the same plant as fungicides and insecticides. We thought we would become a dual purpose plant and all of a sudden we couldn’t be.

We could have stopped at that point and said well, we’ll just be a herbicide plant. We would have been a more profitable company in years four, five and six. But we took the company back a step by opening another plant. The industry needed a service that was spread across all the avenues it wanted; we endeavoured to fulfil that and the company keeps growing in structure.

If I’m honest each time we open a new plant it’s destabilised the cash flow. We’ve taken on a few risks, nearly become bankrupt three times, but we’ve learnt from the experience in each instance. If your income is not generating as fast as you’d expect, you need to build in some sort of cushion for the fact that it may not work. I’ve been guilty of underestimating how long it will take and probably undercapitalised each phase of our growth, but you do need a plan B if that’s the case.

In terms of dealing with growth it’s important to have the right people. Some employees might not be in tune with the plans of the business as they were when it was smaller. It’s important to communicate with everybody what you’re trying to do so that no-one gets lost somewhere along the line.

I think one of our biggest mistakes has actually been hanging onto people who clearly weren’t in the right job. We’ve asked them to do something outside of their comfort area and we weren’t recognising that quickly enough.

We’ve also taken on a few contracts that, with hindsight, we really shouldn’t have. We probably went in a bit gung-ho, thinking, it’s a big customer, it’ll be a big turnover with a long term contract.

We didn’t do enough assessment or think of potential technical pitfalls for one particular client, a big US company, but we signed a three year contract anyway. We couldn’t get the product to behave as it had done before, even the technical guys from France couldn’t figure it out. We were paying out wages and energy but in the end we decided to stop and thought if we go on we’ll run the business into the ground. Even though we had a contract we actually got respect from the US company for stopping.

Some people say that you should change banks to save money but I would actually suggest staying with them if you can. During that difficult period when we lost a lot of money the bank was very supportive. Honesty with the bank and honesty with the client really came to our advantage as we gained their trust. We’re now leading our field and the couple of competitors we have in Europe are not nearly as trusted as our business.

Each mistake you can learn from and as long as you rectify them you can bring the business forward. I would advise finding one or two people who aren’t friends but people who have contacts so that you can sound out ideas with them and they could point out potential pitfalls. I’d probably have saved a lot of time and effort if I’d done that during those eleven months.

Also, don’t be intimidated by these high powered people, be bold and approach them, they’re only human after all. If you can sell your idea to them you can almost certainly sell it to the investor. Don’t take knocks too hard and always think about tomorrow rather than anything that’s happened in the past.

What I’ve found is that most people are enthusiastic about new ventures. Most people I’ve spoken to said to me that they wish they’d done what I had. They worked for big international companies but never grasped the opportunity when they were younger. They never stepped outside the safety net and had a go. Taking the plunge was the best thing I ever did; I have no regrets.

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