Podcast Transcript

Sean: [00:00:00] Okay, G’day everyone and welcome to the ScaleUps Podcast, where we unpack the secrets and strategies of scaling and business with Founders who've done it, the industry experts and the advisors who can help out on the journey, and of course, where we follow a group of first-time Founders on their journey, as they strive to scale.  We have a very clear purpose here on the ScaleUps Podcast and that's to help first time Founders who are still attempting to scale, learn how to do it so that they can fulfill the potential of that business, make decisions with more confidence, and in so doing maximise the value that they can create in the world. I'm your host, Sean Steele, and I'm joined today by Chris Eldridge, the Founder of 4Impact. G’day Chris. Chris has been running 4Impact since 2005 technology services business that's now operating in Australia and New Zealand, and PNG I believe. Is that right Chris? And if I'm not mistaken, you have now scaled up to over 200 FTEs. Does that sound right?

Chris: [00:01:01] Yes.

Sean: [00:01:02] Wow. That's quite the journey, mate. Well, look, we're very much looking forward to hearing about your experiences and the learnings that you've had as you've been scaling up today. So, lots of questions for you. And I'm particularly interested in today and talking about, you know, a couple of moments that I know that you've had on your journey around this sort of scalability of systems and processes, which so many services, businesses really sort of failed to invest in sufficiently, we've had lots of questions from the audience and the community around business partnerships, which of course can be such a wonderful and such a challenging part of running businesses, and also the Advisory Board that I know that you implemented to give you a hand on your scaling journey. So, for the benefit of the audience, just to kick us off, and for those who maybe don't know yourself that well, or 4Impact, can you give us a bit of an overview of the genesis of the business, the purpose and ambition, the typical client profile, you know, the sort of problem I have and how you go about

serving it just to give us a bit of an overview.

Chris: [00:01:57] Sure, I'll do my best. I think it's probably changed a bit over the years, which is the nature of a business when you've been around for a while, but I'm sure we'll get to that. So, we started back in 2005, really trying to fill a gap that was in the, we saw that in the Brisbane market. I mean, everyone's got a gap that they're trying to fill in, that’s why we start businesses, but it was in the technology services space, and if you were a large enterprise or a medium sized enterprise trying to deliver complicated IT projects, you typically had to go straight to the tier one consultancy. So, the tier two consultancies, and they had a model of delivery for consulting, or you did it yourself with a body shop. And we saw a space in the middle whereby we identify great talent in the market, who didn't want to work through the large consultancies, and we would look after them. So, we gave them a community of other consultants to work with, and also work on good projects. They weren't expected to sell services on our behalf. Our approach was if we did a good job delivering for the client, we'd get invited back. So, we typically focused on the project managers and business analysts in the market because that was kind of the leadership layer. And that was a layer that wasn't as commoditised, unfortunately. You know, I can get into chapter and first about that, but really it was about good people doing a good job for a client at a reasonable price. Consultant won, client won, and we won because we could charge a better margin than what's typically going on. And that was reasonably successful to start off with early on in the piece. And then, you know, as I'm sure we'll get to in the conversation, sort of it's morphed, that's a very different business now from what it was, market is changed and you know that's part of the journey being open to that.

Sean: [00:03:51] What kind of projects or what would have been a sort of typical project in those early days, verses maybe some of the projects that your company is taking on now?

Chris: [00:03:58] A typical project would have been, we started in government to be honest. So, there would be, we did a lot of work down at the police where they were trying to transform the way they did things, we did work at Education as well, and typically they have a complicated project. Government delivery projects are always hard because you've got a lot of suddenly stakeholders involved. So, you might be involved in implementing an ERP system, which has got a complicated business rules that have to be managed. So, you need business analysts who can understand what the current state is, where the business systems trying to get to and map those processes. And then you need project managers with good stakeholder mentioned skills because they've got to manage up and manage down and bring everyone on the journey. So, then there's change management. So, it was very heavy on the people side in those days as well. And we wanted departments that hadn't commoditised the procurement process. There's a lot out there which is just, I just need a project manager. I just need someone to do the job and it's never quite that straight forward. The skills are just part of it. It's about the people skills that go with it. So, that was where we started, we did some work also for some of the other insurers and things like that in the market where we could put good people on who had good people skills.

Ultimately it was about high IQ product and, you know, there were good people out there who just didn't want to work the way the market was asking them to work. So, complicated IT systems.

Sean: [00:05:41] And what about and any sort of change in the kinds of projects that you're doing now? Like what sort of, obviously the organisation's changed materially over the course of that time? What about the kind of problem that you're solving or can solve?

