From Bedroom Startup to $100M Exit with Andrew Hulbert | Backed by Funding Circle

0:00And remember, you will die. I always see at the end of it. That's all yours. This episode is brought to you by Funding Circle, business finance that backs you. Andrew. Hello. Back to the podcast. It's great to have you here. It's like I never left. Back with old friends. Big question. We go back to it. Who are you and what problem do you solve? Well, I'm just a dad. I'm just a dad. I live on a farm. I happen to run a very successful business, which I exited. but um yeah no you you find me today in like a really chilled out place a little bit hung over because ideas fest is wicked so that's what we're doing here but no um i was an entrepreneur and i had a really successful services business which we grew to about 50 million and about 500 staff selling to the biggest tech businesses in the uk now i help people with their exits and i help people grow i'm uh i have nothing to lose i have nothing to prove i have nothing to sell so i can give people really direct advice and sometimes entrepreneurs get really sort of wishy washy advice from people who really don't know what they're doing.

0:59I don't think I'm anything special, but I have been through it. I've sold twice, raised a hundred million dollars in exit value, and I've been there and done it. So yeah, I probably am the critical friend on your shoulder telling you what you should be doing without anyone having to pay me to do anything for it. So that's a problem I'd probably solve. Nice. So first question, what advice would you give to business owners when it comes to cashflow? What do they need to think about? The number one, cash flow is the most important thing i would say forget everything else when you start a business you really focus about profit because profits is real vanity metric right or people say turnover is vanity profit is sanity but actually i would go one step further cash is sanity because if you are not converting that profit into cash you will not have a business so the most fundamental thing the first few years of your business cash cash cash where's the money because if you can get good cash flow and you can start being generative in your cash, then eventually that's going to just keep you secure.

1:55Because the one thing I learned as I was getting bigger into the sort of 20 million, 30 million turnover range, it's harder to collect cash as you get bigger. So you have to be really good at it early on. And then it has to be part of your processes as you get bigger. And I was working with the biggest brands in the UK. And whilst they say we're in a wonderful partnership together, they put you on 90 day payment terms. And actually you're doing three months of work paying staff for three months before you even get any money if they pay you on time. So actually, I would say cash number one, forget profit.

2:25Profit comes when you're ready to sell. And for two or three years, you need to make your profit look good and make sure it's growing and you're selling the future potential of that profit. But cash number one every time. Nice. What do people need to know before they borrow any money in business? Well, covenants and what do you have to do wrong to give the money back? That is the first thing because what you need to understand is often if you take out a big loan, there'll be certain like covenant ratios within your financials. So, and if you miss those ratios, you have to tell the bank that that has happened.

2:56And if they're really nervous, they can recall the loan. And if they recall the loan and you can't pay them back, your business goes bust. So the first thing to understand is what terms are you borrowing this money on? Of course, interest rate is important and how much you're actually going to pay back. But, and interest rates fluctuate wildly. I remember we took a£5 million loan out after COVID. As we were growing, we needed working capital, paid 11 % interest on that 5 million loan. But look, it worked for us. It was a hugely successful growth period. And without that money, we couldn't have done some of the debt leverage stuff that we were doing.

3:26But yeah, understand your risk position. What do you have to mess up to have to give the money back? That's a really important lesson to learn. So if you don't learn it, the banker there with the bailiff at the door saying, oi, close your doors. It's time to go home. Shut your email down. It don't matter if you respond. It's all done. Wise words. There's a lot of people here who are starting businesses or thinking about starting a business, let's say, right, I'm ready to go with the idea. Tomorrow's my first day. What's the first thing I should do? Well, drink some coffee because it's going to be a long day.

3:57You're not going to sleep for the next few years. The first thing you need to do is identify where the money is going to come from in terms of who you're going to sell to. So who is your market? What is your go-to-market proposition? And I met a couple of founders in this stage and they're just like, I've got the idea. I started the business. I haven't got any money yet. I was like, cool, but the money is what enables you to have a business going back to cash flow, right? It's how are you going to get that money coming in? So I think from my perspective, before you even start a business, work really hard to understand where is the money going to come from?

4:29So in my example, I started knowing a load of customers in the property services space that I could go and hit up and say, hey, I've started my own business. Are you interested in giving me a contract? And luckily, a number of them said yes, and that's how I got started. but if you don't know where the money is going to come from the business is not going to be a success and I the advice I often give if you're in a job wonderful start building on the side start proving you can get some money in and then when you've done your own proof of concept to yourself then it's time to go all in I've met many people who go all in with no plan they don't know where the money's coming from and then it fails and that's probably why 80 percent of new businesses still fail now because we don't know where the money's coming from and so yeah cash money where's your growth coming from like it's really fundamental business advice but that is what you need to do nice you've been in the field giving some like direct feedback giving advice i guess if we gave you access to everybody's ears today here at ideas fest yeah what's the one piece of business advice you'd want to pass on i have a problem at the moment that people as entrepreneurs we start to tie our own well-being and our own self-worth to our businesses and i think that's a dangerous thing to do it's very easy to do because there are babies and we built them and we care about them and we see them more than we see our own kids.

