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A two-hour brainstorming session lead Julie Deane to her now £50m business, The Cambridge Satchel Company.
With a clear objective to raise enough money to send her children to private school, starting with a £600 seed fund, never in a million years did Julie think her idea would lead to a New York Fashion Week frenzy or her manufacturer stealing her designs.
When it comes to bumps in the road, she has faced them all and kept her head held high.
Julie speaks with both Bex and Sage’s CEO Steve Hare to give a real insight into what it takes to build a resilient business.
Here’s what we cover in this honest yet extremely humorous episode:
Small business, big opportunity?
In this report, discover how Covid has changed how small and medium businesses globally operate, the biggest challenges they are facing right now, and how they're feeling about the next 12 months.
Is resilience something we all instinctively have or do we learn it through adversity?
So one of the reasons we’re talking about resilience is because of some new research by you, Steve, at Sage, the brand behind this very podcast, which showed that when it comes to resilience, British entrepreneurs are split right down the middle.
Half say they are more resilient now following the pandemic and half say they’re not.
So I wanted to first ask, what is resilience? Is it just having cash buffers in the business or having a plan B and not just a plan A?
Steve, can you just set us off and just set the scene about what we mean by resilience?
Absolutely. I think it starts with how you feel personally.
Of course, you need to have those plan B’s and think about the different ways that things might play out.
Things never quite turn out the way that you expect them, but it starts with an attitude of mind.
I think if you’re a resilient type of person, when you see obstacles, when you take knocks and when things turn out in a different way to what you’re expecting, you learn from that, and you carry on, but it’s important to learn.
Then your resilience and your confidence builds because you start to see how you can overcome what looked like a pretty tough obstacle at the time.
I mean, you say it starts with the leader and an attitude almost. And is that in-built?
I mean, Julie, I’ve known you a long time. You are definitely one of the most resilient entrepreneurs when it comes to facing a challenge and thinking ‘No bother, I’m going to just fix this.’
Is that something that’s innate, or did you learn that through being in business?
No, I think I was born with it because otherwise I’d been crushed in my upbringing.
I think my dad was probably the scariest, most difficult man I’ve ever met and after dealing with him, everything after that seemed okay really.
I’m like a rubber ball. I bounce back so many times.
So do you think that resilience is learned through dealing with adversity then?
Because when we’re talking about resilience, post-pandemic, a lot of these founders, maybe they would never know what it is to be resilient if they hadn’t been tested.
So do you feel that’s part of it, to have to get through the trials and learn?
I think the thing is that there are a lot of very, very confident people that do give this impression that there’s only one way of doing something.
I’ve seen this at the British Library, at the Business and IP Centre. And so many people have an amazing idea, but they think they have to read six business books before they get stuck in, and they won’t be ready until they do that.
But you can always procrastinate.
I think where I was really lucky was, I knew that I only had the school summer holidays and £600 to crack on with. So I thought I better not mess about.
I think that it’s a lack of self-belief that causes so many problems.
I like that. Procrastination and a lack of self-belief.
Those are the twin enemies of resilience.
How has the pandemic impacted businesses—are we more resilient now than ever before?
Steve, just back to the research, it says in this barometer that seven in 10 businesses are now more confident about their performance a year from now.
So I mean, are we a pretty resilient lot in the UK?
That’s pretty standout considering two years of upheaval, well more than two years.
I think what the research shows, as you say, seven out of 10 think they’ll be able to get back to pre-pandemic trading levels, profitability levels, etcetera.
About half felt that they had emerged from the pandemic more resilient, but therefore half weren’t so sure.
Again, I think this just comes back to issue of confidence.
I agree it helps if you are born with, what some might call it, stubbornness. My single mindedness can sometimes be interpreted as a bit stubborn, but you can definitely enhance it by going through adversity.
I think what we’ve seen during the pandemic is if you’ve run a business through the pandemic, you’ve had to be more agile.
Things have changed more rapidly.
So if you were able to adapt, be agile, work your way through, figure out different ways of serving your customer, that has given you a confidence level, that you would be able to do that again.
This fear people have of experimentation or failure, it’s really because they fear the unexpected.
I think what you see in small businesses, is they kind of embrace the unexpected, and they gain in confidence when they are able to deal with it.
As opposed to seeing unexpected outcomes as mistakes, or not what you wanted to happen, learn from it.
Then you can start to embrace it and see actually taking more risk and responding quickly to changing circumstances can then become a real strength.
I think we see that in the UK, where there are a lot of small businesses.
Last year, in 2021, despite the pandemic, it was a record year for new business starts.
I mean, that’s fantastic.
I love that, that small business owners, they don’t see mistakes and problems as stumbling blocks.
They’re just opportunities to do things a bit differently.
Two hours of brainstorming and a £50m business idea later…
I want to come back to some of those themes, but I want to talk to you both about resilience in your businesses, in your careers, and just paint the picture of how you’ve learnt to be resilient leaders over the years.
Julie, I’d love to start with you because I feel like just starting The Cambridge Satchel Company was an act of resilience and defiance.
