“Care for every pound as if it's your own”

I did nearly call this lesson “treat every pound of the company’s money as if it’s your own” and then realized one night that some people might take that message literally, so I decided to reword the title to “care for.”

I can give so many examples across all the areas of Radius where employees have spent too much on consultants, contractors, third-party graphic design work, expensive hotel rooms, tanker-loads of diesel, office furniture, mobile phone handsets, pay rises for their team, and the list goes on. Let me also not forget the fact that most IT managers I’ve met seem to think that if overheads can be capitalized, then these costs are almost as good as free money!

Controlling expenditure was easy enough when I just had a small team and oversight over absolutely everything we were doing. However, now that we have nearly three thousand employees in twenty countries across five continents, with a turnover nudging towards £5 billion, it is simply impossible for me to manage our costs in the same way. I am therefore now reliant on a lot of my senior and junior team to keep this ethos in place. The bigger the company grows with its increasing layers of management, the less people seem to think about whose money they are actually spending and more that maybe it does really grow on trees! When I do find a person who follows the principle of caring for every pound they are spending, they also tend to have other good traits, and it’s these people whom I and the company want to nurture and help develop. In our current management long-term incentive plan (LTIP), which I will talk about in more detail later, this trait is one of the key criteria for how we judge which employees should get an LTIP and also how much it should be.

I am sure a significant part of the reason behind my thinking the way I do, beyond the fact that I think my parents gave me a good early grounding in money as a child, is down to the way that the business was originally financed. The only external shareholder money that has ever been put into the business was the initial £58,000 (that’s about £150,000 in today’s money) from my two partners, John Atkinson and John Dunning. This happened at the end of 1989 when UK Fuels (the original company that eventually became Radius) was officially formed. I’m not saying that £150,000 isn’t a lot of money, but compared to most of the start-ups you see now, it is a very modest amount. I didn’t even own any of the equity myself at that point in time, as I didn’t have money to contribute, having just lost it all in the recent property crash. It would be another year, and only after we had properly started trading, before I would actually become a share- holder. Despite this, as well as the fact that neither of the two Johns was actually going to work in the business, I believed that I was on my own and that it was all down to me to make this new venture work.

Just for clarification before I go on, some of the articles you might have read online about Inflexion investing £150 million back in 2018 actually relate to it buying shares from exiting partners rather than putting money into the business, so no more money ever went into Radius after the original capital. Not only did we have just £58,000, but we also had no overdraft facility—just a current account with Midland Bank. This meant that we had to rely on our initial pot of equity cash to pay salaries, rent an office, buy stationery, purchase diesel, and get everything else we needed for the business until we either ran out of money or started making a profit. Although this very tight budget obviously meant that we could only grow slowly, it taught me the strict financial discipline that has been critical for our long-term success.

Over the last decade, I have met many young people in the early stages of their own start-ups, and all they talk about is seed capital, their next funding round, Series B raise, etc., as being more important than what they are actually doing in their business. I find it sad, and it doesn’t usually end well. In most cases, these people leave a trail of destruction behind them in the shape of huge debts and generally let down a combination of investors, employees, and banks. This sort of person will never be able to understand the very important principle of caring for every pound of the company’s money as if it were their own; rather, they have the alternative view of “every good entrepreneur has a few failures” as their excuse! These people definitely fit into the category of treating the company’s money as their own, which I joked about at the start. After what I hope should seem a fairly obvious first lesson (remember, not many of your employees will actually show this trait), let’s get on to what was a really exciting part of the journey: the very start.