Things we’ve learnt from our first two years as an IT start-up
Posted: 16 May 2016
Author: Mark Hurren
Kicking off a series of guest blogs, Chris Pont, director of IT start-up IJYI, shares what he’s learnt from their first 2 years of trading – Chris founded IJYI with John Nicholson in Jan 2014. IJYI specialises in bespoke software development and process improvement, including automation and continuous delivery techniques. Now in its third year, IJYI has now grown to a team of 12, has attained Microsoft Gold Partner status and has clients worldwide. So without further ado, over to Chris…
Let me start by saying, it’s been a fun ride! When John and myself first started IJYI back in early 2014 we didn’t really know what to expect. We knew we were both passionate about software delivery and that we could talk about it for hours on end. We both had a huge amount of experience in leading software development teams, delivering enterprise-grade software and putting process and automation in place in all levels of a software delivery lifecycle.
We created a detailed business plan (because apparently that’s what you do when you start a business) but that was out of date within the first few months and requires constant revisiting. We’ve experienced some epic highs and some morale crushing lows, and I wouldn’t change it. There have been moments where we’ve looked at each other knowingly – “we won’t do that again!” – so it’s been a great learning exercise for both of us.
Here are some key learnings from the past couple of years that should help other business owners make better use of their time and better decisions, which will hopefully result in a healthy, growing business.
Invest in your people
CFO: “What happens if we train our staff and they leave?”
CTO: “What happens if we don’t train our staff and they stay?”
Your staff are your biggest (and probably one of your most expensive) assets. You need them to be good at what they do, able to perform tasks with efficiency and able to speak to clients with confidence in their subject.
Incredibly, this is something many (but certainly not all) larger organisations neglect. One of our senior developers mentioned that throughout his fairly long and varied career, including a variety of blue-chip companies, we were the first company he’d worked for that had paid for him to train and sit exams. In software development at least, the pace of change is incredible, so hiring someone who is at the top of their game and not encouraging them to keep up with what’s new in the industry will result in them being at a disadvantage in a couple of years’ time.
We’re also big fans of apprenticeships, and these have allowed us to bring new, junior developers up to speed incredibly quickly, ensuring that they have a good understanding of the latest technologies, trends and best practice, whilst getting experience with real projects and working with other experienced developers and architects.
If your staff are happy, well trained and have the qualifications to prove it, it’s easy to sell them to a prospective client when the opportunity arises.
Some work takes a long time to win
“He that can have patience can have what he will.” – Benjamin Franklin
It’s easy to visit a client to discuss a piece of work and feel that you’re nearly there, the client is very keen, you’ve got resource available to do the job, and to start planning. You’re about to win some work!
For us this has been the case once or twice, but often this has been quite the opposite! There have been some pieces of work that have been in the pipeline since almost the beginning. The clients are still keen to push ahead, but they may be working on funding, it may be that they need to work on a business plan for how the project is going to fit within their current business, or you may be waiting on other dependencies (for us, in many cases, it’s design and artwork for within the software or website).
Firstly, don’t give up, when the client feels the time is right for their business they may come back to start the work, but importantly, don’t make the mistake of pencilling this into your cash flow until a contract is signed and the work is going ahead.
Use the tools and services available
“Do it, Document it, Delegate it!” – Michael McCafferty
As a technology business, this one really appeals to us. Software-as-a-Service (SaaS) has really taken off in the last 5 years or so, allowing businesses to pay for software online on a monthly basis, and that software is always kept up to date. It happens regularly – we’ll log in to our accounting software one morning and see a bunch of new features available (and every so often, that one feature that we’ve really been waiting for). There’s obviously an associated cost to these services, but we’ve found it’s definitely worth it in terms of time savings and the tasks themselves being easier and therefore more likely to get done.