Chris: [00:05:53] The problem, it's a lot of the similar systems, but where it used to be in the early days, a client would say, well, I'm going to manage this process myself and I need a couple of good project managers and I just need some good analysts, and can you help me on the testing side and the change management, we would provide good people. What we built over the years was certain capabilities, certain technologies where we could offer an end-to-end solution actually deliver the entire project. So, the model at our end of what we use to resource changed a bit, but not massively. It's still about good people. We just manage them ourselves now, and then we wrap a process around that as well to deliver the end-to-end solution. And you know, it's more skin in the game, if that makes sense. So, yeah, and then with that capability, you know, you need it to be, get certifications in the technology and that's happened largely in the insurance space and so then we established a capability offshore as well. And we've grown it out there. So, whilst we still do work for clients where we will augment their own teams in the domains that we could, we'll take on the ownership and responsibility for the end-to-end delivery, and then the ongoing support, 24/7 for the system, so that we can manage it through the life cycles and deal with the issues as they come up, which is a different skill set, again.

Sean: [00:07:22] So given that sort of change where you've really mastered key technologies in addition to the people side and the ability to kind of manage end-to-end. What were the couple of key technologies that you mastered…

Chris: [00:07:32] There's a technology and insurance piece, called Guidewire. And it's produced out of San Francisco and, you know, we were in the right place at the right time. My personal background is I come from a software development background. I'm an engineer by training, so I'd worked managing software teams.

So, whilst we were delivering project managers and business analysts to clients, you know, my background's managing developers and testers and things like that. And we had an opportunity with this new technology. Suncorp were a very early adopter of this technology back in 2007, and I could see the nature of the delivery was not all about the best technical skills because no one had delivered in the technology before, it was going to be about people who understood the software delivery process, the lifecycle, and managed it, because I'd seen the problem, business problem before in a previous life. So, I kind of knew what was coming even if a client didn’t, and so that technology now across general and home and motor insurance, probably goes through about 30 to 35% of the global systems around the world. So, it's just grown and we've been there from the start. So, we know it very, very well, and we've had to establish ourselves as being seen as a credible partner because you know, the tier ones can tend to own that space. So, we've had to fight hard to differentiate ourselves from those people and provide a different path to market. Which we're still doing, you know, it's still a battle.

Sean: [00:09:11] Yeah. Yeah, that makes a lot of sense. Given, Chris you've got so many different you know, the transformational moments on this journey. So, could you just give the audience a quick… using whatever metrics you like, whether that's revenue or customer numbers or employee numbers, or whatever's relevant for you? I guess a sense of the scale and the timeline, so whether that's, you know, if you go back five years to now, like what would you use to represent the changes in your business?

Chris: [00:09:36] Yeah… 2005, as you mentioned at the start. And we had some good growth early because, and remember that the, the type of people, we were charging out a premium people, so that helps the revenue numbers a bit. And we grew pretty fast to about 10-12 million by about 2009, and we had this Guidewire business starting to build, and we'd gone through a process of how we set that up. So, that by 2013-14, you know, we were doing north of 20 million and we actually grew towards 30 million by about 2014. So, we grew pretty fast.

The thing was that for us though that we, the systems didn't grow with it, our maturity as business people didn't have grown with it. And so, we probably didn't know what we didn't know, and you know, then we had our, we ended up concentrated in one particular client, a big project ended and it all just chopped away and all of a sudden, and we got through the GFC fine, but we had our coming of age or whatever the right term is a few years later. And so, we went from 30 back to 20 and we've had to rebuild that back out from about 2015 onwards. And you know, that's been hard, and we can talk about services, businesses, and cashflow and what that means. And some of the challenges with that. But we've grown that back out to about 40 million as in the last 12 months or what have we gone backwards a little bit of COVID, that's par for the course, but what we've been able to do is grow gross margin and look at the other metrics because I think we, as business owners, we can get sucked in by the revenue and what it means and you know, you've got to have the resources and the capacity to grow, it's not just about having a good idea, and that's I think one of the key learnings it's, you know, ideas are cheap, execution is expensive. And so, you know, we're at that point now with a profile in front of us that looks good again, aspirations to grow larger as well though what we're using to measure that is probably different from when we started. And, yeah.

Sean: [00:12:11] Yep. And so, what about the system? Tell me about that you've alluded to it a few times in that conversation. Tell me more about the systems and processes. and how were they holding you back?

