16: Pursue Passion, Conserve Cash with Mike Lander

24
Feb

Mike Lander, CEO of Piscari Limited and Chairman of Re:Signal, a consultancy agency that drives organic growth for ambitious brands, in the UK.

—

Listen to the podcast here

 

Pursue Passion, Conserve Cash with Mike Lander

Our guest is Mike Lander, who is the CEO of Piscari Limited in London, UK, which helps clients negotiate better procurement contracts with big companies. He’s also the chairman of Re:Signal, a consultancy that drives organic growth for ambitious brands. Mike also advises professional staffing companies on organic growth, and he graduated with a degree in marketing, and then he also got his MBA in finance and strategy for Cranford University. So, welcome, Mike. It’s great to have you.

It’s great to see you. Thank you for inviting me.

It’s great to have you. You’re our first European, although I don’t know if you think of yourself as European anymore.

I definitely do. I always will.

You’re a Remainer then, probably.

I’m definitely a Remainer. Definitely a Remainer.

So, Mike, so tell me a little bit, I mean, you are in interesting businesses, involved in several consulting firms, are really growth focused. Tell us a little bit about your entrepreneurial journey. How did you end up here?

Sure. If you go right back to when I was kind of like 16, so a young boy, very, very shy, didn’t think I’d do much, lacked self-confidence, let’s say. And at 16, I always thought, kind of knew I wanted to run my own business. I don’t know why, but I always thought I’d like to run my own business one day. And as you go through the kind of the journey, I started working for big companies.

So I ended up working for some very big companies, people like Barclays Bank and KPMG, so really big firms. And that was until the age of about 30, somewhere around there, probably, maybe 36. And as I went on that journey of working with big companies, you learn really good skills about how do you operate inside big companies, governance, process, systems, discipline, hierarchy.

And although they sound awful and bureaucratic, they’re great skills to learn. And then I went freelancing. So interesting, I guess, snippet for your listeners is, you know, I went independent in about, well, 2002, I guess, 2000, 2002. And I thought I was building a business and I wasn’t. I was being a freelancer. People wanted Mike Lander. They wanted to use me as a, at that time, a kind of project manager. I was a very good project manager. And that’s what they wanted.

When I learned that, it made me really think about, don’t fool yourself that you’re building a company if you’re just a freelancer. Being a freelancer is absolutely fine. It’s a great life. But don’t think you’re building a company. And so in 2006, I’d been working with a company as a freelancer. They were the consulting company. I was their freelancer. And they were looking to sell the company. And I over lunched one day to the guy that owned it. I said, I’ll buy it off you.

And he kind of choked on his food and said, but you’ve got no money or not enough to buy it. And I said, well, if I can find the money, we’d use some of the company if we get to the right deal. And talking to his business partner, they in the end, they agreed. And it was the first time that I’d really moved from being an independent freelancer into owning a company. And I bought that company. I raised several million pounds from banks in the UK back in 2006, 2007, and I bought that company.

I ended up running, we had about 120 consultants at one point. We ran a £50 million government contract. We’d upsold £10-15 million of the contract value. By anyone’s standards, it was quite a big consultancy. And I was, at that point, virtually the 100% shareholder and the chief exec. So I kind of went from being a freelancer to being an entrepreneur at some scale.

A lot skills so that’s definitely a fascinating story. And you know, we have some things in common. So I started my career with KPMG actually in London.

Ah, I was at KPMG.

I think we missed each other because I was there from 1991 to 94 and you came after me. I came 96, yeah. And I also, you know, my company that I founded, the original idea was to focus on buyouts and helping people like you buy out companies, which was from the 2002 onwards. So that’s some things in common. So my question is about how you pulled it off. I mean, 130 people, 50 million contract. So, surely they don’t give, even if this company is in debt, if it’s in trouble, you’re not going to get it for free. So how did you raise the money and how did you get your own equity into the deal?

It’s a great question, Stephen. There’s some key things. Some of it was based around long-term relationships and some of it was just based around, you know, I understood what I was doing, I was very prepared. So a few things. The company I bought was owned by two guys that were at KPMG. I’d worked for one of them. He was the partner, I was the consultant. And I’d worked for him for about three or four years. So I had a strong relationship with him.

And so when he came to say with his business partner, we want to sell, a lot of businesses when they sell, and it’s a trade sale, cause mine was effectively a trade sale to a trade buyer, they’re nervous about who they hand it over to because they want to leave it in good hands. And as you know, Steve, when you sell a company or someone does a buyout, the owner can be slightly nervous about what’s going to happen next.