For our accounts, we use Xero, which is a fully-featured, secure accounts package hosted online. It allows both John and myself to log in using the smartphone apps and check up-to-the-minute information on our accounts, outstanding invoices, expenses, VAT analysis, profit and loss, and more. Crucially, it also allows our accountant to see the same information, make corrections and notify us if he sees anything amiss. The tool also handles payroll, automates VAT returns and can automatically send out invoice reminders to clients if it hasn’t been marked as paid. It saves us a huge amount of time. Similar tools include aCloud, Kashflow, SageOne and FreeAgent.
Receipt handling used to be a task that I kept putting off and putting off, until there was a massive pile on my desk and I had to go through them all and work out why I’d spent money, which client it was for and who I was with at the time. We now use a smartphone app called ReceiptBank, which enables us to photograph receipts and have them transcribed, categorised and published into Xero. This helps to ensure we don’t keep putting off filing our receipts as it takes us a minimal amount of time to complete. There’s also TripCatcher which, when given two postcodes, will work out the mileage (including the VAT element on fuel), allow you to categorise against a client or project, and also publish to Xero.
We also use Harvest which, again with its own smartphone app, means our staff can add time to a project on a weekly basis (with included reminders!) and allows us to keep tabs on project costs and plan for available resource.
Other areas need a more human touch and for many of these we simply outsource. HR is handled by a local HR consultancy and for a monthly retainer they deal with all areas of employment, such as offer letters, contracts, staff handbooks, holiday and illness, and help us deal with any grievances using the proper process.
Marketing and recruitment are also outsourced on a per-need basis. We’ve established relationships with these firms early, which means they know our requirements and are easy to work with when we need to call on them.
There’s quite a bit of help out there, you just need to find it!
“The only mistake you can make is not asking for help.” – Sandeep Jauhar
Early on in our planning, we spoke to some people at Norfolk & Waveney Enterprise Services (NWES) who gave us a huge amount of advice, told us what to focus on and who to speak to. They made us aware of any funding available and gave us someone to talk to when there were problems or we needed a bit of help.
There were a couple of government-led grants that we were able to take advantage of. The Connection Voucher Scheme (unfortunately no longer available) enabled us to install a fibre leased line to our office, meaning we had an extremely fast internet connection with business-level SLAs. As we were seeing such a huge benefit from this scheme, we even had MP John Whittingdale visit our premises and talk to us about the impact this would have on our business.
The Government Growth Voucher scheme provided matched funding (up to £2000) for expert advice in various business activities. We were able to use this scheme to plan marketing and PR activities increasing our brand awareness.
We were extremely lucky to gain a place in the Future50, a business growth programme designed to recognise Norfolk and Suffolk’s most innovative companies – the ‘ones to watch’ – and accelerate their growth ambitions through business advice, networking events that stimulate peer learning, multimedia business support and access to grant funding. Not only has this allowed us to meet with other like-minded businesses but the grant funding has allowed us to invest in the business much more than we would have otherwise.
The key here is to investigate what is available and dedicate some time to applying, as the benefits can be substantial.
Cash flow is king
“You can’t build a reputation on what you’re going to do.” – Henry Ford
We were fortunate that our first few clients took a chance on a small company, in its early stages, for the projects they wanted delivered. Even then, it’s taken time for us to build a portfolio of work to showcase our experience to prospective clients and give them confidence that we’re able to deliver. In the meantime, staff, rent, utilities, insurance all needed paying.
It’s important to build a stable and predictable cash flow early on, even if your margins aren’t quite as high as you’d like. There’s plenty of time to review your pricing structure as the book of work builds, but you won’t be able to do that if you don’t survive the first couple of years.
“I’m a great believer in luck, and I find the harder I work the more I have of it.” – Various sources
We’ve been incredibly lucky in our first two years, but that’s been backed up by some incredibly hard work, late nights, early mornings and two very understanding spouses! We now have an excellent development team that all work exceptionally well with each other and have a broad range of experience across many aspects of software development.
If you’re passionate about your trade and have been thinking of starting your own business, I say go for it. It’s hard work, especially in the beginning, but there’s nothing better than taking a step back now and again and seeing a business you’ve built working well and delivering something you love!