Chris: [00:12:25] Yeah, it's interesting. Back in 2005, I actually wanted to set up a fully cloud-based system business in 2005. I didn't want any servers, any computers and we're successful. We were customer number 17 for Salesforce in Australia, and I automated it left, right and centre. I did some amazing stuff and I can go through the lesson there with you on that one though. Our challenge was there was no cloud-based accounting systems back then. So, we ended up with a probably a small to medium accounting system that we're still constrained with and trying to migrate away from 15 years later. And that was a big inhibitor to us because it introduced complexity in the handling process.

And the other thing, you know, we had a good CRM. We had the accounting system, didn't integrate, probably didn't recognise that they needed to. And in some ways they didn't, and so we've ended up like a lot of SMEs where we've now got different systems that are good for what they do, but how do you bring them together? And the integration challenges are difficult one because it's not cheap. You know, you can go and get a consulting organisation to come and do stuff you know, you pay 20 or 30 grand, but in reality, from a technology services perspective, 20-30 grand, doesn't buy you very much, nor does 40, nor does 50. And so, you end up living with systems that don't quite do what they need to do. And that then inhibits because people make decisions in isolation. And the other thing that we probably did, or I did is that, I built a whiz-banger of an automation early on in Salesforce that could do all sorts of things. But I didn't bring my team with me. My team didn't quite get that and so they would not necessarily use it in the way we'd set it up. So, the whole training and change management was probably something that didn't do as well. You know, I'm a creator and I can see stuff, it's obvious to me, why can't everyone else just get there and probably could have done with some good training support, something like that. Hey, Sean, do you know anyone? Like I kept looking.

Sean: [00:14:47] Don't know anybody does that. Sorry. So if you think about where you're at today from a systems and processes, point of… [Cross Talk]

Chris: [00:15:00] an upgrade, now to get up a new finance system put in place, integrated in with the CRM, which is Salesforce integrated in with the time management and it's still, you know, we've got a vendor in doing the work, you know, maybe we should have done ourselves, but I suppose it's like that, it's like a plumber who's the builder who’s house is always in a state of array because you know, they're working on everyone, else's stuff, not their own. So, it's still something that we've been working through for the last few months. I believe that there's a go live soon. I certainly would like there to be because you know, having data that's consistent is really important. And if you measure the cost of bad data, it's astronomical and it's not astronomically in real cost. It's the time. And I think that's something it's like, what are the things that cost you time in your business? Because that's the hidden cost, because it might be your day light in responding to a tender or you're you miss an opportunity because you couldn't get on top of the information. But as you grow a business, that's very hard to weigh that off because you've got to try it off your own time versus real dollars out the door. And often the real dollars don't exist in the bank account or as is the big problem with a lot of services business. The cash that you have in your business is not in your bank account, it's in your client's bank account or your supplier’s bank account.

Sean: [00:16:33] Yep, absolutely. So, what about from a relationships perspective and sort of business partnerships, you know, we've got numerous, we'd have a volume of people in the community who are either in partnerships that perhaps haven't been set up super well, are considering strategic partnership taking on a business partner, another shareholder who's going to have influence over the journey, and these can be absolutely wonderful, and they can also be incredibly challenging. And some of them work exceptionally well, and some of them don't work well, some of them can destroy a business, some of them can just send it down a different path. What's been your experience of that as you mentioned that has really had the opportunity…

Chris: [00:17:11] Yeah, we started our business, there were three of us originally. I'm the last of the Founders left, my standard line that I give people now is that either makes me incredibly smart or incredibly stupid, time will tell.

And I think, you know, unless you've been around the traps a couple of times, and you've had a few failings on these things, you go in with your eyes open and you have to, you go in expecting the best, and I think that there are things that don't get set up often in the partnerships, you know, the shareholder agreements and what have you. Well, I certainly assumed that we're all on the same page. And I think, you know, we were for quite a while, but people's needs change. You know, business partnership is like a relationship, you need to invest in it and sometimes even with investment, people just have different journeys and different timelines and what they thought they wanted at one point are not the same. You know, we lost our first, one of our Founders after about four or five years because, you know, they just decided, actually, this is not the industry I want to be in here anymore. You know, this is a hard slog. Then we had the other Founder issues because people were going different pathways. And you know, it's really hard because sometimes, you know, for me, I wanted to build a business and that's easy to say, but in reality, building a business often means you've got to let go of control, and you know, not be the king anymore and at that probably could became an issue in the breakup of the second Founder, you know, because it was a job, and the business revolved around them in some ways. And you know, that can be good, you know, makes you feel valuable, it's one of the hardest things I've gone through as well in terms of stepping away from an operation role from the business is losing a sense of identity in some ways and feeling that I'm not valuable anymore. And it's an ego thing, you know, but that's just part of it.

