danmcguire

No more blogging....

Dan McGuire no long updates this blog.
You can still read his column in Real Business magazine here

"Distrust and caution are the parents of security" – Benjamin Franklin

If these tougher times can teach us anything, it’s how to run a business as efficiently as possible.

In many respects we were fortunate that, when I was first involved with Broadbean, we were selling to a market which had been decimated by economic events and we didn’t have much cash. Sounds like a strange statement, I grant you, but we learnt to run a tight ship. There was no other option.

We were an unproven company selling web technology to the IT recruitment market, which was trying to recover from the dotcom crash and 9/11. We made a £35,000 overdraft last for over two years.

I have pondered recently whether, had we been spoilt by more favourable conditions, we would have been as successful as we have been. Often strong markets give rise to weak companies. When firms start making lots of money very quickly, it seems like it will last forever and the fundamentals of business-building can be forgotten.

Then, when the market isn’t as fruitful as it was or even crashes entirely, companies quickly find themselves in trouble.

This is particularly true for small businesses without much cash in the bank. It’s rare for a firm to get into trouble overnight. It can happen, of course, but more often than not the rot has set in weeks, months or even years earlier.

Broadbean was an attractive acquisition prospect because we had a sustainable business model. We had: multiple long-term, high-value contracts; excellent deferred income; high client retention rate; and good cash flow.

It wasn’t luck that put us in that position. By placing a higher value on longer term contracts with recurring revenue and a high probability of renewal rather than focusing on quick wins, we created a solid base for growth. We also didn’t over-extend ourselves by growing beyond our means. We grew organically, not by borrowing.

It’s true that the market conditions and our limited cash in the early days dictated to some extent how we behaved but nonetheless we learnt some hugely valuable lessons and made a point of continuing to run our business in that way when the market boomed.

If we are to enjoy long-term success in business, we must be able to deal with busts as well, if not better, than the booms. For some it is, unfortunately, too late. But for many others the lessons learned now will provide the foundation for much stronger, more sustainable businesses in the future. Who Moved My Cheese anyone?

Open Letter from Dan McGuire

Following the announcement today of our acquisition by Associated Northcliffe Digital (AND), the digital division of DMGT, I wanted to provide you with some key points and an insight into our thinking behind the deal.

Key Points
- Broadbean will continue to be managed by Kelly Robinson and Dan McGuire
- It is business as usual
- International expansion plans have been significantly accelerated
- We will retain our brand and technology

Let me open by saying that everyone at Broadbean is genuinely excited by this deal.  We feel that this is the next logical step in a journey which started over six years ago. Both myself and my business partner, Broadbean founder, Kelly Robinson still have substantial personal and financial interests in Broadbean and will be staying with the business for the foreseeable future. As such the continued success of the business itself and the many great relationships we have fostered with our clients, job board partners and the wider industry are of paramount importance to us.

Over the years, we have received an increasing number of approaches for the business. All were rejected on the basis that they did not afford us anything other than some cash in the bank and a new owner. Kelly and I had always maintained that the only offer we would ever consider would come from an organisation that could accelerate our plans to create and establish the world’s first truly global advert distribution business.

It’s fair to say that this was by no means a quick decision. Kelly and I had no need to sell the business so AND had to demonstrate they were the right home for Broadbean. This, they did. Throughout our discussions with AND we have been genuinely impressed with the people, setup and future plans. Equally, we are very comfortable with the foundation now in place for Broadbean’s future, particularly as this deal gives our international ambitions an outstanding boost.

The final factor in this decision however was that both Kelly and I had to be convinced that any buyer would allow us to retain control of strategy and decision making, respect the company’s integrity and independence, be prepared to support our growth plans, ensure an exciting and secure future for our staff, and absolutely understand what made Broadbean the company it is today. Our conviction that AND meets all these criteria for Broadbean is absolute.

Clients will notice no change in their day to day dealings with Broadbean and will continue to receive the same dedicated commitment to quality service they have come to expect from us.

Job boards can continue to rely on Broadbean’s integrity and independence. All data and information will be treated in the same confidential manner it always has been. We recognise that the appropriate handling of such data is the basis of continued sound relationships with job board partners and can continue to guarantee that Broadbean will not share data with any other company.

This announcement marks the start of what looks to be the most exciting phase in Broadbean’s short life. We look forward to keeping you informed of our progress and would welcome your feedback or thoughts as we go.

If you have any further questions about this announcement or have some thoughts you’d like to share, please feel free to contact me directly.

Don’t Panic! Let’s look at some stats (Part 2)

In Friday’s post I was discussing the decrease in vacancies coupled with the increase in applications. This is the second part looking at responses – if you missed part one it’s worth scrolling down and reading it before this one to get the full picture.

Response levels have increased by over half since the turn of the year. There’s two ways to look at this. The first is that candidate supply is up because there are less jobs available, which is not good. It’s certainly a trend that we’d like to see reversed as this situation leads to lower fees and less live jobs for agencies which will ultimately take its toll at some point on the online sector. For some this signals good times and happiness. Misplaced happiness, yes, but for many the mark of successful advertising is the number of responses generated per single advert. I have no doubt in my mind that certain members of the advertising agency community are currently slapping each other on the back and cracking open a bottle of Cava whilst they marvel at their excellence.