You wanted to do something differently. You wanted to provide for your family.
Tell us that story.
I needed to get my children into a good school.
Emily particularly was not thriving at the school she was at. So I made her the promise that she wouldn’t go back to that school. She was going to go to a school that was fantastic.
But when I found a school that was fantastic, I found out it came with a £12,000 per child, per year, school fee.
I mean, thank God, I only have two children, but still, that’s £24,000 after tax.
You’re left thinking, how do people do that?
But I’d made this promise to her. And so it was very clear how much I needed to make.
So I had a £600 seed fund, and I knew when school was going to start again.
So I had my parameters there and being a very logical person, I sort of went back and sat down at the computer and made a list on Excel of 10 things I could do to come up with the school fees.
It was called schoolfees.XLS, with a remarkable lack of imagination. I think I should have called it moonshot.XLS.
But I sort of had my 10 ideas and marked them all across the columns and the idea of satchels had more marks than anything else. So I decided to get started on that.
I mean, for that whole exercise, I only gave myself two hours.
I mean, it had to be done very, very quickly, but that then means you don’t dither.
You don’t ask 10 people, so you don’t get 10 different opinions.
I think that if I’d had more resources and more time, I wouldn’t have come up with such a good idea.
Well, that’s amazing.
You give yourself two hours to come up with a business idea and in five years it’s worth £50m.
I mean, that just seems like something out of a story book.
No, no, there were so many really bad, bad moments.
I think it’s important to pass along how difficult parts have been.
Otherwise, people look back, and they read these things, and they think I must be doing something wrong, because I’m facing this horrible situation, and you’re not.
Everybody does, but they don’t talk about it very much.
We will go through some of those moments!
A CFO left with £4bn worth of debt, no CEO and thousands of employees depending on him
Steve, you cut your teeth in manufacturing, right?
You were a finance guy, but you were in the manufacturing industry, which is famous for ups and downs and supply issues. So you must know quite a lot about resilience in all forms, from supply chain to leadership.
You were also at Marconi, the telecoms firm during the dotcom bust. So that must have been interesting. Tell us about some of these experiences.
I moved into manufacturing when I was in my twenties.
As you say, I was a finance guy, but I really wanted to work in manufacturing. I wanted to learn about supply chains and what it took to make things.
At that time, in the 1980s and 1990s, the manufacturing industry in the UK was diminishing, and I wanted to experience it.
But it’s real cut and thrust.
I remember as a very keen, fresh face 20-year-old, it wasn’t very politically correct, in terms of how the factory manager treated you.
If he thought you were a waste of space, he told you, and he used to tell me that on a regular basis.
But I really wanted to show him that I could add value and help him run his factory.
Whereas, he just saw me as an overhead who was checking up on him and adding no value whatsoever. So I worked really to show him that by using insight data, I could help him become more successful.
So look, obviously I was ambitious, I wanted to get on. But I very much started from, I’m going to show him that I can help him and his factory to become more success by measuring things.
I worked my way up from being the factory accountant to being the CFO of Marconi.
I became the CFO of Marconi in 2001 just as the dotcom crash was coming.
I remember being very, very proud of myself. In fact, probably a bit too smug with myself, to be honest.
I was 39 years old and CFO of the 15th biggest company in the UK.
I thought that was pretty impressive stuff.
Over that first six months that I was CFO, we had two profit warnings. My boss, who was the CEO and the chairman of the board, both left, and we were in £4bn of debt that we were really unable to pay.
So I then spent the next 12 to 18 months negotiating to try and restructure and save the operating business, which was still trading, just not as well as it had done previously.
That was an enormous test.
I mean, I’d never done anything like that before. I was negotiating with people who, let’s be honest, were deeply, deeply upset.
They weren’t very nice to me in all honesty.
But when I look back, I learned so, so much from being in that adverse situation and I just would not give up.
I was determined to find a solution. I did not want the company to go bust.
We employed tens of thousands of people and I wanted those people to have a successful future, which they did. I mean, the shareholders lost all their money. The banks took over, but actually we didn’t have to reduce that many jobs.
I left at the end. It was one of those announcements when they say, ‘left by mutual agreement’. I mean, I was fired because the banks didn’t want me to continue.
So I’d gone in that very short period of time from, this is my dream, I’m pretty smug, I’m pretty happy with myself, to being out on my ear.
There were quite a few people who said to me, you’ll never return to that type of job.
Well, I’ve done three public company jobs since then. So I kind of proved them wrong.
I’ve got a couple of questions about all of this, because one, when you saw all the other senior people quitting, basically, what was it that made you stay and decide that you were going to try and get the company out of this mess?
Because a lot of people would’ve just been like, not my problem.
Then how long did it take you after you left Marconi to sort of recover?
Did you burn out, did you have to just regroup, and how long did that take?
It’s really funny. I can’t remember ever spending a second thinking, well, I’m just going to walk away from this.
It was not like I felt I’d created the problem because it was created by taking on too much debt, which I didn’t take on.
But it was my job, I’d been appointed to do something.
The circumstances had changed, but I still had a responsibility, as I say, to tens of thousands of people. I think it would just have been completely disloyal to walk away from that.
