Money Matters is an ongoing series where we talk to inspiring entrepreneurs about the finance lessons they’ve learned while growing their business.
In this week’s installment, we interview serial entrepreneur Charlie Osmond, who built his first business Freshminds with our very own founder Caroline Plumb OBE.
He talks to Intelligent Cash about ill-advised purchases, how managing his finances have changed as his business has grown and why the key benefit of managing your money is simply ‘keeping your money’…
Name: Charlie Osmond
Business proposition: Industry-leading software for the hotel industry
Why did you decide to get into business?
I wanted to have fun creating something. I love to build and I was always fascinated as a child by business models and the prospect of understanding and serving customers better than other teams.
What makes your business special? What are you most proud of?
Is it possible for anything to be more special than one’s team? The quality of talent we’ve pulled together, the camaraderie and the desire that each person has to improve every week and build something special together.
What have been the most challenging aspects of running your own business?
I went through a couple of tough times in early startup days – rejection after rejection by investors, fighting to keep the dream alive.
That can be emotionally draining, luckily as an entrepreneur you can only afford to wallow in self pity or doubt for about 20 minutes, so the feeling quickly passes!
How did you initially fund the business to get started?
I raised an SEIS round from family and friends – perhaps the most important business tax break the UK government ever invented.
What funding solutions have worked as you’ve grown?
We went from SeiS to EIS (extended friends that time) and then through a few rounds of VC funding and a debt raised – quite a good option for a SaaS business.
What was the worst financial mistake you made in the earlier days? (any close calls with your cashflow?)
During a hot summer, working from an office without air-conditioning, I once spent £400 on an evaporative cooler. I remember choosing to ignore the advice on the box: ‘good ventilation required’ because it was far less expensive than a proper air conditioning unit. Once this monster switched on we could not hear our phone calls and we achieved 100% humidity within a few minutes.
Needless to say computers got wet, our papers and clothes were drenched and we chucked the machine 24hrs later.
More broadly, I’ve been a victim of the common mistake of not charging enough upfront and underpricing our value add.
How have you managed to alleviate some of those challenges?
With every new product we debate the balance between speed to market speed to learning with speed to cash and profit. Every situation is different, I like to think experience is helping me better hit the right tradeoff at each stage.
In what ways has managing your finances changed over time?
One big difference from the early days is now having the luxury of a crack team to manage them for the business.
In our market we face a specific challenge. We help hotels increase direct bookings. In some parts of the world hoteliers want to pay for a booking only after a guest has arrived on property. So one risk we have to manage with care is that of investing early to attract bookings with the knowledge that we can get hit by global events such as the Coronavirus which then create high cancelation rates.
What has been your most significant or expensive purchase for the business and how have you covered the cost of it?
Hiring team members is where the majority of our cash goes. We have been VC-backed for a few years, and we generally have a hiring plan set out ahead of each raise. Occasionally we come across a person we want who is too expensive on paper. We have tried to resolve such challenges with share options when possible.
How confident are you when it comes to forecasting?
Our business is growing fast, that makes forecasting challenging. We’re constantly innovating the product set and it is hard to know what the value of each evolution will be.
Hiring some senior leaders into the company has really helped aspects of forecasting – for example our chief revenue officer has instigated a process that significantly tightens our ability to forecast sales.
Where do you plan to be in three years?
The business will triple in the next three years. I suspect (as usual) I’ll be on an airplane travelling to meet with more hoteliers.
What tips would you share with other business owners to help them keep on top of their finances? And why is it so important? What would you say are the key benefits?
Key benefits of managing your money? I guess that’ll be ‘keeping your money’.