There will be some job boards right across this land who are now selling with renewed vigour, the very notion that they are delivering 50% more responses than before the summer the jewel in their spiel-laden crown.

There will absolutely be clients of mine looking at their latest stats and making key buying decisions based on volume and not application to placement ratio delighted that the cost per response has halved in just a few months and delivering glowing reports to their seniors that budget is being spent more efficiently.

And then there is me, sitting in my office pondering what it all means but as yet drawing no definitive conclusions. I’m optimistic about the online sector and my business will report a healthy profit this year showing a decent increase from 07. However, it’s fair to say I’m paying closer attention to the numbers – both the stats and the bottom line.

Maybe things aren’t quite as bad as they seem and he intends to come out the other side with the economy in a more reasonable shape - not at the level it should be but much better than we, the duped public, expected - hailed a saviour and, ah, just in time for the election.

Is this the start of a downward trend or the inevitable blip in an existing one? My gut feel, referring to online specifically, is the latter. What I’m most certainly not doing though, and what you should refrain from also, is panicking.
 

Don’t Panic! Let’s look at some stats (Part 1)

According to the Chancellor we are in the midst of the worst economic downturn in 60 years. Apparently the downturn will be "more profound and long-lasting" than people had expected (apparently he was also misquoted but, whatever, let’s roll with it). Reassuring words indeed from the comedy stuck-on-eyebrowed one whose job it is to steer the nation back to a sound financial footing. Or are these words which mask the truth? Maybe Darling has a cunning plan and is strategically setting our expectations low, using the doom and gloom perpetrated by our inherently miserable media to engineer a false view of the economy’s prospects. I’ll come back to that in Part 2.

Anyway, this blog is not about propagating conspiracy theories so let’s get down to the nitty-gritty and see how the online recruitment advertising market is shaping up in the current climate.

In January our users were each distributing 18 unique requirements (which we class as one new vacancy regardless of how many sites it was sent to) per month and receiving around 7 responses per job on average. Last month those numbers had changed to averages of 14 unique requirements and 11 responses per job. New jobs down 22% and applications up 57%.

We already knew that demand for staff was down and candidate supply was more plentiful and it would be very easy to draw negative conclusions from the above.

However, there are obvious reasons why the number of responses are up, not least the fact that we have a healthy quota of clients advertising in the banking and construction sectors where significant job cuts and tough times have spewed eager seekers into the market. The fact that jobs per user are down doesn’t overly concern me as the summer months have historically yielded less requirements.

That said I know that there will be people out there who read the 22/57 stat and dived behind their sofa/couch/futon/spouse and began prophesising the beginning of the end. For those of you still with me, well done for holding on to your hats, let’s put this in to perspective. In the same period (Jan – now) our unique job requirements across the board have risen by 62%. Of course, this show’s we’re still growing fast but moreover it shows that, despite such a huge jump in total unique job numbers, the average number of requirements distributed by users has only dropped by four jobs and the last sample month was August, the lowest month of the year for new requirements.

In the interests of not having a post be too long part 2 of this blog – discussing the response levels – will follow on Monday.

Holidays help delegation no end!

From my Real Business column

I went on holiday last week. In the past going on holiday has been a hugely traumatic experience. I try to get everything ‘done’ before I leave, then phone into the office every day to make sure business is going well and check that people are where they’re supposed to be, doing what they’re supposed to be doing. Ultimately, I spend each day waiting for the almost inevitable call that something, somewhere, has gone tits up.

I’ve exaggerated slightly, but it’s very difficult for an entrepreneur to let go. When you live and breathe your business you sometimes get the feeling that the place can’t survive without you and, in the first few years at least, that is often true.

Let’s give thanks, then, to the management team! Over the past 12 months we have created a management team of eight (for a staff of 50) and employed two non-execs for a board of six to put some solid structure into the business. We’re almost six years into the Broadbean story and it’s only been this year we’ve had a real need for this type of structure - 18 months ago we had less than 20 staff - but it’s totally changed the business for the better.

I’ve promoted the people I think are right for job. I’m not in the least bit concerned about age or how much experience people have, indeed our youngest manager is just 23 and runs the vital client services operation. The entire management team has come from within the business, there were no outside hires.

It’s been great for the morale as it shows that hard work is noticed and rewarded and that our small company can offer excellent career progression. In a lot of companies I know our people wouldn’t be given the opportunity and responsibility they have, not because they’re not good enough or can’t do the job but because there would always be someone ahead of them in the pecking order or they’d be deemed to have a lack of management experience.

It’s an amazing feeling knowing the business has come this far. It allows me the opportunity to spend time out of the office when I need to, exploring new markets and securing the difficult first deals in new territories. I'm working on cracking the US at the moment, generating revenue before we take on the costs.

My team have done me proud. My business partner was away at the same time as me, scouting for offices prior to our launch later this year in LA, and the office not only ran perfectly but I came back to find four new employees and solutions to two major problems that had cropped up while I was away. I felt like the proud parent, “they’re all grown up and don’t need me anymore”.

As I wipe a tear from my eye, I sit at my desk and realise that this emergence of top level talent in my business has left me without much to do.

Maybe I’ll go back to Ibiza for a few days.