I felt I had to fix it.
Actually one of the tributes, one of the lead banks that was very unhappy with me at the time, later on, I was applying for a job, and I needed a reference and the bank that I’d been crossing swords with agreed to give me a reference.
And what they said was, “At all times Steve attempted to do the best he possibly could for all of the stakeholders.
“By definition, that actually meant that they were all unhappy, because he didn’t favour any of them.
“But the best thing we can say is at no time did he consider his personal position when he was doing that.
“He was trying to do the best for the shareholders and in the end, it cost him his job, but he did the right thing for the stakeholders.”
I did then have to go and lie low for a bit. I sort of ran my own business. I did some consulting and I mean that was a real shock. I went from managing thousands of people to doing my own VAT Return.
It reminded me what it’s like when you have to do everything yourself, which was a real leveller.
I did that for a couple of years. Then I got another job with a public company called Spectris as a CFO, which was a FTSE 250 company and gradually rebuilt relationships and carried on.
I love that. Two years of doing my VAT Return, and I’m ready to run another public company.
Thank you very much by comparison.
Wearing down your rivals to reveal manufacturing secrets
Julie, this is the same story with founders.
Founders can’t walk away, I mean even more, so they can’t walk away.
There have been several points in the story of Cambridge Satchel where you’ve kind of bumped up against something and maybe someone else would’ve dropped it and would’ve thought like this is not working, but you didn’t.
One of the early moments was when you were trying to get the first bags made and remember we only have £600 in the pot.
So can you tell us this outrageous story of how you got some poor man in Scotland to make your bags?
Tell us from the top please.
I think one thing I’ve realised over the years is, I honestly think that when I have an idea, everybody is thinking exactly the same thing as I am in my head and 80% of the time, that’s not the case.
I just knew I wanted to make school satchels and there wasn’t a shred of doubt in my head that whatever manufacturers I approached and said, “I want you to make a school satchel.”
They would be seeing the same object as I was seeing in my head.
But I just didn’t know where their pricing was coming from.
The worst thing is the minute they call themselves ‘artisans’, because then it’s going to cost £200 a time and these are supposed to be satchels for school.
So I sort of came up with this thing that I thought was the obvious way forward.
I’d make a prototype so that I could show them what I needed.
So I made a satchel out of two cereal boxes covered in brown paper and with a black Sharpie I drew on the buckles. I mean, to be fair, it looked very much like a satchel.
Thank God, a satchel is really straightforward.
But anyway, I just could not find a manufacturer and I hadn’t realised, it never entered my mind to get these things made overseas.
It was British manufacturing that I had in mind because what’s more British than a satchel?
But I just could not find a manufacturer.
So I was scrolling through all these pages of Google searches related to satchels. And I scrolled back to page 12, and nobody goes off the first page, but you seldom go more than halfway down.
On page 12, there was this school in Scotland that said school satchels can be obtained from our outfitter.
So I phoned the school outfitter and I said to him, “I can’t find satchels for my children. I think the world needs satchels. Who makes your satchels? Where do you get them from?”
He wasn’t going to tell me and fair enough, I’d be exactly the same way.
And so he said, “No, I’m not giving away my manufacturer’s details.” I said, “But are they made in the UK?” And he said, “Yes.”
At that point, the poor man sealed his fate. He was going to experience misery on a grand scale until he buckled.
So I thought, he’s there in the school outfitter shop in Scotland. He’s going to settle down and really get engaged with customers or start doing his VAT Return or something.
And I’m going to phone him every 35 minutes and ask him a question and until he cracks.
So I set my kitchen timer for 35 minutes and I phoned him, and I said, “What colours do you do the bags in?” He said, “It’s chestnut brown.” “Oh, okay.” So I just left it.
And then 35 minutes later, I phoned him again. I said, “Do you have dark brown? Or was it just the chestnut?”
And then, 35 minutes later it was like, “Have you thought of doing them in navy? I think navy always looks smart. It’s not as harsh as black.”
Oh my gosh, all that day, I phoned him every 35 minutes.
Then the next day I phoned him, and I said, “The size, now a 14-inch bag. Have you thought that maybe there are some children just a bit too small to carry that? What about say 13-inch?” He said “No.”
He almost made it to lunchtime on the second day before he just said…
Oh, bless his heart.
“Ask me all your questions.”
And I said, “That’s the really strange thing, is that in my heart, I know I have millions of questions, but when I phone you, maybe it’s your voice, but I can only think of one at a time.”
And at that point he just said, “Look, this is the manufacturer. Why don’t you make his life a misery?”
Which I didn’t think was very charming.
But you know, I did sort of understand at that point and I then had my first manufacturer’s details.
I’m almost crying. This is like a comedy sketch.
I mean, this is the realness of building a business, right? Just the hilarious moments that are foisted upon you.
But that was the turning point.
Because without those bloody satchels, there wouldn’t be those first products. I mean, you would’ve been stuck.
So you had to bang down that door.
Yeah. I had to do it, and he was a casualty at that point, and I’m sure casualty of war.
