Simon Pearson

Name:

Simon Pearson

Business:

Pearsons

Web site:

www.pearsons.co.uk

Years in business:

22

Number of businesses:

7

Entrepreneurs' Forum member

I left school at the age of sixteen with the grand total of 3 O Levels and just went from one job to another. It wasn’t the best foundation in which to build my own business. At eighteen my father said I needed to get a real job, he knew someone who was in the recruitment and marketing industry, how about that? I said, ‘Well, I’ll think about it,’ to which he replied, ‘No you won’t you’ll do it.’

So I started thirty nine years ago as a messenger at the Teesside office for a Leeds based company. It wasn’t a question of starting a career; I chose it basically because I had no qualifications. But as I progressed in the business and ultimately ended up running the Teesside office, I could see certain things that could be done differently and improved. Particularly, they wanted to sell the Teesside office and concentrate on business in Yorkshire and further south. They didn’t think the North East was the place to further their business. I believed that there was a lot of opportunity in the region, especially with business to business and public sector clients.

I think there’s this stereotype about the North East, it’s all flat caps and whippets but it’s actually full of fantastic people running professional businesses and people have the wrong perception. Londoners forget that we’ve got some of the most profitable Plcs and market leaders in the UK.

Some London based competitors said I was crazy to start my own business in an industrial town like Middlesbrough, which is what I ended up doing. They were wrong, we’re a very successful business and they now see us as quite formidable opponents. I set up Pearsons and we’re now aiming to be the number one recruitment and marketing digital communications company, and we’ll do it from the North East.

I ended up setting up on my own after seventeen years working for someone else. I started the Teesside office on a bit of a wing and a prayer really, with a loan from one grandmother, a loan from a second grandmother, a borrowed car, an overdraft, and six people. I had thought about starting my own business before but I wasn’t really bold or brave enough to do it. I’d thought about entering MI5 or MI6 because I had very good evasion tactics (especially when it came to finding a job) but without a doubt the best thing I’ve ever done is start my own business.

I felt I could be a market leader in the field of recruitment and marketing communications, particularly looking at business to business and the public sector. I could see a gap in the market and a lot of competitors were, as they are now, based out of the area with perhaps only branch offices in the North East. I could see a real opportunity for a home-grown marketing and recruitment communications organisation.

Obviously there’s a number a challenges in starting out on your own. When I ran the Teesside office, the Leeds office still provided all the finance, invoicing, management reports etc. Suddenly, after having this all provided for me I had to do it all myself. I’d left school at sixteen so I didn’t have a clue what a balance sheet, a spreadsheet, a P&L was. I couldn’t just pick up the phone, dial the Leeds office and say what about this problem, what about that, what does this figure mean, so it was a very daunting prospect.

I used the Leeds model as a basis and then went to a local accountant who guided me through how to develop spreadsheets and especially how to watch cash flow. His advice was infinitely useful to me.

I had a bit of a client base when I started out as the majority of my previous customers came on board with me. But six months after we’d got going, Cleveland County Council, who generated a third of our business, took all their recruitment and marketing work in house. So almost overnight we’d lost a big part of our business, which I didn’t tell the bank! It was a huge blow and we really needed to pick ourselves up after that.

I did question whether I’d done the right thing in going it alone. We’d lost so much business so soon after starting it. But we pressed on, sold aggressively, watched our cash flow very carefully and ultimately grew and developed.

I think what happened was actually a good thing. We’d started with a client base so we had a bit of a comfort zone. We easily could have just sunk into that and become complacent. But we were horrified at the time and I think it’s these sorts of events that force you into looking at the business and looking further a field for new business. So we learnt from that and became a much more focused company after having a huge knock back.

We ended up growing to have a £4m turnover after four and a half years. But then the recession came along in the early ‘90s and all of a sudden marketing and recruitment budgets were cut. It was a real learning curve because we were losing money. But after learning our previous lesson, we maintained a strong cash flow, developed very good relationships with our clients, had a strong service ethos and were very client focused so that they remained loyal despite the cut in budgets. They were very supportive through a difficult time.

Then in the mid/late ‘90s we experienced rapid growth. In six years we’d grown from a turnover of £7m to £23m but we got carried away about the growth in itself and didn’t manage control of the costs. By 2003 we’d become the eighth biggest recruitment communications company in the UK which was a huge ego trip. We’d got so engrossed in managing that growth and maintaining client delivery, quality and reputation that we neglected a fundamental part of our business plan to generate good profits. We were certainly profitable but nowhere near our targets.