Sean: [00:19:49] And so given your experience on the partnership side, what were the learnings for you from that? And what would be the practical things that people could do to optimise against the challenges in partnership?

Chris: [00:20:00] I think that an agreement is really important, about what constitutes success, what become points along the way, milestones to revisit, and building exit mechanisms, because relationships are important to preserve and you know the challenge, the other thing that is that when you've got two business partners who aren't on the same page, your staff know it straight away.

and it will. You know, I had someone …

Sean: [00:20:39] I feel it, it’s not just they know, they feel it.

Chris: [00:20:42] So it looks like mom and dad aren't in love anymore. And that's really hard to hear, and you know, the kids suffer, and it's such the same analogy. And I think it's about trying to find ways as best you can to recognise that and work out, well, what's best for the business, and I think that's probably a key thing as it comes to me there is about building in mechanisms that people will ultimately agree to disagree, but we'll operate and have measurement things for both all parties about what's best for the business, because if it's done right, the business should live beyond, the people who set it up

Sean: [00:21:38] It's one of those things isn't often when we are starting a company it's very easy to get into a relationship. But of course, these are often the things that get some of the least attention, in the same way as if we're buying a house, we often spend, you know, a tiny, tiny amount of time on something that's a really major investment. We do it on gut-feel. Often happens with a business partnership, right? The documentation, the actual, the discussion and consideration around what people want and how are we going to check in when that changes And, what is that going to mean for people's options to exit and who can they sell to? And all of those elements that really actually have to be sort of fleshed out and revisited. As you said, people’s life change, people take on partners, their families change, their desires evolve.

Chris: [00:22:13] Absolutely, and let’s be honest, a lot of Founders haven’t done this before, you know, they they've worked in a certain context, there's a gap, you know, two people get together, three people get together because they're going to build a better mousetrap than a widget, and own the world. And I think, you know, key learning ultimately is having a better mousetrap, better widget will work for a while when you're on you, it's on your own energy, but you know, that's not what makes businesses succeed in the long term. It's about all the things that come around the outside and, you know, not investing too far in that too early, but just having a roadmap and that takes great maturity and great experience, which, you know, most of us don't have.

I mean, there's a better support mechanism now, there's incubators and accelerators and things like that, which didn't exist when we started. You know, it's just a few blokes having a crack and seeing what could happen and, oh, bugger me, this is working rather nicely, now what do we do? Because you know, it's being successful is often as hard as being, being a failure. Anyway.

Sean: [00:23:29] Chris, I know a lot of business as you mentioned, many first-time Founders don't know what they don't know because they haven't built a business to the next stage before and therefore many of them look around for Advisors or Mentors or Advisory Boards or governance Boards.

And they're quite often, you know, there's a myriad of options and the question is, which is the right one for them. You chose to take on an Advisory Board at a stage of business’s development, why did you do that, and how did it help the business?

Chris: [00:23:56] So, we took Advisory Board at the start of 2018 and we had just finalised the exit of the second Founder. Agreed on the terms, we'd got a new investor to come in and it was a good time. I've got to confess, it wasn't me that had the insight. I was so deep in and I was so weighed under by the stresses of going through that breakup, it was really personally hard to do that. And our CEO said, look, I've been introduced to someone who runs an Advisory Board group, and I think we should have a look at this because if we just keep doing this the same way, trying to come back the same way, you know, that's the definition of insanity, it's become a bit of a term now, but it really is true. And he encouraged us to engage and do it starts off with a survey process about where your businesses, how happy are you with your business? I wasn't very happy with the business. It was, you know, it's been a long journey, and you know, she asked us for feedback at the end of the process. And I said, I think you've completely undersold this, thing has so much potential to help understand where the business owner is, is, and you know, how they're feeling about what happens next. So, we did it really, because it was about trying to say, well, we've got to do, we've got to behave differently. If we really want to achieve what we, where we were the business from a revenue perspective was backward of been seven or eight used before, you know, with the same sort of business planning approach, it'll all come good, the March to June quarter is when all the money will come in. I mean, everyone would be buying their night, off we go and we'll set ourselves up for the following year, and they old hockey stick. And so we got through that process of how to do it, and it was really, it was really solid. And so we picked a Chair, and then from there, we picked a couple of other people. And previously, when we'd had Advisors working with us, it was one person. And the assumption, a lot of us, I think, small businesses, we assume that if we bring in at one person that one can one Consultant and maybe they've worked in a Big Four or whatever that they know what to do. But many of these people haven't actually built a business themselves before, and they give the best advice they can. But it's still on you, which it should be. And so, you end up, in some ways creating a hero, but you're going to listen to everything they say and do everything they say. And I think that heroes, true heroes are very rare. What is better is the conversation, and I think that's, what's so valuable about the Advisory process. It's not about listening to one person telling you what you should do. It's about having a conversation with a group of people who don't have all the answers, but collectively someone will ask the right question about, well, why are we doing this? And what does that make sense? And it, then you go back and make the process. It might be a decision yourself, and for us, I think the discipline of turning up every couple of months with some presentations feeding, you know, delivering that to an Advisory Board so they could ask questions, probably helped as much ourselves because we started to think about what we were doing.

