Entrepreneur: James Biggin
Age: 49
Business Name: Steel City Marketing
Industry: Branded Merchandise
Location: Sheffield
What made you realise that you needed to take drastic action to save your family business?
When I took over the business in 2008, I realised there was a black hole in the company finances. We were making loss after loss. I don’t think there was anything sinister going on, no one was stealing or anything like that, but problems and incompetencies were hidden.
The issues stemmed from one particular member of staff, and there was a phase when I couldn’t face doing anything about it. Managing their exit in 2012 was an awful thing to do – I’d never tackled anything like that before. But we were two or three days away from insolvency, and I knew I had to act to protect what my dad had built and give the business a future.
How did you turn things around?
One of the big changes we made was investing in a major software upgrade that saves each team member 10 hours per week. We couldn’t explore this option previously, as the person who left wanted to keep everything manual and had resisted change. With the new system, everything goes through the books and the accounts are nailed down.
Another big move was to buy a run-down office space and renovate it. We had five members of staff rattling around in a huge premises, paying £20,000 a year in rent. So I started looking locally and found this place with a car park. It was beautiful, but battered. I ended up moving the building into my pension as an asset, which means the business now pays rent directly into my self-invested personal pension (SIPP). It’s one of the smartest financial decisions I’ve made.
How did the changes impact the team?
We went down to a small team, and it felt like family. We started laughing again. We started having fun. Once we started making money, that was a real transformation. Within nine months, we were making really good profits, and the team was earning bonuses because I could chuck some extra money their way.
We’ve done something different and special. Bringing together people where you know everyone really well – that’s a small business for me. No one has left in three and a half years.
Did you seek professional help to get the business into a strong financial position?
I did a Goldman Sachs growth program with the University of Oxford, including a finance module. It was designed to make me more resilient in finance, but there were aspects I just couldn’t get my head around. Put me in front of my desk where I need to look at the KPIs, quotes, average order value, margins, all of that sort of stuff – fine. Start to look at cash flows – no chance.
I have a member of staff who keeps everything running smoothly with bookkeeping and credit control, but someone from the Goldman Sachs program suggested I also get a Financial Director (FD), either internally or by outsourcing that role. I’ve found a digital accounting company that can provide this, and it’s a breath of fresh air.
I made a big mistake taking on previous accountants who were preachy and bullied us into making bad decisions. They would come in and tell me exactly what to do, and some of their advice was completely bonkers.
I’m paying way more than before, but I get a meeting with the FD once a month. He makes sure I’m claiming everything I can, such as working from home allowances and directors’ vouchers, and timing capital investments to reduce corporation tax. I wouldn’t have known about that stuff. I also wouldn’t have known to choose a business credit card with rewards.
» MORE: Your Guide to Business Tax in the UK
Looking back, do you wish you’d done anything differently?
If I was doing it all again, I’d tell my younger self to get the digital systems and financial processes set up in the early days, and maybe not get as involved in some of the fluffy stuff that you can bog yourself down in, like our branded merchandise.
When we first started making money, I kept too much cash in the business. It built up and built up and built up, and when COVID happened, I was like, ‘Oh god, that’s all my money going down the drain’.
I don’t want to go through that again if a war or another pandemic happens. Something could very quickly wipe out that cash surplus, so we’re looking at how to reinvest it. I’ve just approved a new website, which is a bit out of my comfort zone. We’re putting a gym in at work, and I’ve just bought new office chairs for the team.
How do you think your business will evolve?
I’ve been really honest with the team, and transparent about future plans. I don’t want to retire, but when the time comes for me to step back, I’ve told the team that I don’t want to do a trade sale, because that will strip the company to nothing. I wouldn’t want that for them. Instead, I’ve floated the idea of an Employee Ownership Trust (EOT). This arrangement means employees get a controlling stake in the company, held in a trust, into which profits are paid.
I don’t like the word entrepreneur because I know I can’t run the show by myself. It would ruin everything if my team weren’t happy. I believe that when you put people first, profit will follow.
You can follow Steel City Marketing on Instagram @steelcitythedon
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