5:41But actually then when you sell that and you exit, a lot of entrepreneurs have a depression spell afterwards because they've lost their sense of purpose and sense of being. I was always very deliberate that I understood this was a means to an end. I was going to run a business, I was going to make some money and I was going to sell it one day. And that was part of the journey. And I actually, I don't identify just as an entrepreneur anymore. And I did for a long time. Now I identify as like I'm a dad and I do lots of different things. So I think for me, what is your purpose? What is it that genuinely makes you happy?

6:09not what you're seeing on someone's social media or seeing someone in a plane or with a bright yellow sports car or whatever. None of that stuff, unless that's really important to you. But what really, really matters, so like for me, it's family and actually focus on that. And it's very, very easy to chase more followers or chase the next bit of growth or chase this, but look after yourself and actually genuinely understand that business is not you. Put yourself all into it, yes, but that is not you. And at some point, that's not going to exist anymore. And actually you are still there and you're a brilliant person and you need to focus on that.

6:39So yeah, stop taking your self-worth from your business and stop going on Instagram and looking at people that are spending 10 grand a month on their socials and thinking, wow, I wish I could have that helicopter. Clip that up. That's the bit. I suppose equally, maybe you'll have to think of a different one here, but what do you think is overrated business advice? What do you think people talk about too much that just ignore that? You know, I think some of the most overrated business advice is just because you get more followers, you're going to be more successful. You're not. you and you guys would say the same i think but it's better to have a thousand followers that genuinely interact care about what you're saying maybe they'll buy from you than a million followers that are not interested and like people who are buying their followers and growing their socials it's just ridiculous and it's a complete vanity project and actually in pareto we were we had the sixth most recognized brand in the sector 120 000 competitors and we were number six and we were that was when we were like a 40 million pound business compared to businesses doing 8 billion and turnover we had less than 10 000 people on our whole socials actually so it wasn't social driven yes we told the story on linkedin but just because you get more followers doesn't mean you're going to be more of a success i would say really focus on telling your story through socials a really authentic story a very accessible story so people can feel like they're part of the journey but don't obsess about the numbers and actually like it's better to have engaged people and people who may buy from you or people that will recommend you to others because in my world we sold 250 million pounds of services we didn't do any marketing at all it was all word of mouth there was no ads we just literally did a little bit of linkedin where we updated what we were doing we wrote lots of articles in the press we did lots of networking we did lots of awards but we were never doing paid ads or anything like that and that's why our socials weren't that big and i personally i didn't even start my socials until i retired and then i did it afterwards so yeah i would say be careful of that nice and then so then there's a few different ways to take this but if somebody's thinking i need to win my first customer what advice would you give them to start network network network network uh i was just saying to someone in in this field who just came to have a chat with me they'd seen some of my content online i was like you could sit all day on whatsapp or instagram or facebook whatever and send out a thousand messages being in the field chatting to people doing this face to face do you know what i should have brought bloody business cards you know when i again in my business we were paperless and i made a real thing that we were paperless and it was this was like a big deal so i said no one's having business cards and actually now i was just with kim uh who runs a tech business she's chatting to someone she pulls a business card out of her bag i'm like this is like vinyl business cards are bang and back but no um network you need to be out there not from your computer so whatever your niche is whatever your sector is find where people are networking about that go there and do it and if you really want to go hard start your own event where you start attracting those people to your event i um i used to network a lot in other people's events and then i was like well actually i'm one of 100 people there so i just started running my own because now i was the one of 100 people there and everyone knew who i was and i wasn't selling to them but they were coming to my event so then when they had a need for property services in the future they knew who i was and i was a nice guy and they come to my event and we'd given them free food and drink or whatever so yeah i think from my perspective just get out there and network and for young people in particular that's really hard advice for them to take because that's not what they're doing and if you're 19 watching this and you're thinking how do i get ahead of my peers go to work four days a week get out of the house go presenteeism works in management right just go and be somewhere and i promise you like the relationships and the tacit knowledge and those incidental interactions that you have that is where you will garner value that is where you will harness value and also that is where you will get opportunities that other people won't amazing thank you so so much is that it we done that's it oh amazing thank you smashed it thank you mate this episode is brought to you by funding circle to find out how you can get fast fair and hassle-free