And it was kind of interesting because, you know, I was in the business, you know, obviously CBard with the CEO reporting to me and me running a sales team. The CEO and I sort of got it, but I don't think anyone else did, and you know, it would be, we're not on the same page, we get on fine, but we went on the same page about what was going on. And that process made me realise how frustrating it must be for the CEO to have to manage a Founder because I don't do what people tell me to do, that's how we got here which was great up to a point, but if we were really going to scale, part of it was me getting out of the way, and how do you do that? That's really hard because there's a Founder, someone you're in it, you own the decision, but if someone else does it and you let them go and go, that's all right, it's a learning experience, but it costs you a million bucks. How do you deal with that? So, there's a whole psychology thing that goes on in all of this, but the Advisory Board helped me step away and have the confidence that there was a group asking good questions. And then I could focus on building out a better board process, you know, working on myself, and go to the next level in terms of my role, because it wasn't about me being the hero anymore or being the best of everything. And I've done every job in that business just about, but if we're really going to grow, it's not about me.

Sean: [00:29:04] If I reflect that back to you, I can almost see that it lifted a weight, you know, like your, if you think about work you spend a whole bunch of time answering questions that you've asked yourself about what to do next, what to prioritise, where do you want to be? What should that look like? How do I get there? So, you spend all this time essentially answering… the work is answering the questions that you've asked yourself, and it seems like, you sort of used them Advisory Board to help as one element to help, to take some of that off your shoulders so that weight to get other people to ask high quality questions, maybe questions that you guys weren't thinking about to really challenge and have the opportunity to step back and really consider deeply the answers to some of those questions. and with the high-quality questions, you got some interesting opportunities to kind of reflect on what do we need for priorities around, what do we do, and how is it going to work?

Chris: [00:29:54] Absolutely Sean, I think and this is the other part, because you're absolutely right, in being able to stand and get out, you know, I was probably operating extremely tactically and operationally because, you know, it's a service business, you know, the margins aren't necessarily great.

So, then there is the cashflow issues that go on. So, my solution to fix that was to go harder, more meetings, more relationships, create more opportunity, and some of the opportunity I created was probably rubbish because it was not business, it was high cost of sale. So, in standing back, what it's allowed me to do is learn to ask better questions myself. So where I might be in the weeds dealing with things. Now, my conversations are about what does that mean? And what about that? So, I'm now behaving a hell of a lot more strategically about my business and the executive team have been able to set up all the parameters that allow to know that the short term is the short term, and there's still challenges. Don't get me wrong, but we're not going out the back door tomorrow. You know, it's, you can start to look six and 12 months out. So, what are the steps we can take now for the future whilst we're also doing the things in front of us. So, you know, it's freed my head up.

And the other beautiful thing is it's not about me having all the answers is around that. You know, we've elevated our own executive team, the Advisory Board process. Now working on a governance, the governance board process as well, it's elevated the whole thing, the better conversation.

So as an organisation whereby having a heck of a lot more strategically and out in front, you know, and that's a good place to be. Although the worst thing you can do is start believing your own bullshit. So, pardon me. So, you know, you've got to keep looking around the corner, where's the thing coming because you know, we're not a great big organisation. We're still an organisation that's vulnerable and needs to stay on top of it. And I don't think that ever goes away, unless you, I don’t know, have a different business model from what we've got, but we're working on that.

Sean: [00:32:18] Okay. I've got so many questions for you. One of the things you mentioned before, which I really want to touch on before we move on to some questions about people is, finances. You know, when a business is growing fast, it can be really challenging to figure out how you fund your growth. And you often look at a lot of different structures and options in terms of how you're going to make sure the business has got enough cash and oxygen, or whether you want to use somebody’s capital to acerate growth. How did you fund your growth and what have you learned, and what have you learned about ways to fund your growth in a way that actually worked for you guys?  

