6 months ago by Mike Pye

Solid Financial Foundations

Rg New Feb 19 Pic

There’s no such thing as an overnight sensation. How do I know? Because I’ve been part of the We Are Adam success story that started over ten years ago.

 

Off the back of our best year yet, I’m writing a series of blogs that talk about the importance of business ethics. It also felt like the right time for this message because some business owners are acting irresponsibly and unethically by writing off debt and putting their business into administration.

 

Nothing could be further from the way we operate at We Are Adam. In the second article in this series, I reveal how we’ve spent more than a decade laying strong financial foundations to ensure the longevity of our business.

 

Getting Our Financial Foot in the Door

 

It’s a proud moment for us all at We Are Adam as we’re about to reinvest some of the profit we made in 2018 (our best year yet) into our own property. This isn’t an ego trip - it’s a sensible way to help us secure the business’ future and enable us to grow from even deeper roots.

 

We can only do this because we’ve built a solid business credit rating. By honouring financial commitments, paying suppliers on time and keeping money in the business, we’ve forged the financial and reputational strength we need to do this.

 

But I can tell you, this kind of success does not come easy.

 

Riding the Highs, Surviving the Lows

 

Along with every other business out there, the economic downturn of 2009 was a particularly difficult period for our business. We’d had a fantastic start, building our client list and regularly turning over £500k. But then the crash hit and we were down to the last £5k in the bank.

 

At the time, I remember seeing lots of other businesses going into administration. This allowed the directors to write off their debts and start again, albeit trailing desperate people they owed money to in their wake.

 

At We Are Adam, our bank recommended that we cut deep and hard with wide-scale redundancies. This didn’t sit right with us so we decided to ignore the bank’s advice and put the business before our own personal needs.

 

That meant reducing our cost base and cutting non-essentials to protect the team. Sadly, we still had to make some redundancies. But we also decided that, as leaders, we shouldn’t be immune. So we all went without any pay for 15 months while the business recovered.

 

Valuing Our People

 

I always think that communication and honesty is most important at the toughest times. That’s why we were completely open with our employees about the position the business was in. While other major players were making large numbers of redundancies, reducing the working week and cutting bonuses, we took a different approach.

 

To ensure we could continue to pay our team’s basic salaries, we reduced targets to deliver enough income to cover our costs. Because everyone knew the new objectives were about keeping them in work and not lining the leadership team’s pockets, everybody worked hard to hit their targets.

 

The Unethical Alternative

 

In life, I believe you always have a choice. As directors, we could have kept taking from the business. We could have enjoyed holidays in the sun while our suppliers struggled to make ends meet. We could have wound up the business and thrown others under the bus by walking away from our debts.

 

But that’s not who we are as individuals or a business.

 

When it’s your name above the door, I strongly believe that the buck stops with you. And that’s a fiduciary responsibility all the directors here have taken seriously.

 

Regrettably, it’s not something we see being reflected in the wider business world. It seems that some directors are taking their obligations lightly and criticising the
people that work for them when things go wrong.

 

Take one digital agency I’ve heard of who blamed their financial difficulties on operational problems caused by their chief technical officer. Or another business who pointed the finger at their finance director when the business ended up in administration.

 

I think this attitude is fundamentally wrong: as a director, you’re responsible for everything that everyone who works for you does. Which means understanding all
that’s going on in your business so you’re in the best position to challenge, question and act.

 

Being the boss means the buck stops with you. And it’s up to you to lead your team at all times.

 

Building a Financial Buffer

 

Because we stepped up and took responsibility, and thanks to our total transparency with our staff, we managed to ride out the 2009 crash. It was one of the toughest periods of business I’ve been through, but I’m glad to say that, as a leadership team, we’ve learned from it.

 

Values have always been important to us but they became even more critical as they helped us to focus on what we stand for. By realising the importance of doing quality work for quality clients, instead of joining the race to the bottom, we’ve built a business that stands out for the right reasons.

 

The other lesson we learned is the importance of having a financial buffer; a lifebelt that will help us ride out any future storms. Buying our first property is part of this long-term growth strategy.

Strong financial foundations are just one aspect of our vision for 2019 and beyond. In the final two blogs in this series, I’ll be talking about the importance of looking after your people and building a culture.