And because they knew me really well, it helped the deal go through. It definitely helped those tricky nights when it was very dark. I remember one negotiating evening with the owners and me as the buyer. And it was a tough meeting. And so that helped get through those dark hours because the relationship helps you stay on track. Whereas I think if you’re buying a company and you don’t know the owners and you’ve no relationship at all, very difficult to make that deal work.

Second thing is, I think the MBA really helped. I’d understood through the MBA, I came into the MBA as an engineer, project manager engineer, and I came out as a project manager engineer with finance, marketing, and strategy skills on paper, not in practice, but certainly on paper. And so the ability to structure a cash flow and understand how you value a company based upon a discounted cash flow basis, those basic things became really valuable because it helps you price the asset that you’re buying.

And so I think that was another thing. And then the third thing I think is, so I don’t believe in luck, but what I do believe in, if you work really hard and you persevere, and when opportunity knocks, you open the door and you see what’s in there, and you keep doing it, eventually the right things happen. You’ll have quite a few mistakes along the way, but the right things will happen eventually. But one thing that did happen was timing.

In 2006 in the UK, this was just before the crash, remember Steve, before it all went really horribly wrong in the markets? Yep, 2008. Yep, so in 2006, the banks were looking to back entrepreneurs. They wanted to get cash out of the door backing entrepreneurs. And I found the bank I worked with at that point in that mode. And so I managed to raise, you know, several million pounds worth of debt from the bank to support buying of that business. And that was timing.

And interestingly, I think if you look at a lot of the research that was done over the last 20 years about why companies are successful as they grow, what’s the kind of the overriding factor, a lot of the research points to timing. You know, people say it’s the founders, or it’s the capital, or it’s the IP, or it’s the… A lot of it actually is about, yes, but it’s not sufficient. You need a market that is ready for your proposition at that time in a growing market that’s expanding.

Success is not just about inheriting a thriving business; it's about doubling its size, embracing resilience, and navigating the clouds when they appear. Click To Tweet

That’s true. So often venture capitalists call this the vintage. So there are certain years which are good vintage years for investments. And there are other… Most years are not good vintage years, but that is a good vintage year. I remember 06, 07, I was running an M&A boutique and it was a very, this was very good years. I mean, the best years we had.

You could get that. You could raise capital in those markets.

People were very optimistic and a lot of money was looking for a home. So definitely was a good time. So what happened afterwards? You acquired this business, how did you turn it around? How did you, what did you do with it?

So when I took it on, it was in great shape. The guys that had run it had run it really, really well. I mean, these guys were clever guys. They’d run it really well. It was profitable. It had brilliant consultants working for it. And I managed to double it. So I doubled it in size to 120 consultants. And I did it really following their model. I had a consultancy business where all of my consultants were freelancers, all of them, no employees at all. So as I found work, I found great contractors and I gave them work.

And when the work stopped, the contractors went away. So you have this completely floating cost base, which makes you very resilient to any shock. And what they’ve done is, once again, an interesting lesson for your kind of listeners maybe, is there’s something about a critical massive experience that’s really important in your kind of staff base, be that permanent staff or be it contract staff. What happens is the organism creates a bit of a life of its own.

And if you build a high quality organism, if someone comes in from the outside that doesn’t fit, the organism automatically rejects them because it will infect the rest of them. And so I bought this business when it had like 60 odd consultants. So as I scaled up, everyone knew another consultant who was brilliant. No one would refer someone to me who was a bad consultant because it would infect the rest of them.

So I have this massive pool of talent because if one consultant knows two consultants, well, if I’ve got 50, I’ve got access to a talent pool of probably 100, 150. That’s what happened. We won a project and we needed 40 consultants within about six to eight weeks. We found them, high quality, ex-KPMG, Ernst & Young, McKinsey, Booz, AT Kearney, really high quality people because my people knew them. And we have these big contracts. So we were very attractive to work with.

Was it profitable? So when you outsource everything, is it still profitable?

Really profitable. Yeah, very.

So what happened next? I’m getting very curious. What happened next?

So this is good. It’s all part of the story arc. So now, now comes the clouds turn up and the dark days turn up. So I thought I was master of the universe. I thought I could do anything. You know, I thought I was a genius because I managed to double the size of this company. And then the world gave me a dose of reality, which was the contracts we were working on were big government contracts. And as you all know, Steve, you know, those contracts come to an end.

So you’ve got this massive dependency on these very few big clients and your public sector only. So you must diversify, you have to diversify. And so I went on a diversification strategy. And the plan was as these contracts went down, the other ones would go up, the crossover would be the midpoint and it would all be great. And so we expanded into the Middle East. That’s probably a podcast in itself.