Chris: [00:32:50] Yeah, and that will come with the lens which is bit of services lens because you got a product that could be a lot more attractive for outside attracting outside equity investment than a services business, because you know, you're investing in people and you know, what happens if that person leaves or whatever. So, our path has largely been operationally funded. You know, I funded the set-up of the cost of the business, and it's a whole another story about that, but I think you know, a lot of business people, they go; oh, I can see this opportunity. And I'm going to get investment to do this. I need capital.

And I will say that the capital, there are two main forms of capital; there's debt and there's equity. And they both come with strings attached. You know, you've got to, if you bring in an equity, you've got an investor, who's got expectations on the return, on the timeframes. If you bring in debt, you've got a third party which may be a tier one lender, or maybe … and they are going to want their money back and they're going to put covenants on the business to run it. The third part, which a lot of business owners I think neglect because they think it's all about building a better widget. And they measure all on the revenue is operational funding. And by looking and learning about the balance sheet of the business and the cashflow statement, not just the profit and loss and starting to get your head around a couple of key metrics, there's often a lot of change that can be made in the business to free up what's going on. If I make that practical, if you've got a business that turns over, let's say $3.6 million of revenue a year, and there's 365 days in a year. You're roughly generating $10,000 of sales a day across the 12-months. So, if you can address invoicing terms, address delays between getting invoices out the door. There's a $10,000 a day benefit to a business. Now you can scale it from there. So, understanding some of those numbers is really important because behind each of those numbers, there's a person there's a process or a system, which is a change management exercise. So often you can release funds to grow and invest strategically just by changing some of your internal processes, being a bit smarter about that and investing in yourself.

And I think this is one of the learnings I sort of had as a business owner. I just thought it was about grow the revenue, charge a decent margin. There should be some profit at the end, But, you know, profit is a bit of a story, you know, unless it's in your bank account. So, the only thing that's reality is, is cash.

So how good are you at converting the assets in your business to cash in your business? And that's the sort of thing you need to look at. And sometimes you don't need to grow the revenue to do a much better job of that, and in doing that, you'll free up enough to invest. And that's not to say that debt and equity don't count. But if you do those things, people are more likely to give you debt and equity to fund the stuff you want to fund anyway. So, exactly.

Sean: [00:36:09] And probably on more favourable terms, you know, you've fundamentally got a better business. And I always think about it in terms of a cash conversion cycle or just a really simple terms, you know, the number of days it takes from the day that you spend a dollar going out to get a customer and the day that customer pays you. And if that's, you know, is it 30 days or 60 days, how long does it actually take you to get that money back in the business? Because that dollar coming back into the business is what you've got to help fund the next dollar. And you know just shaving days, you know, days at a time, to your point, it might be just changing your invoice terms. It might be getting some prepayments. It might be splitting up, you know, the way that you receive the payments and when.

Chris: [00:36:46] Absolutely, and on top of that, when you start a business small, you’ve got customers, who if you build, they’ll help you and they'll grow, but as you get bigger, they'll change their invoicing terms. And what tends to happen a lot is that you'll have suppliers who've been with you from the start and you don't do the same to them. So you get this mismatch between what your customers are expecting for you in payment might be 30 days and what you're paying your suppliers, which might be seven days. And all of a sudden, you know, the thing in a services business is you go, where's the cash, you know, I'm making money, but where's the cash. I'll tell you where it is. It's in your customer's bank account and in your supplier's bank account.

Sean: [00:37:37] Yeah. Bit of a challenge, when you're trying to grow the business. From a people perspective, Chris, when you think about the earliest days when you were still, when you sort of the first few roles in the management team, the first few roles where you thought, you know this is beyond me or we need to bring in some bank string or someone at management level. Who was your first key hire and what did they create?

Chris: [00:37:48] It's probably another conversation and I'm not, not a hundred percent sure. We went for finance, which was important, you know, but that was because we as Founders, we invested heavily in culture. And ultimately, and especially in the world we're in today, I think the culture is key because there's a lot of turnover out there in the industry at the moment because there's people who've been locked up behind screens, like we are today who are now got options again. And they want to be involved with companies; companies are hiring again. So, if I had my time, it may well be down the people side and the culture because ultimately, I think there are three parts to a business, it's continually working on the underlying culture of your business.

It's then working on your resilience. So, you can protect against hard times, which is your systems and processes. And then the growth on top of that. And you then have to choose the mix with the resources you have available. I think there are probably more options now where you can outsource certain roles, you know, virtual CFO and things like that. But making sure as you hire more and more people that they're happy and they want to keep working for you. That's critical.

Sean: [00:39:22] So, when you think about, if you had, knowing what you know now, if you had your time over with this business again, what would you do differently this time around?