He feels like he suffered, but I just needed that. I really needed to know.
Sometimes there are tricky times that build resilience, but sometimes there’s also the problem of too much success.
Being ruthless with your time, so you can be fully present in your contributions
So when things are going outrageously well, better than you anticipated, and that can cause problems.
I’d like to talk to you both about a time in your careers when that’s been the issue. And then what kind of resilience, if is that a different kind of resilience to be able to withstand too much success?
Steve, I might start with you.
I think that last story is one of the best stories of perseverance I’ve ever heard in my life. I thought I was tenacious, but that is something else.
I think sometimes when things are going well, there are a couple of things that I would observe.
First of all, when things are going well, it actually can hide quite a lot of problems.
It’s actually only when things don’t go well that you realise that there are quite a few other things not going well.
You might have thought they were okay, but they got ignored during those times of success.
I think the other thing that I’ve always suffered from is that I’m very curious. So that makes me nosy, which means I want to be involved in everything. As I’ve done bigger jobs, that’s become harder and harder.
When things are going well, and there’s a lot happening, you can really find yourself trying to do too much. I then find it very difficult to actually attend to things and set them up properly.
So you end up being a bit superficial if you’re not careful.
One of the things it took me a long, long time to learn, and I still have to work very hard at this, is it can be very hard to be present at what you’re actually doing because you have 20 things in your head.
So you are talking to someone, but you are thinking about something else, and you’re not actually listening to what the person’s saying to you because you’ve already moved on to something new.
That is a very dangerous state of mind to be in because then you don’t learn properly because you’re not listening.
I think when things are flying high and everything’s very successful, if you’re not careful, you start to believe your contributions are a bit greater than perhaps they are.
You have to remember, particularly in a bigger company, it’s a team effort.
You are facilitating, but you have to get really good people around you.
Then you’ve really got to be ruthless with your time because you need to be present in whatever you choose to do.
The best example in my career is when I worked for Apex. I worked in private equity, and I was an operating partner. So I was there to kind of troubleshoot within the companies that we owned, but I got an opportunity.
The boss said to me, “Oh, we need someone to be COO of the firm. We need someone to run the back office, and a couple of hundred people. Steve, you are the only person really who has any people management skills. So can you do that?”
I said, “Yes, but I want to do the job I’m doing.”
And he was like, “That’s fine. Just do them both.”
So I thought, well that’s fantastic. Wow. I’m now the COO of a prior equity firm. I’m sitting on the investment committee. I never gave a single thought to how I was going to make that work.
The truth is, I didn’t until I faced up to the fact that I needed to do it differently, but I sort of thought I could do anything.
I could make this happen. I just had to get the right team around me.
So my advice is, always be very thoughtful about what you do and when you do it, be present.
Make sure that you spend your time where only you can be effective.
If someone else can do it, get them to do it.
That’s a great point about success almost being blinding.
And that actually, when things start going almost too well, that’s when the wheels could fall off, because you haven’t got the right controls in place.
When New York Fashion Week results in a backlog of 16,000 bags
Was that your experience?
Julie, did your wheels come off at any point?
My wheels well and truly came off.
I taught myself to code, I coded my first website. I mean, that website didn’t really have many wheels to start with, but it got me to where I needed to be.
Everything was run on the basis of, if I can sell 10 bags a day, that would be great.
I had these British manufacturers that were fantastic.
I had one in Scotland, one in Hull and one in Norfolk. Each one of them could make up to 250 bags a week.
I was thinking, I’m just aiming to sell about 10 a day. So I’ve just got so much space here.
Of course, I can supply Urban Outfitters in America from my kitchen, it just a little bit of planning on my Excel spreadsheet. This is good. I’m all good.
Then I had a call from somebody, and they said, “Oh, next summer, it’s going to be the brighter, the better.”
And I had seen some health and safety leather at one of the manufacturers because he was making some health and safety sort of stuff.
So I said to him, “Oh, could you make me a satchel in that?”
It was bright yellow health and safety fluorescent, and I sent it away to the magazine. They said, “Yes, this is amazing. This is great.”
I was thinking really, these fluorescent bags? Then I had this really bright idea.
I thought I’m going to ask the bloggers that seem to be driving a lot of my traffic, to wear them. They were going to New York Fashion Week. I had no idea what people even did at New York Fashion Week, but they were going.
So I said, “If I lend you a bag”—I wouldn’t even give them a bag.
“If I lend you the bag, can you wear it at some big shows you’re going to, because I really need them to get noticed because I need to make enough money to send my kids to school.”
So I think the honesty was quite compelling, and these bags were outrageous, they were fluorescent.
And so they did take the bags with them.
They went to some enormous shows in New York Fashion Week. And when the lights went down and the show started, they’d start taking photos and the flash photography would pick up all of these fluorescent bags—it was high vis everywhere.
I had them in pink and orange and the original yellow.
We call it a signature yellow now because that’s what people in fashion do, and it was all over the place.
The New York Times called us the ‘street style sensation of New York Fashion Week’.
