SIX MONTHS into a graduate scheme with a subsidiary of the HSBC banking group,
Elizabeth Gooch, aged 18, had no qualms about telling her employers what she
thought of the programme. “It’s extremely boring,” she said. “I want to
leave.”
Gooch had joined straight from school, yet wangled a place on the graduate
scheme. Her employers thought enough of her to transfer her to a team that
was working on productivity improvement. Gooch loved it. After completing
the 12-month placement, she left to join a consultancy that helped large
firms find better ways of using their staff.
But Gooch was restless and became increasingly frustrated. “It was clear that
coming up with measures saying someone is this productive or that productive
is completely inaccurate,” she said. “I was convinced there had to be a
better way.”
In 1988, she became an independent consultant, registering her company as EG
Consulting with £1 after securing her first contract. She borrowed £1,000
from friends and family and lived off credit cards while she built up the
business.
Despite a turnover of £700,000 in her first year, Gooch was unable to secure a
loan from any bank. “The banks said, ‘who are you to think, aged 26, that
you can advise financial-services firms?’ I was told to go away and come
back when I had a proper business plan.”
Undeterred, Gooch began acting on her ideas to make performance-improvement
consulting more effective. One problem was the amount of information that
companies and consultancies had to gather and make sense of. So Gooch set
about designing software that would collate the information. “You needed to
gather information about all the factors that affected performance, which
involved ringing HR, maybe getting something from the payroll or the line
managers. The information needed was all over the place,” she said. “That’s
where the idea for the software came from.” Gooch launched the new software,
called Operational Intelligence, in 1993, employing six staff and several
contract workers. Its sales reached £1m.
“At this point, we were very much a lifestyle business,” said Gooch. “If I
wanted a conservatory or something we would do more business and if I took a
holiday we would turn over less. It was very much dependent on what I wanted
to do.”
In 2000 Gooch met her current chairman, Rodney Baker-Bates, who suggested the
firm should focus on the software rather than on other consultancy work. The
business was renamed EG Solutions and its turnover grew 28% a year until
2005 when, in need of further capital and keen to increase turnover beyond
£4.2m, Gooch decided to float on the Alternative Investment Market.
“We had two options really - venture capital or flotation,” she said. “I liked
the float model where you had several institutional investors with a range
of views and advice rather than a venture-capital investor with a large
stake in the business.”
On flotation, the firm’s strong record of growth won it favourable reviews
from brokers. Investors piled in and the share price soared, said Gooch.
However, the euphoria did not last. In 2006, EG Solutions failed to meet its
sales targets by £700,000 and posted losses of more than £800,000 in 2007.
The investors were furious.
“I had really personal attacks from analysts and shareholders alike. They told
me they had never seen anything so bad and that the business would never
recover. I took it all very personally.” Gooch admits that she took her eye
off the UK market in pursuit of new business in South Africa and the
Netherlands in a bid to meet ambitious growth targets. Determined to get the
company back on track, she began work on reducing costs, which was not easy.
“Customer satisfaction is what keeps this business going,” she said. “I
couldn’t cut any corners. I also had to take people out of the business,
which was painful.”
Gooch managed to cut costs by £1.2m, returning the business to a pretax profit
of £50,000 in the six months to the end of July, as she had promised
investors. Her plan for next year is to boost sales by 20% in new markets in
South Africa, India and Denmark, she said.
She does not regret her decision to float the company, but rushing into the
process was a mistake, she said. “Flotation gives a public face to your
business and access to finance that is so often key to development. But
there needs to be a lot more attention to strategy.”
A dogged refusal to give up kept her going in the tough times, she said.
“Persevere and never see anything as a failure. Look at what you can learn
from something that does not go the way you want.
“It’s all about attitude. I do not believe in failure. I have needed sheer
determination - although my shareholders would probably describe it as
stubbornness.”
- Rachel Bridge’s third book, You Can Do It Too - The 20 Essential Things
Every Budding Entrepreneur Should Know, is published by Kogan Page and is
available from The Sunday Times Books First on 0870 165 8585 or at timesonline.co.uk/booksfirst
, priced £14.99
