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IoD Director Magazine, Feb 2016

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Virtual Board - Entrepreneur Interview

Entrepreneur Emma Clarke asks this month’s panel of business
leaders if she should start planning her exit - Expert comments from John Courtney and others.

Published in: Business
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IoD Director Magazine, Feb 2016

  1. 1. Entrepreneur Interview February 2016 Director 43 Emma Clarke I f there are three lessons that actress-turned- telecoms entrepreneur Emma Clarke took from the audition room to the boardroom it was how to sell, how to present and how to cope with rejection. With theatre parts not paying enough to afford the rent on her London flat, Clarke came up with the idea of launching a ‘virtual numbers’ business. “My mum and dad had just sold their telecoms business, a sideline to their web design company, offering ‘virtual numbers’ – a telephone number which can be redirected to a UK landline, mobile or to any area code around the world,” she says. “I realised that too many companies don’t include a telephone number on their website, or they only list a mobile number. It’s super-detrimental to a business – no customer wants to wait for a reply to an email form submission and displaying an 07 [mobile] number feels less professional and less trustworthy because it suggests that you have no location. Instead, for less than £10 a month you can have a landline that points to your mobile and gives you a more professional image.” Eighteen months ago, Clarke launched Brayford Numbers with her mother, Christine, as partner in the background. “My mother’s experience helped me open a business account – designing the website and shopping BrayfordNumbersisafast-growingtelecomscompanyfoundedin2014byactress-turned-entrepreneur EmmaClarke.Assheturnsthespotlighttothefuture,Clarkeasksthismonth’spanelofbusiness leadersifsheshouldstartplanningherexit cart required only a small investment,” says Clarke. “It’s a niche telecoms company. We don’t do hardware or installation. The advantage – and problem – with the business is I can target any size of client. My clients range from sole traders – plumbers and electricians who need a [landline] number to point to their mobiles when out on the road – to huge franchises with hundreds of numbers to monitor call traffic to their franchisees, and media agencies needing local area codes in multiple cities.” Competition is fierce but Clarke believes she provides a fresh face and personal touch. “I’m not mid-forties or male and I haven’t done this job for two decades. I take the time to talk to clients to see where I can add value to their business. When you’re talking about my business, you know it is Emma who will sort you out,” she says. Running a business has proved a steep learning curve. “Training as an actress helped with rejection,” she says. “I can sell anything to anyone but I’ve had to learn about how to control VAT, gross, net… understanding how business works as a machine.” Last April, Clarke faced her hardest struggle, the sudden death of her mother from a heart attack at the age of 64. “I was in total shock but I had to get on. My mum was an amazing source of advice. Not only did she believe in the business, she believed in me. I knew how important my pride in myself was to her and that was the driving force to make a go of the business. Mum’s death reinforced how important it is to separate the personal and the professional.” Brayford Numbers turned over £25,000 in its first year and has enjoyed steady growth since. “It’s a slow-burn volume game,” she admits. “When it comes to small clients you need a lot of them. “For two years I’ve thought of it as a baby but now I’m thinking about how the business can grow without me inside it. As it grows, I’m aware that my personal touch could be a problem for my business and I will need to pass the reins to other people.” CV Age28 EducationBAHonsinEnglish, UniversityofLeedsandUniversity ofCalifornia,Berkeley.Diploma inacting,AmericanAcademyof DramaticArts,NewYork. CareerTheatrerolessupplemented byfreelanceandtempwork, includingbeingaPAtoacasting director,sellingperfumeinHarrods andreceptionistforBupa. Hobbies“Iamamassivefanof restaurants,scubadiving,cold countries(Icelandisafavourite) andcraftbeer.NorthLondon’s Beavertownbreweryandthe microbreweriesaroundMaltby Street,southLondon,areamazing.” Words Richard Dunnett Virtual board “The advantage – and problem – with the business is I can target any size of client,” says Emma Clarke
  2. 2. Interview Entrepreneur 44 Director February 2016 Clarke has found inspiration from her membership of IoD 99 – the IoD network that supports entrepreneurs under 40. “It’s been amazing,” she says. “Using 116 Pall Mall has been essential for work and meeting clients and through IoD 99 I’ve met people of a similar age with businesses in different fields. “I’m always excited to hear about other people’s companies, their plans, and how their ideas came to fruition. All my friends have got jobs. They get a pay cheque every month and they don’t know the turmoil of running a business. It makes a difference hanging out with people of the same ilk.” Asked to look five years down the line, she says that in addition to building a team, she is considering expanding the business into call handling for clients, investment permitting. Despite having all this on her plate, Clarke is already thinking about a time when she may wish to sell the company or put management in place. “I’ve always had the thought of exiting in the back of mind. You can