All of a sudden, my website went absolutely ballistic. It hit 16,000 bags on backlog. That was really, really tricky because Ewan, Clive and Alec weren’t going past the 250 bag a week mark, and I was begging them.
And they said, “No, there’s all these health and safety rules, because then you’ve got to start having health and safety people in.”
Then the manufacturer in Hull said that the ladies didn’t like making the fluorescent bags because it was giving them a headache. So they’d make any bag, but not the fluorescent ones.
It was just a nightmare.
People would come in and say, “What a great problem to have.”
But it wasn’t a great problem to have because people were angry. They were really angry. They wanted their bags.
But then the Department of Trade found this big manufacturer who was experiencing horrible difficulties and said, “Look, they’ve got the right machines there. They’ll be able to make volume.”
I was thinking, hurrah, this is the way out.
In the meantime, I was writing back to all these customers saying, “Don’t be angry, but you’re definitely not going to get it this week. The girls in Hull have got a headache, and they’re not making any more fluorescent ones.”
It was so unbelievably stressful. Success didn’t taste that great at that point. What happened with the big volume manufacturer, that felt great for about three months because I was getting volume, and I was thinking, oh this is fantastic.
I could see some of that big backlog being chopped away.
But I found things miserable and tough with that many people emailing me to say how disappointed they were that they didn’t have their bag by then.
Or that it was their daughter’s birthday, and I’d ruined their birthday.
When you’ve got thousands of those every day, it’s not a great place. It doesn’t feel what success should feel like.
But little did I know that things were about to get way worse.
You can never prepare for an excessive boom sales—but you can learn from your past mistakes
I want to know what you learned from that experience, as in how have you prevented that kind of boom in sales, from having the same impact again, or is it impossible to plan for something like that?
I just think it’s impossible because I never thought that by giving those people those bags, it was going to have that instant kind of take up and that mass effect.
If you did plan for that, then what would you do?
All of a sudden, you’d start all kind of capital expenditure. You’d gear your business up to be able to cope with making 18,000 bags.
Then all of a sudden, you’d have so much overhead that the minute that subsided you’d be completely crippled by it.
You just can’t plan for that kind of thing.
I think it was probably karma for all the nagging I gave that poor man in Scotland, but these people were on my back.
But the only thing that would make them happy was to get them a bag. So I would be as open in my communications as I could.
I’d put an auto-response on my email because there were only three people in the business at that point. It was me, my mother, and Lottie, the girl down the road.
So then it was time to embrace tech, and I put an auto-response on just saying, ‘If you’ve contacted me to say, you’re disappointed, I know you’re disappointed. I am literally bending over backwards to sort this problem. We’ll be back in touch.’
The best thing I could do was to keep my focus on trying to get the bags made because that was long term.
That was the only thing that would make them happy.
The one challenge every business faces—varying capacity
And Steve, you are nodding.
Does hearing this story make you very glad that you run a technology business?
I mean, do you have the same peaks in demand and pressures in the same way or is it a completely different kettle of fish?
There are some similarities, but no, in manufacturing, load variation is a huge issue.
I think actually it’s interesting, particularly with businesses like yours, Julie. You have to sometimes decide and be quite firm about what you are going to do and what you’re not going to do.
As you say, just because the demand is there, it does not necessarily mean that you want to put in place the dramatically increased capacity because that’s actually maybe not what you want to do with your business.
I remember in fact Bex, one of your previous guests, Ryan, talking about vegan doughnuts.
I remember him saying that actually I’m not going to make unlimited amounts of doughnuts. That’s not why I’m in this business.
I have a kitchen and I will produce what I can produce in that kitchen, but I’m not having 10 kitchens because it’s a personal thing for me. I’m still involved, and I don’t want the stress of all these different things.
I think that’s really cool, if you are as clear as you were Julie, about why you got into business. You went into business to pay for school fees and those objectives may evolve.
But at the end of the day, it’s your business, and you do it for your reason.
Obviously, we’re different. We’re a bit bigger. We have public shareholders.
But in many ways growing 40% one year and 2% the next year is disruptive to any business. It means your capability and capacity is just flexing up and down.
Although we don’t have manufacturing, we still have support.
If we grow rapidly, which we have done in the past, and we’re still growing strongly now, what happens is our customer service comes under enormous pressure.
So you call us, and then you have to wait because we don’t answer the phone fast enough because we don’t have enough people.
So we put the people in place and then the calls drop, and they’re sat there, and we have to use them for something else.
So this varying capacity is definitely an issue for all businesses.
It’s getting harder and harder to plan for that because the world has a lot of uncertainty. I mean, think about small businesses that serve commuters.
So you’re running a coffee shop. I actually stopped this morning to get a coffee in London. I was talking to the lady because I go to the same place every day.
Of course, they’ve got peaks now on, say a Wednesday, when everybody’s coming into the office. So they sell lots of coffee.
But on a Monday, hardly any, but predicting what will happen on a day-by-day basis has become largely impossible.
It’s the same for sandwich shops.
How do you cater for these things? The load is just going up and down. It’s really challenging.
Yeah, I wish there was a straightforward answer.