If any of your listeners are thinking about going into the Middle East, yeah, by all means, drop me an email. I’d be very cautious indeed. I’ve got lots of friends from the Middle East. So culturally, I think it’s a beautiful place to be. In business, there are some golden rules you need to abide by or else it will go badly wrong. So I spent in the Middle East.

And then also, I got into the schools business. We were in education consultancy. So through a bunch of advisors that I’d worked with, they all thought it would be a brilliant idea for us to buy a school because you get this annuity income effectively off the back of this asset. Higher barriers to entry because it’s high capital barriers for entry and regulatory barriers for entry. When you’re in, the pupils tend to stay with you.

And then another lesson in my entrepreneurial life, never ever, ever buy into a sector that you don’t really understand really, really well. You will come badly unstuck. Unless you’ve got a lot of capital that you’re prepared to deploy to get yourself out of trouble, it will probably go badly wrong. And I didn’t know anything about running schools at that point. I know a lot now. And so, yeah, it took me quite a long time to learn how to do it effectively, what the issues were, and basically we got into trouble.

Never invest in a sector you don't understand well. Master your field before expanding, or trouble may follow. Click To Tweet

So I then had the bank on my back, we had more debt. I paid the first tranche of debt off in two, three years out of cashflow. Second tranche of debt that we took on was not that way. Company got into trouble. We had good cash reserves, but all of a sudden, you know, the picture started looking quite dark. And I had to work with the bank on a recovery plan. So I had to restructure my own business, strip out all, I had a few central people, like five or 10 people.

I had to restrip, yeah, strip those out, change all the offices, and it restructured the schools business and the consulting business. So yeah, very, very hard lessons. But then I came out the other side, the consulting business by that point had dropped off, and I built a new schools business, and then I ended up selling that schools business. I ended up with 100 staff, 45 pupils, special needs school, and I sold that to some private investors. So it came good in the end, but my word, it almost killed me.

And what happened with the Middle Eastern division? Did that just go away?

I closed it down. We spent three years in the Middle East on contracts, and I closed it down. And that’s because, I think rightly, the MRRs expect you there for the long term. If you turn up and expect to make a fast buck because of the sovereign wealth and the oil assets, you would be sadly mistaken. It’s a very, very difficult climate to do business in because there’s a language barrier and there’s a very strong cultural barrier. And they are rightly fed up with expats coming in, earning big salaries, having a great time and going home. And I don’t blame them. They’re fed up with that. And I think we’re gonna see a lot of changes in the Middle East about how they operate their economic environment.

So, you sold the school business, which kept its own. And then what happened next?

So I sold that. Whilst I was in the back end of kind of running it and then selling it, I started a procurement consultancy with a friend of mine, which is basically, it was all about stripping costs out of a supplier cost base for a big company. So we used to work with private equity-backed companies. So you know what that kind of land looks like.

So for your listeners, that some of them may not, private equity company, so big VC basically, turns up and they buy a company and they deploy a hundred million pound of capital. And they expect in three to five years time between two and 300 million back. So a two to three times return over a three to five year period. And obviously they place that money into several companies and across the portfolio, that’s the average return they expect. So we used to work with private equity-backed companies that were big, and we’d go in and we would look at their cost base or their supplier costs.

Let’s say there’s 10 million pounds of supplier costs, and we would renegotiate all the supplier contracts, and we’d on average get between 10 and 20% savings on that supplier base. So you take 10 million down to 9 million. Well, that million pound of difference, if you’re a private equity-backed company, you’re selling for between 10 and 15 times EBITDA, net profits. So 1 million pound of extra EBITDA gives you 10 to 15 million pound of extra value. So the PE companies loved us. It’s like, this is great. And so I did that for a number of years. And then we sold that to another consultancy company who specialized in exactly the same thing.

So what was the size of the business when you sold it?

It was tiny It was like four of us, four or five of us. It was very niche, very specialist, profitable, but very niche. Yeah. Because the founders, me and Steve, basically we ran it. And we kept it small for a number of reasons. We didn’t want a big consultancy. It’s very hard to win lots of those kinds of deals unless you’re at scale. It’s that kind of, you can’t go from being four or five people and then just become like 30 or 40 people in that private equity market.