Chris: [00:39:22] Well, I think the market has changed, so I'm going to dodge the question a little bit because I don’t think we would get the run in the same way, I think there are different ways of doing it, and service businesses are challenging. And you know, I probably, if I had my time again, I would build a partner network earlier. So, not a business partner, but you know, products and services and things like that. And that's actually been one of the key strategies for us to unlock and grow because, well, I think as a service business, you know, we started off going, well, we can do that. Yeah. We can do that. You know, you're only one or two hires away from having a capability to solve a particular problem. In actual fact, the key to our growth, the next phase has been niching up and saying, this is what we do. And this is what we're really good at because then your customers and the market can start to recognise you for your expertise and you engage in, and you're the go-to people for that particular problem and then of course, once you are the go-to person, then they want to use you to solve other problems. We're kind of always coming through the door and, you know, if you think about the way we started the business, we probably showing up and saying; Hey, we've got the best people that can help you solve your problem, in hindsight now, as we've grown and built out a network, we say, actually, we've got a really good solution to your problem, by the way, the delivery of the quality people to do it, just make sure you can have certainty it's going to get done. So, I'd probably come the other way, and make sure that I knew what the real business problem we're solving was because then you can get all involved earlier in the decision-making cycle. And you know, customers are always interested if you're going to help them grow their revenue base. Or cut their expense base in some way, the fact that you do it with great people is just, you know, makes it easier to engage you. So, I do that. We've invested a lot in the last couple years about building out technologies that we can work with and then being able to piece together solutions so that we can create ecosystems if you like of solutions. So, we can go to customers say, look, this is the sort of problem we see that you've got and here are the different ways we can piece this together, by the way, we'll end up doing the services work, joining all those things up, but we were able to solve the problem and have a meaningful conversation through the door. And the other thing about partners is that they become lead generation for you because when you start building up a direct Salesforce, it gets expensive really fast. So, if you can have ways of bringing leads through the door, that come to you, then you start to get rid of the cost of sale. And that's the stuff that kills service business because services business is ultimately about, you know, time build and all those sorts of things there.

Sean: [00:42:37] Yep. Yep. Love that. From the customer first, from the customer’s problem backwards. Yeah. What's the real problem. Not what do we have and who can we sell it to? What's the real problem that's going on here and how do we build a solution around it? Whether that's us doing everything or whether that's us bringing in partners.

Chris: [00:42:40] And I think there is real credibility in saying we don't do everything, but I'll tell you what we can bring bunch of other people to the table. You know, sometimes the…

Sean: [00:42:45] Yeah. The customer just wants their problem solved. So, you know, as long as I got somebody capable of bringing the pieces of the solution together, I don’t always have to supply the whole solution, I love that. What was the one of the biggest mistakes that you made, and what did they almost cost you and what learnings did you take forward from that?

Chris: [00:43:12] I made lots of mistakes, and I think and it's hard because you can look at them and say, and go we shouldn’t have done that, but if you've never done it before, how do you know? And you've kind of, you're having a go and you kind of got to do that experiment. I think it's about, you know, being able to back out early. I think that, I probably, as a business owner, I didn't grow up enough, and I've still got this to some degree. I'm the guy that likes to be liked and I like to be around other people. And so, making the hard decisions in the interest of the business, I probably took too long to learn some of those lessons because you can't be a nice guy and help 80% of the business if the whole business is out of business. And that was, you know, when times got tough, we probably didn't act fast enough. You can look at that as a weakness, but you know, I've always wanted to believe in people and because our business is about people. So, it was a mistake, it was a learning, but I'm not sure, you know, that it was necessarily the wrong thing to do because people ultimately knew that we cared.

Sean: [00:44:54] So when you think about the future, then take me out to the future. What does the business look like in three years from your perspective?

Chris: [00:44:57] Yeah, I think for us is, you know, we're starting to reimagine what's possible, and it's ironic because 15 years ago I came from building product and I built products for other people. And so, I was waiting for the great idea of the product I was going to build, but they didn't have any of the, you know, the start-up incubators and things like that. And I thought, well, if I build a product, I know how to build good product, but I've worked out that it's not about the best products, best sales, marketing, distribution. And so I didn't have any of those skills at the time. I was a people manager of software. So, I thought what I am good at is I'm good at people. I'm good at people around technology. So, we'll build a services business and we did that. And my view at the time was we'd build deep enough pockets to generate the cashflow to go build a product and you know, went away from that. So, if I look at what we look like in three years. I think we're kind of back to that because we built up by niching up, we're actually able to identify where are the real problems are in the market and solve that. And we can, now we've got the capability to build some of those solutions because we've got deep expertise, we're in a better position to go out and attract investment capital. So, I think in three years’ time, you'll see our business with some products in its portfolio, because we got really, really good at a few things and were able to see where the problem wasn't solved in the market.