I mean, I love that point about if you know your purpose, and you know, your boundaries that helps you be resilient.
But in terms of the external pressures and rising and falling in demand, you can be as resilient as you like, but it’s still tricky.
I think you have to be honest. I think Julie said this, you have to be honest with your customers, right?
So if you are not going to be able to do something for them, you have to be prepared to say so.
There’s nothing that customers get angrier about than if you say, “Well, don’t worry, I’ll get it to you tomorrow.”
When actually it’s going to be six weeks.
If it’s going to be six weeks, you have to tell them, “I’m sorry, it’s six weeks, and we’ll do our very best to do it faster, but there is no way it’s going to be tomorrow.”
What to do when your own manufacturer steals your designs
Julie, you went out of the frying pan and into the fire, as you say.
So you thought that was going to be the biggest stress.
And then a few months later, something even bigger walloped you.
Even bigger. Yeah.
So they were in financial problems, the manufacturer. So we agreed that I would buy all the raw materials. Then as soon as the bags were made, I would pay on the day the bags were made.
None of this 30-day, 60-day terms.
I would buy all the knives and I would take them to the other manufacturers that I had up and running already. So the bags could all look the same.
Having done all this, I thought this was finally going to make these people happy, and it was going to be great.
Well, first of all, I had one of the bloggers say, “I’ve just had a bag sent to me. Have you changed your name?”
And I say, “No, I haven’t changed my name.”
She said, “Well, it’s the same bag, but it’s now called Zatchels.”
And she said, “I don’t think that’s a good name.”
I thought, well, what, no, somebody’s just copying. It’s somebody overseas copying me. Never for a minute did I think it was my manufacturer.
But then I had a phone call from someone who worked there and said, “Are you the lady with the boxer dog that comes around and talks to us?”
I thought they were pretty high odds, so there could only be one woman with a big boxer that walks around there. So I said “Yes, I am.”
And he said, “Well, I can’t sleep. I’ve never been part of something like this before, but your material is being made to make copies, and it’s being hidden across the road and just feel really bad about it.”
I couldn’t believe it.
I really couldn’t believe it.
I went down to my manufacturer, and I knew if this was true, that I couldn’t work with somebody like that, who’s lying.
After I’d saved their business, and they were making more on every bag that I was making.
It was just sleazy. It was wrong. I couldn’t do it.
We still had over 20,000 bags in backlog because the backlog kept growing. So it was around 20,000 bags in the hole.
I was going down to the only volume manufacturer that I had.
But I did get a huge lorry from one of the tanneries and said, we might have to pull all the leather out, because if this is true, then all the leather is coming out, and he’s not making a single one for me after that.
So I went down and sort of faced him down with all the people and the sewing machines around, and they were making the bags like mad, and I was thinking, they’re the only ones that are making on this scale.
I just said to him, “This is what I’ve been told. Is this right?”
He looked me in the eye, and he said, “Yeah. And the thing is, you’ve got no choice. You are just a stupid woman who doesn’t know about manufacturing. So you’re going to have to suck it up.”
And he just turned and walked out.
I was just stood there. I couldn’t believe it. I was so angry. I think the stupid woman thing didn’t help.
If he did the same thing again, maybe leaving that sentence out would’ve been a better move, but it was just astonishing. I was just thinking, oh my gosh and I really can’t work with him now.
I know I’m pulling all the leather out. I also know that backlog is massive and growing.
I heard myself say, and it’s something I hadn’t thought of before I went down there, but I heard myself turn to the people there and say, “Wow, he is a truly horrible person. And if he treats his best customer that way, then he must be horrible to work for.
“So why don’t you come and work for me at my factory?”
I’m like, what factory would that be?
But it was like at my factory. Let’s do that. We can just all make them.
You’ll have all kinds of benefits like heat and people not yelling at you and stuff. All, but two of them joined.
So I was driving back to Cambridge with this massive lorry full of leather behind me, all different colours. I didn’t know where it was going to go.
So we took it back to the tannery and I said I would work out a plan for it tomorrow.
Then I went back, and I made Emily and Max their dinner and I tried to appear really calm.
We read through the Golden Key, we did the homework, they went to bed. Then I just went straight on to Right Move. I thought, please, please, God, let Right Move do commercial properties.
I looked at five factories the next day. I put the original manufacturer’s postcode in because it needed to be close so all the workers from there, were able to get to my factory.
So I put his postcode in, and I viewed these really ropey places the next day, because none of this had been planned.
That was a brave decision because I had to use the money that people were paying for the bags to set up the manufacturing.
So, that was a tricky time.
Choosing your premises based on which has fewer rat traps
I’m having palpitations, just hearing this story and what I’d love to know where that man is now and his business.
Do you know?
Is he in prison?
Well I did sue them. I did take legal action, but I only took legal action after my factory was up and running.
I know my limitations and I knew I couldn’t take on some big lawsuit and the lawsuit was not going to make the bags that were going to make the people happy— especially after I’d used their money to start manufacturing.
So I had to make these people’s bags and I think it was the worst time.
