Jonathan Wells

Name:

Jonathan Wells

Business:

Guroo Ltd.

Web site:

www.guroo.co.uk

Years in business:

2

Number of businesses:

1

Entrepreneurs' Forum member

One of the biggest problems with having a good job is that you’re frightened of leaving. It’s a very big decision to leave that salary behind and agree to take none whatsoever because at the start, you don’t have any income coming in.

But if I’d have been brave and knew what I did now, I would have wanted to start my own business even before I got a job anywhere else. That’s a good time to do it, before you’re used to earning a salary, before you’ve got other commitments like kids and mortgages. I would certainly encourage my children to think about starting a business very early.

When I was eighteen, it was either get a job, in the civil service probably, or go to university. I think that these days it isn’t that simple. You need experience, you need to get stuck into things and take new challenges up.

It’s difficult when you have family commitments, to put those at risk. I’m at a stage in my life though in my late 40s where those family commitments are starting to decrease a little, and therefore I feel I can take a risk again, but a risk that can be managed and controlled.

With risk comes excitement, enthusiasm, reward, and the ability to take things forward in the way you want to take things forward, rather than the way that somebody’s already decided.

When I was made redundant from the shipyards in Newcastle, I became a salesman. I never really had an ambition to run my own business until I was in my late 20s.

I’d worked for a number of companies based in London all in the education sector, but I was sick of commuting. I used to get on a plane on Tuesday morning, spend the week in London and come back on a Friday night. Whilst that was a good way to make a lot of money, it wasn’t a good lifestyle.

I’d been through three companies in London and each time the company became successful, and my role in sales and marketing had a lot to do with that. I started to get the feeling that if I could do this for other people, what was stopping me doing it for myself?

But I wasn’t able to take the big brave decision to leave the salary and actually start my own business.

That opportunity arose two years ago. I was able to sell the shares I had in my last company back to the founder which gave me a little bit of capital.

Being a minority shareholder in the business was quite a difficult position to be in. You have a degree of influence, but ultimately you don’t make the choices; that’s the privilege of the majority shareholder. Whilst you can benefit from some of the success of the company, you can never benefit completely because it’s not your company. Therefore you don’t have the control over the way the business is being shaped and moving forward.

My wife thought I was mad to give up the nice salary. But I think you get to a point in your life when it’s something that you need to do, rather than just want to do. I needed to challenge myself, to run my own business rather than work for somebody else and help them run their business.

With that in mind, I went about going it alone. The problem was, I knew that I wanted to have a business in the education sector as I’d worked in it before, but I didn’t have any idea about what we would actually do.

All I did was I went to colleges and just asked them, what do you want? We went to both senior managers and students. I remember sitting in a café in Darlington and said, if we were developing some software, what would help you in your studies? That ended up giving us the initial idea.

The best advice comes from the people you want to sell to. If a customer says, that’s a bad idea, it probably is. If they say it’s a good idea and you don’t think they’re simply humouring you, they look genuinely interested and start asking questions, then there’s a very good chance that you’re onto something.

After visiting potential clients, we then went out to see some people who could help us develop the software. We can do a lot of the development but we can’t do everything. I’m a big believer in sourcing things locally so I found a company in Newcastle who do websites and they really helped us to start up.

Part of developing a business is getting other people to understand what that business is and what you want to achieve. We’re very careful to work with people who understand what we want to do rather than just deliver what we asked them to deliver. There’s always changes taking place and being able to manage those changes effectively is a very good thing.

Keeping things local is probably cheaper too. It may not appear to be, but because there are so few problems with it because you’re able to manage things so much easier, it works out really well.

Our original concept was to develop software that would help students pass their exams. The reality is that we’ve developed software that develops their learning. Rather than just teaching kids how to answer exam questions, we’ve introduced things like video learning and have made extensive use of podcast technology. We have a lot of interactive online materials which students can do in their own time, away from school or college. They can then be more in charge of their own learning and they become engaged. If they’re engaged, they’re more likely to learn something, so we make our learning materials very appropriate for a young adult.

In terms of raising finance, I’d agreed (with my wife) that I would invest £100,000 of my own money, or rather money that I’d got out of the sale of my shares, into the business. I put all of that money aside into a separate account, so once it was gone it was gone and I wouldn’t miss it.

For the first six months of working on my own company, Guroo, I also worked as a consultant for other people. That meant I was working seven days a week; three days as a consultant where I had a bit of money coming in and four days at Guroo where there was no revenue whatsoever because all the money was being spent.

As well as having the money from consultancy we were fortunate to win some grants from Business Link and the City of Sunderland Council. They were only a couple of thousand pounds each which doesn’t sound a lot compared to £100,000, but it did make a difference. It helped with the initial web development work, marketing and equipment for setting the company up.

Then we just tried to keep our overheads very low. Yes, we have to spend money developing the software and that means spending money with suppliers. But we don’t have to have company cars in the early days; we don’t have to have huge offices. We do need to keep the costs low and by doing that we can spend a lot more on development and end up with a better product before we get the revenue from our customers.

It’s very important to market in advance of something becoming available so you can take the orders for when it does, and you’re not waiting another three months for the money to come in. Luckily, we got our first customer right on plan so although that £100,000 is pretty much gone, we’re able to generate some cash flow and that’s paying the bills.

No matter how good you are at anything, there’s always something to learn. Part of learning is making mistakes, so I think we should embrace them, especially since I’ve made a series of them!

I’ve spent money where I shouldn’t have spent it because I thought it was a good idea at the time. It wasn’t. Things like making USB sticks with our logo on. Somehow I thought that would create a successful business. However, what creates a successful business is working hard and a good product. Besides, you end up giving the USB sticks away and then you realise that you’ve spent £2000 on something that has no value when you could have used that money on doing a better product.