Sean: [00:46:30] It's a whole process of learning to say no, isn't it almost more than that you say yes to everything at the start, but then at some point you've got to start saying, no, we're not going to do that. No, we can't do that. No, that's not what we do. I love that. Chris. I would like to ask you something that I ask every guest and it's called ‘Above All Else’. I want you to imagine for a moment. I mean, you've been incredibly successful and you've been running this business for a, you know, a solid period of time. You've learned a hell of a lot of your journey. So, I want you to imagine for a moment, go out into the future and imagine that you're in your sort of yearning years, you've achieved all you wanted in your business career, you've started as many companies as you wanted, you created all the value in the world that you wanted, you're probably not running as fast anymore, but you still got all this sort of wealth of wisdom in that mind of yours, and one day you get a call from the CEO of the world's largest global community, all first-time Founders, they're all running small businesses. They're all probably 20 people, sub 10 mil, something like that. They're all trying to scale to the next stage, they're curious and hungry and she offers you all of single, once in a lifetime opportunity to share your wisdom with a small business owners across the world. And she asks you for your three above all else's and she asks you to finish the sentence, “above all else the three things you've got to get right as a Founder, if you want to scale are…”?

Chris: [00:47:47] One, play the long game, and invest in people and help people even if there is no immediate benefit to you.

Sean: [00:48:13] Beautiful. I love that. Thank you very much, Chris. You know, Chris, I'd like to acknowledge you for the humility that you've shown on this journey because you've had to go through a lot, you've had periods of time where you probably thought you were mastering the world and then, you know you’ve had a quick sort of rap across the knuckles by the industry or the market or finances or customers and, you know, you had to take some real setbacks. You've had some challenges on, from a partnership perspective and you really have to look at yourself and what are the business need and where do I go wrong? Where did I read things incorrectly? And over time you have learned to ask yourself some really hard questions about, you know, how do I get myself out of the way to actually to put my ego aside and think about what’s best for the company, not what’s best for me, and look at the results of that. So, I’d really like to acknowledge for the way you showed up on this journey, sharing that insight with our community. How can people get in touch with you or follow at what you are doing?

Chris: [00:48:51] Well, I'm on LinkedIn. So, you know, search for Chris Eldridge 4Impact. I run a website called www.businessbalancesheet.com.au, which is really about trying to some of the financial tools and you know, for me as a business owner, being able to stand back and measure my own business.

And I found some ways to do that, which I think are useful to other people, you know, I've got a lovely book that just tries to teach people about the financial statement, because I think you know, this is poorly done and this information is not, not widely available enough. And the finances will underpin everything you do. It's not the only thing you do, but it tells you where the problems are often and what you know, where you should be asking questions. So, you can have a look at that side as well. Which I can share the links with you, Sean, and you can put those up.

Sean: [00:50:04] I love that. Yes, please do. If you send those to us, Chris, we'll make sure those get into the show notes. Well, folks, I hope you've enjoyed the show today. Huge thanks to our guest, Chris Eldridge from 4Impact, really appreciate everything you've done for us, Chris. And we look forward to staying in touch and hearing from you more in the future. A few things before we go, folks, if you've got some value from what you'd heard today, we'd greatly appreciate it if you could leave us a review on Apple Podcasts, it certainly means a lot to me, but it also means a lot to the team behind the scenes who put this together and get a huge kick out of it. And it also helps to get the podcast into the hands of more people like yourself. If you head to our website, www.ScaleUpsPodcast.com, you'll find the show notes there and the links there. And if you register your email on the site, you'll be the first to know when episodes are about to drop before the rest of the world, and you'll also get first access rights to free tools and downloads and templates that we'll be putting up there to help you as you scale up. If you have any questions about scaling up in your own business that you'd like myself or a guest to tackle, you can just jump on the website, click on the Speakpipe button on the right-hand side of the site.

And just leave us an audio message with your question straight from your phone. If you are more of a social being, you can find us on all the socials @scaleupspodcast on your favourite platform, LinkedIn, Twitter, Facebook, Instagram or you can watch the full version of this podcast on YouTube if you prefer video. But finally, just before you go, just remember. The only thing that can guarantee that you won't scale, is giving up so, stay unshakable in your faith that you’ll get there, and always remain flexible in your approach. You’ve been listening to ScaleUps Podcast, I’m Sean Steele, look forward to speak with you next week. Have a great evening.

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