Introduction
Greetings! I am Ben Sheppard, a serial entrepreneur with a portfolio of five ventures, spanning across consulting and technology sectors. Among these, one led to a successful exit, another taught me valuable lessons through its failure, and the rest continue to thrive. My intention with this blog is to offer guidance and insights to founders, whether they are embarking on their first venture or seasoned in the entrepreneurial journey. My experiences, triumphs, and setbacks have equipped me with a wealth of knowledge that I am eager to share.
My Genesis in Entrepreneurship
Before delving into the world of startups, I spent 15 years in infrastructure finance, consulting for governments, banks, and private developers on substantial financial deals, running into billions. My clientele included prestigious institutions like HSBC, Macquarie Bank, and the World Bank. Despite a flourishing career and a directorial position at a leading global engineering firm at the young age of 31, I felt a void. The monotony of routine tasks and the desire to test my true potential propelled me towards entrepreneurship.
The Launch of My First Startup
In 2013, fueled by ambition and a thirst for challenge, I co-founded a law and advisory firm specialising in infrastructure and sustainability. Our early success was meteoric, bagging significant contracts with Bloomberg Philanthropies and the Rockefeller Foundation, and growing from a duo to a 15-strong team within nine months. This rapid growth, however, came with its own set of challenges, particularly in understanding the nuances of different types of sales.
Sales Types: Strangers, Runners, and Repeaters - A Strategic Approach
In the intricate tapestry of entrepreneurship, understanding and categorising different types of sales has been pivotal in my journey. This realisation dawned early in my career as a founder, leading me to classify sales into three distinct categories: strangers, runners, and repeaters. This classification not only simplified my approach to business development but also offered a strategic framework to balance and optimise our revenue streams.
Strangers: The Unpredictable Windfalls
'Strangers' represents those unexpected, often lucrative projects that materialise seemingly out of nowhere. They are characterised by their unpredictability and the potential for significant revenue. However, their sporadic nature poses a challenge. In my first startup, for instance, we encountered a 'stranger' project that initially contributed a substantial portion of our revenue. This sudden windfall, while beneficial, also highlighted the risk associated with relying too heavily on such unpredictable sources. The key lesson here was the importance of not becoming overly reliant on these types of sales, as they can be fleeting and not a reliable foundation for sustainable growth.
Runners: The Reliable Backbone
'Runners,' on the other hand, are the bedrock of consistent revenue. These are ongoing projects or services that generate steady income. In my experience, nurturing 'runner' clients has been essential. They provide a predictable and stable financial base, allowing for more effective planning and resource allocation. The challenge with 'runners' lies in maintaining the quality of service and staying competitive, as complacency can lead to a loss of these vital accounts. Balancing the pursuit of new opportunities while sustaining the 'runners' has been a crucial aspect of my business strategy.
Repeaters: The Periodic Boosters
'Repeaters' are those clients who come back periodically for specialised services. These sales are not as consistent as 'runners' but offer a recurring revenue stream. They typically involve clients who have specific, intermittent needs. My approach has been to cultivate strong, lasting relationships with these clients, ensuring that when the need for our services arises, we are their go-to provider. The challenge with 'repeaters' is to remain top-of-mind for these clients, which requires a nuanced understanding of their business cycles and proactive communication.
Balancing the Trio for Sustainable Growth
The art of managing these three types of sales lies in striking the right balance. Relying too heavily on any one category can lead to volatility and risk. My strategy has been to build a diversified portfolio of sales types, with a healthy mix of the predictability of 'runners,' the periodic boost of 'repeaters,' and the occasional windfall of 'strangers.' This balanced approach has not only provided financial stability but also allowed for strategic planning and growth.
In conclusion, understanding and effectively managing the dynamics of 'strangers,' 'runners,' and 'repeaters' has been a cornerstone of my success as a founder. Each category plays a unique role in the financial health and growth trajectory of a company. Navigating these categories wisely has enabled me to build resilient, sustainable business models that can withstand the ebbs and flows of the market and client demands.
Cash Flow and Cost Management
Managing cash flow and understanding the financial runway is a fundamental aspect of steering a startup towards success. My journey as a founder has taught me that these financial elements are not merely accounting terms but the lifelines that sustain a business. As someone who always puts people first, I've experienced firsthand the challenges and nuances of making critical financial decisions, especially when they directly impact the team and the overall health of the company.
Understanding the Financial Runway
The concept of a 'financial runway' is central to startup management. It refers to how long a company can operate before it runs out of cash. In the early stages of my ventures, I learned the importance of calculating this runway accurately. It involves not just knowing the current bank balance but projecting future expenses and revenues. This foresight is critical in determining when to seek additional funding, make strategic investments, or tighten the belt on expenses.
Timely and Tough Financial Decisions
One of the hardest lessons in my entrepreneurial journey was learning to make tough financial decisions promptly. There were instances where holding on to employees for too long, driven by a desire to look after my team, led to financial strain. These experiences taught me that delaying necessary cuts or adjustments can exacerbate financial issues. Balancing empathy with pragmatic decision-making is crucial. It's about being transparent with the team, explaining the reasons behind tough decisions, and finding ways to mitigate the impact on people as much as possible.
Strategic Financial Planning
In subsequent ventures, I adopted a more strategic approach to financial planning. This means regularly reviewing the company's financial health, understanding the burn rate, and forecasting cash flow with precision. It's about staying ahead of the curve, anticipating potential financial challenges, and planning accordingly. This approach also involves being open to adjusting business models or strategies in response to financial insights, ensuring the company remains agile and adaptable.
Transparent Communication with the Team
Transparency with my team regarding the company's financial health has been a key component of my leadership style. I found that employees appreciate honesty and clarity about the company's financial situation. This openness not only builds trust but also fosters a culture where everyone is aligned with the company's financial goals and understands the impact of their work on the overall financial picture.
In essence, effective cash flow and cost management are about more than keeping the books; they're about understanding the financial pulse of the startup and making informed decisions that balance the well-being of the team with the company's sustainability and growth prospects. Learning from early challenges in this area has enabled me to build stronger, more resilient businesses, grounded in sound financial practices and a culture of transparency and strategic foresight.
Conclusion
A final word from me, mastering technical aspects like sales types (strangers, runners, repeaters) and financial management (cash flow and cost control) is foundational for business success. These elements are not just theoretical concepts but practical tools that drive a company's stability and growth. Understanding and managing them effectively enables entrepreneurs to build resilient businesses capable of adapting to market changes and customer demands, ultimately laying the groundwork for sustainable success in the dynamic world of entrepreneurship.
This blog is a mere glimpse into my experiences and lessons. I welcome further
discussions and hope to inspire fellow entrepreneurs on their path. Thank you for joining me on this exploration of the founder's journey.