If you work with investors that are VCs, private equity companies, when you’ve done it, you realize quite how tough that world is, unrelenting. I used to rock up with the PowerPoint slides at the beginning, Steve, and the portfolio partner would say, throw away your PowerPoint slides, I don’t care about them. Get out your spreadsheet and show me the numbers, because I’m an accountant, I’m a finance guy, and I want to make sure we’re making money. After that, I always walk to me with my spreadsheet, never a PowerPoint slide.

That’s the life of finance in London, isn’t it? Lots of numbers, lots of spreadsheets.

Yeah, and pretty aggressive. Yeah, non-compromising.

Yes. That’s the business. So, tell me a little bit about, and then you sold that company and then you then founded Piscari and there was also Cigrette Signal. Yeah, that’s right. So what happened?

Yeah, so what happened was, I worked with that consultancy company for a couple of years, two or three years, and then, I mean, I’m now 56, so I left them about, I think, four years ago, somewhere around there, and wanted to do more of a kind of a portfolio of work. So I started working with Re:Signal, SEO, organic SEO and content company.

We work with quite big brands, and I work with the chief exec. So I’m now their chairman. He’s the chief exec. We get along really well. It’s very much a partnership. And yeah, so that’s worked very well. So I enjoy that. It’s advisory work. And then I also, I’m involved in a business we founded, which was an architectural and interior design business. So we help people basically design beautiful homes for themselves. And then for the other part of my time, I run Piscari.

And I sat down one evening with my wife on the sofa. She’s highly creative, very regular business person, and she had run her own businesses. And she said, we were wondering what to do. And she said, you’ve had all this experience as a procurement director, buying lots of stuff for big clients, negotiating with small people. Why don’t you turn it around? Why don’t you help smaller companies negotiate better deals with big companies? And I said, that’s a great idea. I wonder if it will work. And I went out and talked to a bunch of SMEs that I knew and clients.

And it’s now turned into, a couple of years later, basically, one of the things I run now, the core of what I offer is I run a negotiation skills and procurement insights program, where I help smaller companies, I train their sales teams, their commercial teams, about what do procurement people look like, how do they negotiate. I train them in negotiation skills foundations to make them better negotiators. So when they go into these bigger brands, as they’re starting to grow, they’re going to negotiate much better commercial deals.

So, Mike, tell me a couple of things that someone who is growing a brand, an ambitious brand as you call it, that want to be successful working with Amazon and big chains, I don’t know, Walmart, other big department stores, how do they go about not lose their shirt on those deals?

Okay, so there’s a few things. So let me just kind of think about three things. First of all, understand that if the deals of any material size, Amazon, take it as an example, will have professional buyers on their side. That’s what they do for a living. They will have professional buyers on their side. So be aware you’re dealing with a professionally trained negotiator. That’s what their job is, to get best value for their client. Number two, preparation.

The biggest failure of all entrepreneurs that grow their companies that I’ve worked with, and I’ve worked with hundreds over the years, is the failure to prepare because we’re too busy. If you walk into a negotiation with Amazon thinking as the owner, I know what I’m doing, I know what my margins are, so I won’t move, and you don’t prepare a negotiating strategy, and you don’t research who you’re going to go and talk to, and what the competition looks like, and what your differentiator is, and what the five points of the negotiation are rather than the one which is price, you will get taken apart piece by piece.

Preparation is the key to negotiation success. Don't walk into a deal unprepared. Research, strategize, and understand your differentiators. Click To Tweet

So understand their professional bias. Secondly, prepare really well. And the third one, which is really hard to do, takes some practice, is become emotionally detached from the deal. So you’ve been involved in M&A, Steve, quite a lot. So I learned this from a guy I met many, many years ago, who was an ex-IBM salesperson, sold 10, 20, 30 million pounds for the deals. And he said, Mike, the moment you become emotionally attached to the outcome of a negotiation, you’re doomed. You’ve lost the deal.

You might win a contract, but not on the right terms, because a smart buyer will recognise that you want it too much. So you must always remain emotionally detached from that deal until the contract’s signed. And then you can have a small celebration until you start delivering it. And the quarterly business review turns up around your SLAs and KPIs.

Right. So you won’t have much of a honeymoon.

Not much.

But I definitely share your experience. I mean, as an M&A advisor, where you add that we brought to the table was that we were emotionally not attached. To some extent we were attached to the success because we wanted to make the deal happen, but not to the extent of the buyer or the seller.

Exactly.

We could actually hear things that the emotional buyer or seller was saying and could translate it to what is the real issue and could help the two parties see each other’s positions and perspective and understand and feel less upset about things.

Correct.

And that was one of the main roles that we played in these transactions. And whenever a seller would want to go it alone, often the buyers were trying to seduce the seller to fire the advisor because they felt that because they were the professionals, if the vulnerable seller was there, then they could basically wipe the floor with them.