We’ve spent a lot of money on advertising when we really shouldn’t have. When you’re a new company you’re often simply ignored. What we should have done is worked hard and marketed the company directly by going to face to face with our customers.

We’ve made a load of mistakes with getting the product developed, but actually that’s not mistakes that’s just working on getting the product better.

We started making some videos which support the learning materials. The first video we made was awful. It was twenty minutes long, it was like sitting in a classroom being bored by this lecturer whilst he talked about adding up numbers (it was me who was talking). It took a number of go’s before we got it right.

Part of being the boss is that you can’t do everything yourself, which means that other people will make mistakes as part of the process. When someone else makes a mistake and they’re spending your money, there’s a temptation to jump up and down and say don’t do this, do that or give it to me.

But actually that doesn’t move things forward. There’s only one of you and you can’t create a business if you do all the work. You need to encourage people to grow and explore different ways of doing things. It may not be how you would do it, but it very well could be better, and you have to allow people to do that.

It’ also important to have the right people around you; people that you can rely on. I’ve got two employees now, and both are very enthusiastic, very dedicated and very committed to the business.

I’ve made that mistake- I thought I could do it all myself, without support, but I quickly discovered that was nonsense. I went to Business Link but in all honesty that wasn’t a great success. Their business advisors don’t really understand what you have to do to develop a software business; it’s all investment at the beginning with little revenue. There’s a lot of marketing involved, but it’s not about writing a sales list.

I talked to Business Link very early on, but within three months decided that wasn’t getting me anywhere. Speaking to people who’ve done it all before has been a very good thing to do though. I joined organisations like the Chambers of Commerce was introduced to people through people at Business Link and the Entrepreneurs Forum.

I have a little bit of difficulty with the word ‘networking’. When I go an event, I’m not networking to try and sell something to somebody else because my customers, schools and colleges, are never at these types of things.

But networking in a wider sense means talking to people who’ve also developed some software, but for a different market. Then you can ask, what did you do here, what suppliers did you use? It’s only by talking to other people do you gain the experience to move forward.

One of the hardest things is trying to understand how much someone will pay for the products and services you provide. You have to identify where the budget is, and follow it. For example, if someone’s got £10,000 to spend, let’s make sure that the Guroo service and all the things that we deliver, comes to £9,999.

I look for the margin, the difference between what it costs me to make and how much I charge for it. If I can keep that margin at seventy percent, the profit goes towards running the company. ‘Profit’ isn’t a dirty word; profit comes when you’re doing something extremely well, and the money we make pays the salaries and helps develop new products. One of these days it will go towards paying my salary too.

I’m now working with an organisation called NStar who are here in the North East, to raise external finance. I’d like to raise enough finance to enable us to employ dedicated sales people and probably two customer support people, and that will help us to grow much faster than we could have done.

At the moment we’re resource-bound. I’m the only one who does any selling and I can only see so many customers. There’s probably three quarters of colleges in the UK and nine tenths of local authorities that have never even had a call from us yet. If I had more people I could do more.

Ultimately I want to sell the company in three or four years, and start another business in the education market. There’s a buzz to creating something new and taking things forward. I’d like to be a serial entrepreneur, and enjoy the process of doing that.

People say that one of the downsides of running your own business is that you work harder and longer. But I don’t actually see that as a downside because I enjoy what I’m doing now. I didn’t leave the office until eight o’clock last night and my two employees stayed with me because we’ve got a product that we need to deliver to Gateshead College tomorrow. But we were all in good spirits. We can’t afford to send our stuff over to the printers; we have to get it done ourselves, but there’s a thrill in creating something of your own and which you’re really proud of.

I sleep better too. I used to wake up in the night worrying about sales figures, the latest advert, whether I’ll meet my targets for this month. These days, I know I’m not going to earn any money today, I just try and keep the company growing. It’s not about the figures, it’s about making good decisions. The figures will follow.

There’s plenty of other perks too. I’ve just been invited to the Sunderland mayor’s drinks evening for people who make a difference in Sunderland. I don’t know whether I am actually making a difference in Sunderland, but it’s really nice to get that recognition. It doesn’t half make you feel good and I would never have got that had I still been a sales and marketing director in London, not even if it was the best company there.

When I was sixteen, success to me was getting a girlfriend. As I got older, success was getting the numbers for the month to take to the boss which was very short term success. Now, success is less financial and more motivated by what people think of the company. I ask myself, are my customers benefiting more than they otherwise would be from dealing with me, do my staff have a more fulfilled life by working for Guroo rather than another company, do we treat our suppliers well?

Success has become rounder rather than one dimensional. We’re not at this point yet, but when, as I hope, the company becomes very successful, we’ll be able to put things back. Loads of people have helped me; I want to be in the position where I can help others too.

At the moment we’ve got a company that continues to grow, employs people, and creates happy customers. Five years ago money was the main motivator: I had a mortgage and young children. I’m fortunate now having done those things that I can take a step back and say, ok, I don’t need to earn loads of money anymore, I can have a good time creating something off my own back.

I wouldn’t change what I did under any circumstances. Even if the company fails, I’ve had a fantastic time and I’ve tried my best. I can look back on that and say, at least I gave it a go. There’s no better time than now to start; it doesn’t get any easier if you wait, so if you’ve got a good idea, go out and deliver it before anyone else does!

You don’t need to be five times better than anyone else, just a bit better, then in the end the customers come to your door. You need to have a degree of humility and accept that you don’t know it all; you can get great advice from the people around you, but most of all have the belief that what you can do can make a difference to your customers.

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