Jamie Greenwood

Name:

Jamie Greenwood

Business:

NJL Yorkline

Web site:

www.njlyorkline.com

Years in business:

10

Number of businesses:

4

Entrepreneurs' Forum member

I used to work as a designer and estimator for a shop fitting company in Leeds, worked up to director level until one day my boss came into the room and asked if I would like to buy the business. I emptied the contents of my pocket which I think contained about £4.50 and asked if that was enough. He said, ‘Not quite,’ so I set about raising the money.

I got in touch with Business Link who then put me in touch with a few corporate finance houses. I ended up carrying out an MBO and raised nearly £1m to buy the business in 1998.

I’d always had an ambition to run my own business, I just didn’t know how to start. So when the opportunity came along I essentially went for it without thinking of the long term consequences. The thing was I was only twenty seven years old at the time and the business employed forty people who I was about to inherit.

I went from being a twenty seven year old employee to the twenty seven year old boss. I was in charge of people twice my age, probably when I was one of the youngest members of the team. Loads of problems sprang up because of that. Whilst I took on board their views, I found it difficult to try and explain my point of view with certain decisions, especially regarding change.

Thinking about it now I’d have much preferred to have started a business from scratch. Its fine to inherit one of the business is developing but not if it’s stagnated, even if it’s got a lot of history and goodwill. I would say always buy a business with an opportunity to develop it.

Probably the biggest mistake I made when I was starting to take over the business was approaching a fellow director to take fifty percent equity. In the first few years the business faced lots of challenges which normal businesses do, but we got to the point in the boardroom where I would say left and my colleague would say right. We couldn’t resolve any issues and eventually I said to him, one of us is leaving this room; the other is leaving the business.

If I’d have started out on my own I wouldn’t have borrowed as much money. It gives you a tremendous amount of pressure as it all has to be repaid, plus interest. Also, if you can help it, don’t give away equity. There’s other ways of bringing people on board.

Giving equity away is a long term decision and at the time you might not rationally evaluate the impact of it. When you don’t know what the future holds for you, you might regret as I did giving fifty percent of your business away.

After solving those problems we grew the business organically, invested in the right sales team and looked at opportunities to buy other businesses.

We bought offices in Scotland and Newcastle in addition to the one we had in Leeds and developed a considerable turnover in the space of two years. We were turning over four times as much as when we started.

On paper we were doing very well and receiving many benefits of having a considerable turnover. But because we’d grown so much in such a short space of time, all of our cash was tied up. We started to run short of money as the cash flow was becoming too tight.

We tried various ways of raising money, but the bank said they weren’t going to extend our overdraft and then dropped a bombshell: they wanted repaid in forty eight hours.

We went from a developing, profitable business on paper, consuming lots of cash to having no cash and having to repay it within two days, which left me with no options but to put the business into administration.

It was a really painful decision to make; I didn’t want to make it until a mate of mine who I went out for drink with and explained the situation to said I didn’t have any choice. It was all about recognising that the business had become insolvent and finding ways in which to deal with that head on and sort out the issues that arose.

It was important to me to maintain my personal integrity and not walk away from the situation. We tried to communicate properly and honestly to clients who we owed money to. In one instance, a gentleman called into reception, announcing that he was going to do all sorts of weird and wonderful things to me. I invited him into my office and explained what had happened and by the end of the meeting we shook hands and he wished me all the best.

The business also employed nearly a hundred people who potentially could be out of work. I think that was probably the biggest motivation for me to start again and I bought assets back from the administrator as soon as I could.

The business is now totally different to what it was five years ago. It had to change for it to be a success. My previous experience taught me that if an issue arises, deal with it head on and don’t put your head in the sand.

Since staff are a key part of any business, I placed increased importance on looking at what people do, praising and rewarding them as appropriate, but recognising that some people’s skills perhaps weren’t as suited to the business once it had developed.

I try to spot things early on and patch them up. If it’s not going to work in the long run, it’ll just get harder and harder to deal with so you really can’t put things like that off.

I ignore CVs as well. Obviously I need to check to see if they’ve got to a certain standard, but it’s all about attitude. A person with the right attitude will always work with you but if they have the wrong attitude it’ll never ever work.

I’ve spent a lot of money training people, but I see it as a long term investment because I know having the right staff will pay dividends to the company.

The people I have now are ones that I’ve brought into the business so they share my values; they’re the business through and through. They get rewarded for it as well.

You’ve got to have fun within the business- you spend more time in it than you do at home. So all of us have fun, and the by- product of that is the fact that we all get on, we’ve more productive, and we’re more dynamic.

I needed to recognise when the new business began to build up. At the beginning we were reliant on a small number of clients. Although we were turning over a considerable sum, those clients represented eighty percent of the turnover. That’s great whilst you’re developing a business, but if you start relying on that small number it can get really tough if one client doesn’t place as much business with you.

We’d set up our whole structure around that turnover, and sure enough we soon started to struggle. I could see the path we would take if we carried on like that, because I’d been there before and I really didn’t want to go back.

We managed to maintain a smaller business than we had before and we’re far better off. Ironically, it’s ultimately been more profitable. A larger business is often full of need to have a considerable turnover but if you have a slow month you could lose a fortune. If that happened in a smaller business you might only lose a little bit.

In an expanding business it’s important to look at margins, not volume. Everything seems rosy if you have a large turnover, until you start interrogating the figures.

You can find that you’re doing a lot of work for a big contract, but for low profit margins. We went to see one of our biggest clients because we weren’t actually making that much money from them, and said, very sorry, but we’re not going to be working with you any more. It’s all about recognising that sometimes you need to do that.

We consciously downsized our business in order for it to be more dynamic and easier to control. We’ve disposed of low margin, low performing and high risk work but have increased profitability because the company is more sustainable.

I’ve learnt that money isn’t everything. Once you’ve got to a certain point and don’t have any more money worries, what’s the point in keeping on chasing it, especially if it’s going to have severe consequences for you and your staff. You need to have fun, enjoy yourself and your business, and if your staff are doing a good job, give them some benefits.

If you’re thinking of starting out on your own, I couldn’t recommend enough finding someone to talk to about it. Being with the Entrepreneurs Forum I’ve seen that everybody else faces challenges and you don’t feel as alone, particularly when making mistakes because I guarantee you, everyone does! I was put in touch with a very successful businessman when I wanted to start again and he acted as a sounding board and a mentor to me.

His guidance was just fantastic. I don’t get every decision right by any means so I literally paid this guy to come in for two days and listen to me whilst I ran past all my ideas and the struggles that I’d been through.

He was the one who said that taking my current team through the changes we were going through, was not going to work. I now have loads of confidence in my staff and have given them a lot more freedom because of that.

Everyone who wants to be an entrepreneur should find an experienced mentor of some kind because they’ll save you time, money and since they’ll have been through the experience, they’ll save you from making some bad decisions as well. That, coupled with bags full of energy, and perhaps an understanding wife, will set you well on your way to having your own successful business venture.

If I’d h

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