These places that I saw the next day because you know, I didn’t have any time to waste. But these places that I saw, some of them, they were the worst places that you’ve ever seen.
I whittled it down to two.
But the only way I could objectively choose between these two awful places was by which one had fewer rat traps on the floor and that’s how I chose the first premises.
But then, it was so ropey, the front fell off the factory about two months later, and it was a terrifically awful time.
However, I will say it was the best move because since then we’ve won British manufacturer of the year.
We make all of our own bags in the UK. They’re not offshored, and I’m really proud of that.
I’m really, really proud of our manufacturing place. It’s not the same place as that first place that I had. We have zero rat traps on the floor. I’m just going to put that out there now.
Technology allows businesses to focus less on admin and more on the important stuff
Steve, I mean, you hear stories like this.
Sage, it’s a huge platform with so many small businesses on it.
Tell me about how you as a CEO of a big business are giving business owners like Julie a voice, what the issues that you hear about every day you are championing at the moment?
Sure. I just also would just like to say, I think that story Julie just told was an absolutely fantastic story.
It’s just a great example of focusing on customers and then also focusing on your people.
If you get the customer experience and your colleagues, the people that you employ, if you look after those two, I mean, that’s really your business.
It doesn’t matter what you do. If you don’t do those two things, long term, you won’t have a business.
The businesses that thrive are the ones that serve their customers, and they look after their people and their people enjoy being part of the experience.
I think in terms of what we’re trying to do, it’s things like lobbying government.
I’ve had quite a few meetings with government recently around trying to ensure that in the UK, we have a business-friendly environment.
Particularly for small businesses through things like the Help to Grow Scheme, through trying to get more tax incentives.
I’m a big believer that in the same way that, historically things like capital allowances have been tremendously successful, because it allows an entrepreneur to invest in physical infrastructure, machinery, and reduce their tax burden.
I think that should be more flexible in a digital age so that you can invest more into digital tools and into making your business more productive, rather than just hardware.
We should try and help as wide a number of people as we can.
At the end of the day, we want people like Julie to be able to focus on running their business, not doing admin and compliance and so on.
So between Sage and accountants, we should be able to work together to really try and automate, as much as possible, that back office, compliance and giving insights.
Julie’s mentioned it, speed of cash flow is everything.
If you’re running a small business, it’s not really to do with profits. It’s to do with cash.
Have you got cash?
So you need your cash coming in very quickly, and you need to be careful and thoughtful about your forecasting of what pays out.
We try to really focus on providing advice, particularly during the pandemic. We had a Covid hub, which actually was not just for our customers. We made it freely available to all small and medium businesses to try and increase the speed at which people could access that advice.
I think sometimes, I’m sure Julie would feel this, it’s like those stories that she’s just been telling. It can be a lonely place running a small business.
So I’d like to think that as well as providing software, we provide 24/7 support.
If you need to speak to someone, pick up the phone and there’ll be somebody there from Sage to talk to you.
I really like that point about how technology can bolster resilience and that’s the role that Sage wants to play.
That was also mentioned funnily enough in the research in the barometer because I think it was 56% of UK SMEs said that the pandemic has permanently increased their reliance on technology.
So it’s contributed to that resilience.
How Sage systems can make your life easier
Julie, you are a Sage customer.
Do you think that having a lot of that stuff taken care of, that your finance function is confident of all of these systems running smoothly, that frees you up to focus on strategy and building your business?
If I think back to the first sort of like three years, I spent so much time on bank reconciliations, between what was coming in on the website, what was coming in through PayPal and then what was coming in through the card reader and all of these methods.
It took so long, and things just weren’t speaking to each other in a way that made my life easy at all.
There were loads of other things I needed to do, but those bank reconciliations, you’d always be out by like 15p.
It was just so annoying, and it would just drive you insane.
I remember there were some government things that they’d get Cambridge or businesses together to talk about their problems and the problems of a big business are very different to the problems of a small business.
I’d hear about the problems of what they’re doing about R&D credits and their supply chain and everything.
All I wanted to know was there an easy way for me to get DPD to pick up from the house?
That’s what I wanted, because I didn’t want to stand in the local post office with 12 parcels being hated by everybody behind me, three times a day.
That’s what I wanted.
I think it’s a very different kind of environment and hopefully businesses, if they want to scale, they will scale from one set, and you’ll get different sets of problems. But I think what I like with Sage at least is we’ve been able to grow with it.
So we’ve been able to use some modules when we’re smaller and now at the moment we’re integrating, there’s a manufacturing thing, which hopefully will mean that automation makes things a little bit smoother because that’s not what we do well.
We make bags brilliantly well.
We don’t sit there and think about how we’re going to do different levels of VAT, all of that kind of thing. If we can have systems that talk to each other, then that makes my life a lot easier.
I think with karma, my life is due to be a lot easier. I’ve done my thing.
Yes. I would agree with that.
Paid my dues.
An entrepreneurial mindset is key to adapting your business
Just finally, I want to talk about kind of building a resilient environment in which to operate because you can make all the right decisions for your business, but you need a stable economy.
You need to create the talent, which comes into your business to future-proof your growth.