Correct. And they would. Yeah. The thing that happens in negotiation, and you’ve described a very good illustration of that, the buyer will draw you in to making you feel really warm and comfortable. And all the bits that don’t really matter in a deal, they’ll agree on. And it will all be really nice and comfortable.

And the headline price will broadly be agreed, broadly. And they’ll draw you in. And what happens is, as a seller, you get drawn into this conversation. I’m doing one at the moment. I’m also a deal advisor. Small deals, I help my clients sell their businesses because of the negotiation skills. And they draw you in, and then they’ll see you tip over the edge of spending the money. In your eyes, they will see you’ve just bought the car, you’ve bought the holiday, you’ve bought the new house that you’ve been working for for 25 years building your business, so rightly you should deserve it.

And they see that. And in that moment, I call it the Columbo technique. They go, there’s just one more thing, and it’s the biggest thing on the table. And it’s not the only thing, there’s going to be three or four of those. And they take the seller apart. And the seller goes, I want it so much now that they carry on, they accept it. And they accept on reasonable terms, because they’re emotionally attached.

The Columbo technique in negotiation: Beware of last-minute surprises. Stay vigilant, and don't let emotions lead you to accept unfavorable terms. Click To Tweet

That’s true. That’s true. I think it’s called the law of consistency, that it’s really hard to be inconsistent with what you already said or how you behaved.

That’s right.

Unless you feel like a fool if the thing doesn’t happen that you told all those people. You’re telling all your friends. Yeah, it’s definitely a thing. So let me ask you, kind of take the switching gears here. I’m always looking to understand the framework, the business model that drives these companies. So can you describe me a little bit what was the business model of your big consulting that you bought out? I understand generally that you had consultants, you had contractors, big government contract, and so on. But how did you manage this business? How did you manage all these people in this business, especially if they were not employees, they were coming and going, how could you deliver quality and make sure that things were working well?

So if I look at two things about, one, how do you deliver quality, and then secondly, what are the value drivers? So the first in terms of quality management, what had become very interesting with that company was there was an ethos of high quality service delivery because of where they’d come from. It was no mistake that all our consultants had come from big consulting firms. You kind of had to have come from there to get in. And that wasn’t an exclusivity thing.

That was, we knew that if you’d gone through three or four years in a big consultancy firm, you have the discipline and rigor that we needed to deliver the quality. You also knew that you knew how to write slide packs. You knew how to tell a business story in logical terms. You knew how to test a hypothesis. You knew how to roll out large-scale programs. So all of that comes with people that have been through those big companies because it comes with the territory.

And so that was one way that you manage consistency, is that you look for people with very similar experiences. Didn’t matter, you know, their ethnicity, didn’t matter where they’re from, didn’t matter what sex they were, it’s irrelevant. That benchmark was, have you worked in that kind of environment? Yes, you have. Then it’s highly likely you’re fit. The second thing, the second way you manage quality is peer-to-peer. Because you’ve got these people that all worked in professional services firms, you all knew what great looked like.

I had workstream leads that ran each of the workstreams, and then I had kind of big program leads that ran the big programs. And those workstream leads, their job really was to, you know, obviously set the environment, be leaders, but also set the kind of quality framework. And peer-to-peer review of materials. And often we do it between work streams. So one work stream would present to another about what they were doing, and then you get feedback.

So we had a very, very strong feedback culture. Yeah, all feedback was good feedback. Nothing was ever personal. The golden rule in my consultancy was, it’s not personal. If what you’ve delivered doesn’t meet the benchmark, then we just need to enhance it and improve it. Because there might be a knowledge area that you don’t have. It might be that you’ve got too much on, so you’ve not had the time to focus. So we’ll all help each other get the right outcome. And it worked really, really well.

So what about the strategy? Was it just your own? Did you alone drive the strategy and decide it? Or did you gather input and how did you do that?

At our peak, we were about 20 million turnover of fee income. So it’s a big concern at that point. And what I did was I built a board, basically. So I knew the value of boards. I hadn’t had one, but I knew the value of one. And so I built a board, which consisted of two non-exec directors, one very experienced finance director, who was part-time, one day a week for me, two days a week for me. And then I eventually moved up to chairman and also appointed a chief exec. In hindsight, that was a mistake. I think a lot of founders as they grow, you know, want to move out of the chief exec role, the chairman role. And for a very good reason, when you sell your company, again, as we both know, you do not want to be the person heavily involved in day-to-day running of the business. That’s number one.