never say never. What if I get to the point where I want to travel around the world?” she muses. “I think I have an end goal in mind – not tomorrow but in some years’ time, which is why I am so keen to detach myself emotionally from the business, keeping that personal level of service but knowing there would be a day when it would work if I went on holiday for three weeks.” This brings us to Clarke’s burning question for the members of this month’s virtual board: “How important is it to have an exit strategy when growing a business?” she asks. Over to the panel… Tojoinourvirtualboardortoseekitsadvice, contactusatreaderpanel@iod.com brayfordnumbers.co.uk @BrayfordNumbers EmmaClarkeisamemberofIoD99 WhatadvicewouldyougiveEmmaClarke? Emaildirector-ed@iod.com Howimportantisittothinkaboutexitwhengrowing abusiness,andwhatmeasurescanyoutaketoputanexitstrategyinplace? EXPERT ANSWERS It is never too early to plan for exit. I learnt this lesson very clearly last year when I sold my digital marketing business and hadn’t put in place some of the things that were required. As a result I got a lower price for the business. Fortunately, most of the things required for exit are also needed for efficient running of a company, so they are not too onerous. First and foremost, people will not invest in a lifestyle business – there must be a history of increasing sales and profits, a plan for future growth and it mustn’t be just you. Investors will be buying a company that can operate without you, so part of the growth plan should be quality staff in key areas. Better one seriously good manager than three poor ones. Think about having a network of agents or distributors and sharing revenue with them – this can be a fast way to grow. Not having a business plan smacks of not having a strategy, and that makes investors nervous. A simple budget for the current year and near future is essential – for your and investor comfort. If you are dealing with lots of small customers this can be time consuming and will severely restrict growth (and sale price), so think about ways of automating processes. stockwoodventures.co.uk @JohnGCourtney JohnGCourtneyisamemberof IoDSouthWest Thanks so much for all of your great answers – they’re very helpful. It would seem that there is a unanimous vote for beginning at the end (which Tim rightfully points out doesn’t just mean selling up!) when planning your business. In light of this advice, 2016 will be the year I really start thinking about solid planning, implementing systems and envisioning that perfect management team, as Jo says, to prove that Brayford Numbers could work without me in the future. John’s idea of shared revenue with distributors really resonates with me and I think that this will be a key part of the business’s growth over the next year or two. John G Courtney Business mentor at Microsoft Ventures and independent non-executive director You will exit your business; this is a given. Whether that’s by sale, succession, management restructure or business failure is down to you. With the exception of business failure, any one, or more, of the above would be a desirable option. Planning will help you understand this and give you a structure to work towards. It will dramatically increase your chances of achieving the desired result and, just as importantly, alert you if things are not going as you’d hoped. That will enable you to act before it’s too late. Planning is more than important; it’s fundamental. Begin at the end. What is the desired outcome? It probably isn’t ‘to sell’ or any of the other options suggested earlier. It might be to travel, to retire by a given point in time, to realise a certain sum of money or similar. Selling, or the others, is a means, not an end. Once you understand your end goal make sure your plan contains actions and short-term measurables that will act as signposts for your business journey. Goals may well change through life. A plan will help you adapt to change, not hinder you. Only follow advice that is truly aligned with your end goal. And discard advice only by positive decision, not by omission. iod.avondale-group.co.uk @AvondaleUK TimHardmanisamemberofIoDSouth Tim Hardman
Managing director, Avondale Start planning your exit on entry. The sooner you do, the better your chances of securing the best deal. There are many sorts of buyers – management team, trade buyer (horizontal or vertical), national or international players or private equity investors. They are all looking for specific qualities in a deal, but they all want a great management team. Team being the keyword! Make yourself the least important person in your business as soon as possible. Although it will sell even if you are essential, the downside is you would need to stay involved post deal and that doesn’t always work out. You need to tie in staff, ideally with a long-term incentive plan. Secure great contracts, with no change-of-ownership clauses, and give the buyer the comfort of ongoing trade. Make your business desirable by developing your brand, register and patent what you can, and have robust and auditable information. You can’t have a valuable business and minimise tax. Choose capital value over lifestyle business. Get the best advisers from the start, including corporate finance lawyers and tax experts. Also, keep an eye on the business throughout the transaction; deals often fall at the last minute, so you need to make sure you have a business to go back to. fds-group.uk.com @fdscfs JoHaighisamemberofIoDYorkshire Jo Haigh Chief executive, fds Director Services Clarke’s response

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