You’ve both done that.
Like tell me about how you have to committed to building resilience around the business in the kind of 360 view in order, yes, to support your growth, but also to do the right thing.
We have always got out of tight spots by having that entrepreneurial thinking that we had in the early days.
We’ve created problems for ourselves when we’ve acted as if we’re a £100m turnover business when we’re not. I think that going back to that idea of we’re not seeing the tourists now because of the pandemic. That really hurt us.
The American and the Chinese tourists were absolutely a bedrock for our bricks and mortar shops.
We’ve got London, we’ve got Edinburgh, we’ve got Cambridge. We wanted those tour groups, but those tour groups aren’t there.
So thinking those people are still around and hopefully would still want to buy from us.
So how do we reach them? That’s why we tried things like livestream shopping, to try and reach them where they are.
We did a pop-up in Shanghai.
It’s this sort of mindset of, that’s not going to work, how can we do it?
And keeping that ‘let’s just give it a go’ mentality because never in a million years, did I think that sending those high vis satchels to New York Fashion Week would have the impact it did.
Never in a million years.
Sometimes you just don’t know what’s going to work. So you have to throw out all kinds of things and see what takes.
The beauty of long forgotten British craftsmanship
But also just investing. I mean, you’ve brought back some like long forgotten skills.
Some of the satchels and bags that you make, haven’t been made.
Your doctor’s bag I read hadn’t been made that way with that level of complexity for something like 100 years. So that’s another investment.
It does, it goes through 12 pairs of skilled hands. Every single one of those bags goes through 12 pairs of skilled hands to get that project to at the end.
I sort of like scrummaged around in this sort of deepest, darkest, they call themselves antique centres, but my dad would’ve called them junk shops, but that’s where you find the real gold.
Our bag that’s just like a tubular bag now, which is one of our absolute bestsellers.
It’s a bag that I found.
The date of the bag was 1938, and it was used to carry around two wooden lawn bowls when people took their lawn bowling really seriously.
This bowls bag is a unique looking bag and people absolutely love it. That would’ve been forgotten and the story of why it was created.
I think that’s what we love to do is just rediscover these bags from the past.
You think, no, that does not deserve to be forgotten. If we can bring it back and bring back that craftsmanship, then that’s a real honour.
But my gosh, people have to please support British manufacturing because it’s been through some really, really tough times. At the moment, times are tough again.
So every time you spend your money, just think you’re supporting the business that you’re spending it with.
That’s really important.
Demonstrating a commitment to your communities will strength their resilience
And Steve, tell me then about Sage and your commitment to bolstering the resilience of the UK and the economy, because this is a big thing for you guys, right?
I mean, we have businesses all over the world. We have a big US business and big businesses in continental Europe, but we were born here [in the UK], 40 years ago, this is where Sage was invented.
There’s a spinoff out of Newcastle University founded in a pub in Newcastle.
I think those roots matter. I think the fact that Julie manufactures in the UK is just absolutely amazing.
I think too often there is this attitude of, well, where’s the lowest cost place to do something. You have to start with customers and customer experience.
We sell to small to mid-size businesses. I think small to mid-size businesses care about their communities. They care about the places in which they operate.
I think you have to demonstrate a real commitment to the communities in which you operate.
We have a foundation that we set up seven or eight years ago.
We give all of our people at Sage five days’ paid volunteering a year.
I remember when we first did that, people saying to me, “That’s crazy. You’re going to give people a whole week paid to not work.”
I was like “Yes, it’s part of the community, it’s part of giving back.”
I’m very proud of the fact that we’re from the North East, we’ve just invested heavily in new facilities in the North East.
We’re sponsoring the new business exhibition centre up there.
Then we’re going to call it The Sage. But it’s all about creating that community and having commitment, that during difficult times, you’re not just going to walk away because you can make £10 more profit somewhere else.
That’s the wrong attitude. It’s just the wrong attitude.
You have to take a long-term view.
People sometimes say to me, how can you take a long-term view running a public company? Well, you can. You can, because you decide. Until someone fires you, you decide. I run Sage for the long term.
Of course, we have short-term commitments, but you have to create the right environment where people think I can experiment. I can try things.
If it doesn’t quite work out, we’re not going to suddenly walk away because something went wrong.
We’re going to learn from it and try and make it better.
So I think this commitment to communities, to the countries in which you operate is super important.
And yeah, I think that’s a lovely point to end on because you can be as resilient as you want within your business.
But the only way to have a lasting model is to do the right thing and to do the right thing by your customers, your stakeholders, your suppliers, and that is the true secret of resilience.
So thank you so much to both of you. What amazing points and insights and stories.
I’m glad that this is radio, because I actually have tears down my makeup from laughing at your stories, Julie.
So thank you.
I can laugh at them now.
It’s good to be able to look back and smile. Definitely.
Yes, it is. You’ve definitely got to, and it does make you realise that it’s not a smooth ride.
So don’t be too hard on yourself because people are botching things up left, right, and centre and still managed to survive.
It wouldn’t be as much fun if it was a smooth ride.
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