You want to sell a self-managing company.

Correct. You have to be able to sell. And when I sold my company, it was self-managing. I was chairman. It was self-managing. But at that time, it made me too detached from the business because the chief exec ran the business. So they ran inwards and I looked outwards. And the strategy was developed by the board. I am the strategy as chair of the board. But yeah, that’s what we did. And going back, I wouldn’t do the same thing now. I’d have changed that. I’d have had the advisors.

I think non-execs and advisors can be really valuable. I think you need to understand what gaps you’ve got, because sometimes you want people out of sector, but very experienced. I think quite often, you want people that understand your sector, the dynamics of your sector, and have done something at a bigger scale. I think there’s a whole world around coaching. I’ve got certain views, Steve. It might be yours or it might not be yours, but it’s my view, so I’ll stick to it, which is coaching versus mentoring.

I think most entrepreneurial companies, they need more mentoring, people that have been there and done it, than they do the appreciative inquiry approach, which is coaching. They need discipline, structure, rigor, like the EOS methodology. They need something that’s got rigor in it, and they need people that are deploying that to have experience, because they don’t know what they don’t know.

So the idea that a coach that’s content-free can coach an owner of a 10 million turnover SME to get them to 20 million, when all they’re doing is just asking questions without any frameworks, business frameworks, I think would be bizarre, I think. Yeah, when I work with SMEs, I’m brought in because they see something in my past that I’ve done that worked or didn’t work, that they want a shortcut.

I agree with you. There is, it’s kind of a myth about coaching and definitely there are some people that have issues and they have to work them out and they need someone that they can confide in.

Definitely.

And often happens with small entrepreneurs that, you know, they have no one to to talk to, they feel isolated, their spouse isn’t going to hear anything, or maybe their spouse is nervous about the business. So they don’t feel like they can share things. And then definitely a coach who gives you, ask the right questions, help you work through issues is helpful.

But when you get to a level when you’re no longer this small few people company, and especially when you come up from a niche and you have to start to compete with bigger boys and girls, then definitely you need the frameworks, you need mentors who’ve been there, done that. It’s interesting, a sports analogy, you see tennis players who break into the top 50, the top 20, the top 10 even, and then they hit the ceiling and they realize that they need a mentor, they need, you know, they need Joe McEnroe or they need Ivan Landl to come in, or Boris Becker, to help them get through this, you know, how to grieve in a grand slam, what’s the mindset, how do you prepare, how do you fight off the intimidation and all that stuff.

Yep.

I like the distinction this is very helpful.

Good.

So, what are the business frameworks that you see are helpful? So you mentioned that it’s mentoring, business bringing the framework. So can you speak to about a couple of frameworks that you have seen that you found helpful in your career?

So, I like frameworks, I’m an engineer by training. And so frameworks, processes, methodology, they kind of work for me. So a few that are, I think, invaluable in the toolkit. So one, a sales pipeline. You need stages in your sales pipeline. You need gates in your sales pipeline. The gates have to have criteria. So when you go from marketing qualified lead to early sales qualified lead, to get through the gate, you have to tick some boxes. Certain size of opportunity, certain size of company.

You know, we’re talking to someone who might be a decision maker, we’re not sure. They might have a problem around now, we don’t know. We’ve seen something in the press. You need something. So as a simple framework, if you don’t have a sales process and you don’t start using something like, I don’t know, HubSpot, you know, Zoho, whatever you want to pick. Salesforce, heaven forbid.

But if you don’t have some kind of sales CRM with a pipeline management system in it, you will not be able to manage your business. You can’t grow it. Because once you’ve got past five opportunities in your head or written down on your desk, it stops working. What were the notes? What did they say last? Where are we in the sales cycle? It’s complex. There’s five people in this company. We’ve got to go and talk to all five of them. You need to keep track of it. And so that’s one thing, definitely. The second thing is-

Plus you might be leaving the company and someone will take your place and they will have to take your institutional knowledge.

Exactly.

Correct. You have to go forward. You cannot carry it in your head.

So you have to have a sales process at some point. You have to. Second, a big thing of mine, cashflow management. In those early years, as you grow, cash flow is king. If you can’t manage your cash flow, you will die. The problem is you won’t know you’re going to die until you’re dead. What often happens is as you grow your business, you win a bigger contract. Let’s say, Steve, that one of your clients is doing 20k a month a business, so they’re running a business like 250k, probably a bit small for you.