Someone once said to me, ‘Turnover is vanity, profit is sanity, cash is reality’ and it really is true.

Our turnover has fallen recently from £23m to £16m in two and a half years, but our profit margins have more than doubled. We’ve managed to go beyond the vanity of turnover. We’re actually forecast to go down to a c£14m business, but by that time our profit margins will have trebled. By managing costs effectively as well as maintaining strong client loyalty we’re a far more profitable business now than we ever could have been at £23m.

I would say that service as well as budgeting is absolutely paramount, and you’re only as good as your last job. You need to be able to gain a huge amount of trust with clients which in a competitive market is a big advantage. You need to develop partnerships, professional service, delivery, work to business disciplines and understand your clients. Just simple things as well, like quoting for things in advance, checking things and making promises that you know you can keep. If you let clients down, the trust starts to go.

What makes all this possible is a good team behind you. We take all new employees on a lengthy induction course. As important in learning all the new technical skills is taking in the Pearsons’ ethos, and everyone, from reception to programmers to designers, is expected to take part. I once had someone come up to me who’d been talking to a member of my team. He said he could tell straight away they were a Pearsons person, which to me is the biggest accolade you can get.

I’ve made loads of mistakes during my time here. I think one of the biggest, aside from the vanity of turnover, was not being commercially sharp enough in charging the appropriate fees that reflect our high quality and professional service. We needed a much tighter business focus. Now, at the end of each month I dig out the business plan and ask, are we still going there?

In 2004 we got KPMG in to have a look at our business. They performed a fine-tuning and made us sharper, leaner, meaner, more focused whilst still maintaining the Pearson’s service ethos and helped us to make the transition to a more digitally led business by changing our structure. Many people forget that in digital terms we were a very early entrant into the sector when we launched our online jobs board www.Sector1.net in September 2000. Everyone thought we were completely mad when we launched Sector1 just six months after the dot com crash in April 2000. So in a very young sector Pearsons is a mature digital recruitment and marketing company. I think it’s really useful to have an outside professional body come in because they tell you how it is. Often you can’t see the wood from the trees and they definitely told us a few home truths. The one thing that doesn’t change in business is the need to change.

Like many business owners running Pearsons has been a huge roller coaster of highs and lows!

Since starting Pearsons 22years ago the business has been all consuming with incredibly long hours so by the weekend I did not have much energy left. As a result I think the family suffered to a degree and looking back I wished I had spent more time with my three children when they were younger.

Also my long suffering wife Catherine having to listen to the days highs and lows at the office at dinner each evening. Like many partners of business owners she has been an invaluable sounding board as the business has grown and prospered.

I think I should have forced myself to get a hobby of some sort or play golf both good ways of taking ones mind of things but then the long hours/tiredness ( and a lot of excuses ) got in the way.

On a positive note if I had my time again would I do anything differently. Apart from more time with the family and taking up a sport the answer is a resounding no! Running my business has been exciting rewarding stimulating --- and more-- and yes also very stressing but the advantages far outweigh the negatives. The satisfaction gained by seeing the business grow and successfully respond to market changes is really great.

Since our business restructure three years ago my role is somewhat different these days. I took the role as company chairman and stepped back from the operations side of the business to concentrate on strategic direction and raise the profile of the business.

However it is no less exciting and absolutely fascinating to see how we have developed into a high tech digital recruitment and marketing business. I don’t profess to understand all the cutting edge web technology we have ( I suppose I don’t need to really with all our experts ) all I need to concentrate on is achieving our strategic objectives of becoming one of the UKs leading digital communications companies.

The hours are not as long these days which allows more time with the family and my youngest who is still at school.

I do now also have the time to put something back into this wonderful region the North East of England. I belong to a number of business organizations in the region as well as having some non exec director roles. I advise on the growing skills shortage within the region and devote as much time as possible to community development trusts to further the sustainable communities agenda and also mentor new business start ups.

To succeed in business I think you have to be incredibly resilient. No matter how many times you’ve been kicked on the floor get back up again as I’ve had to get up again about a hundred times. I believe that the reason why some people fail in business is because they don’t realise how close to success they actually are.

Leadership is key, but only in the sense that you’re able to work with a group of people that you like and respect. People can then look to you and also can be influenced by the way you run the business. That’s why it’s important to not let people see you down, remain optimistic and always maintain a sense of humour, and your team will act according to your example.

It’s also easy to be distracted and deviate from the course you’ve set yourself, perhaps because you’ve been knocked back. Tomorrow’s another day so try not to get depressed and just keep at it.

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