Let’s say it’s a million a year that they’re running. And they win a contract that’s worth half a million pound a year. And it’s with Amazon, say. But Amazon’s payment terms are 90 days on month end. So you’re out of cash for 120 days, and then you’ve got to chase them. So let’s say it’s half a million pound contract, you are 250,000 pound of cash out of pocket. You’re not because it’s at cost. Let’s say our margins are half, say. You’re 125,000 pounds.

And you’re not going to get half.

You’re not going to get half. You might wish to. You’re over 100,000 pounds out of cash. And what happens, I think, is as companies, they win these big contracts and there’s a big, hooray, we won it, it’s fantastic. And everyone’s like, brilliant. And then we recruit some people and then we start delivering. And then, you know, someone in finance starts saying, um, we’re going to become insolvent very soon if we don’t collect some cash. And that I think, cashflow management in high growth companies is critical.

I agree with you. I had a client a couple of years ago who were growing really fast. They were a construction, contracting service company and they were growing fast. But because of the fast growth, essentially the CEO, who was the chief salesperson, he couldn’t keep up with making enough sales. So they signed up with a company called Contractor Connections, which was basically a lead generation company.

And they took, essentially they took a piece of their margin, a big piece of their margin. The second issue was that because there was no personal connection, those customers started to play slower than the existing customers. So they ran up a big receivable balance and they started borrowing. And then the company, you know, the bank stopped lending to them. And essentially they had to slim the company down. And they almost fell out of business.

Exactly.

They had to slim the company down. And then they abandoned this contractor connection service because they realized that it was not bringing them high quality, were they proprietary opportunities where they could get their terms. And they just had to acknowledge that they were on a slower growth path because they had to manage their cash flow.

That’s right. Absolutely. And there are hundreds of companies, thousands of companies following very similar stories. Everyone will say, oh, I’ll invoice discount. Well, yeah, you might be able to. Depends on the quality of the client on the other side. So it’s that thing that you have to manage carefully. And when do you invest in people? You need cash reserves to be able to do that.

So that’s the second one. I think the third one, yeah, something I always come back to, Steve, and it’s an age-old model now. It’s a strategy model, which is Porter’s Five Forces. You know, it’s so simple. You know, it’s got kind of five bubbles. But when you think about that, and you just, like, take some data that you’ve got in your head, or from the web, or wherever you got it from, it does help you think about the industry dynamics that you’re working in, and about the power of the buyer versus power of supplier.

And, you know, the dangerous things are, if you are a, so another tip I’d say to your audience is, do not operate in the commodity markets. Whatever you’re in, do not become a commodity. So I’m quite a fan of Blair M’s, the Two Bobs podcast. I’ve spoken to Blair a few times. And absolutely, he’s like, become focused, become niche, find your space, become differentiated. If that limits your growth, but it’s profitable and you’re growing slowly but you’re growing well, much better than trying to be, you know, if you’re in marketing, you know, trying to be a WPP.

You know, we’re going to become the next WPP. Well, you might, it’s possible, but I wouldn’t advise it as a strategy to start growing your business. I’d niche down. Look at my proposition, Steve, you know, you talked before. What I do is I work with SMEs, particularly marketing agencies, recruitment agencies, IT services companies. I help them negotiate better deals with their customers, and I provide deal support because I know those sectors, I know those skills. That’s a niche proposition. I’m quite hard to compete against because I’ve really niched down. I’m small, but I’m very compact.

In your niche you are big. So, yeah, as a journalist, you’re small, but in your niche, you may be a giant.

Exactly.

It’s definitely. A few years ago, I represented a company which was a really small player, like $5 million of sales revenue, but they were in the niche of the auto industry. And in their niche, they had a 50% market share. Wow. This is in Hungary. And they could not be beaten. They had high margins. They had close to 50% EBITDA margin. Super business. They couldn’t grow the business because the market was limited.

But it’s a brilliant business to own. It’s a brilliant business to own. It’s fantastic.

I think their challenge was that they were too dependent on a single customer. Sometimes that also happens when you’re a small niche that become too concentrated. So they had to manage that, but yeah. I mean, every business has its issues, right? Yeah, so this is fascinating. So if you look back on your career, I mean, you had some really interesting successes and failures, like an entrepreneurial career. So if you look back like 20 years, what would be the advice you would give to your, I don’t know, 35 year old self as to how to move forward.

So a few things that I think, and I’ve got a son, you know, so Leo’s eight, and so it’s very relevant because whether he takes the advice or not, you need to at least know what the advice might be when he says, what would you do? So I think there’s a few things. So I think firstly, whatever you’re doing, you have to have a real passion for it of some kind.

You’re in business a lot, every day, every hour, weekends. You have to really enjoy that thing that you’re doing. There has to be some kind of greater purpose, some kind of passion. So for example, in my spare time, I read books on negotiation. My wife thinks I’m crazy. It’s because I love it. I find it fascinating. I find it really interesting. So make sure you’re doing something that you’re passionate about. Don’t stray from that. Don’t get into things that you don’t really understand and you’re not passionate about, number one.

Number two, I think, don’t get into areas that you don’t understand and bet the farm. When I say bet the farm, don’t put all your savings into some adventure that you think is exciting, but you don’t understand what on earth the dynamics are of that sector. That’s a bad investment. Number three for me would be around specialism. I think in the world now whereby the web is ubiquitous, knowledge is everywhere. Some of it false, some of it true.

So you need to have some kind of specialism to stand out. Pat Flynn, who has a podcast, talks about an inch wide and a mile deep. And he’s right, I think. People buy really deep specialisms now from entrepreneurial companies. So you need to be passionate about something in an area that you kind of understand, and you need to be focused. And I think if you’ve got that, I think learning to be a general manager these days, I think that’s, I’ll stick my neck out, I think it’s a little bit pointless.

Sure, if you want to go and work for General Motors, you want to go and work for GE and be a GM, yes, you will need to have covered all the bases, finance, strategy, ops, sales, marketing, et cetera. And there’s nothing bad about that, but it will make you a general manager. And in these days with a globally accessible workforce that’s flexible, I think those roles will be fewer and fewer and fewer. If you want a sustainable life that generates a good quality of living, have some kind of specialism that you focus in. Those are probably three of mine, I think.

That’s pretty cool. So you talked about mentoring being so important. Did you have mentors yourself?

Yes, I’ve had along the way, I think several. Interesting, when I was a young boy, there was a guy that was in the family that was a lecturer at one of the local colleges. He sadly died a long time ago, but he was brilliant because he believed in me. And I found it very hard to get, when I was 16, I went for several interviews. I left school at 16, didn’t do any qualifications at that time. I did mine later. I went to job interviews. I was told by one company, you’re not very bright, you’re not very capable. We don’t think you’ll be able to do much apart from sweep the floor.

You know, that has quite a damaging effect on a 16 year old boy who’s not got any confidence. So Eric Dearman, this guy who’s a lecturer, he helped me get into college, he helped me get a job, and he believed in me, and he helped. He believed in young people. And so I think that was really fundamental in my life. I think another one would be the guy that I bought the business off, Anthony. Yeah, he was a big person in my life for many, many years. Ex-partner at KPMG, very, very talented man, bought the business off him.

So yeah, I think he would be one. And my wife, my wife brings, so Vicky brings a completely different perspective. Vicky’s a creative, she ran her own marketing agency, highly creative. I’m very process, data-driven, very structured. And she brings a completely different perspective on a problem. And that, I think if you have that in your life and you’re open to it, that can be really powerful. Like I don’t know how to build the Piscari business if it hadn’t been for Vicky’s thinking around, why don’t you turn the coin over and help smaller companies sell to bigger companies?

That’s awesome. When you have that and if you can tap into it, because I see a lot of people who have a spouse that have a different perspective. I think most of us would say that our spouses do have different perspectives on many things. But I think many of us are not able to tap into it. We just see the tension and we just want to manage the pain that is the result. But if you can really tap into it and leverage it and use it, then it could be super powerful.

It doesn’t mean that you have to, I mean, I’m a big believer in what you do with a mentor is you ask them the question, they give you their view, you talk to a few people, and then you decide. You may not decide to do what they say, but you’ve taken some input. You have to make a decision. It is your decision. Do not blame anyone else for a decision you have made.

Take on your decisions or take responsibility. That’s the only way forward. But that’s awesome. I really enjoyed our discussion. So I’m sure many of our listeners will want to learn more. How can they reach you? Where can they get more information about what you do and maybe connect with you?

So two areas, you can look on LinkedIn. So Mike Lander on LinkedIn, you’ll find me fairly easily, I think. And another thing is if you go to piscari.com, P-I-S-C-A-R-I.com, piscari.com slash guide, There’s a guide there, there’s a blog, and that’s all about the kind of stuff that I do.

Awesome. Well, piscari.com, definitely a place to visit. It was great having you, Mike. Very interesting businesses you’ve been involved in and love your perspectives. And for our listeners, we’ll continue next week. Have a great day.

Thank you, Steve. I really enjoyed it.

 

Important Links:

This entry was posted in . Bookmark the permalink.