A key question for the owner of a small, rural business: “Do I have the ability and desire to scale? To push for significant growth, would I have to make a big investment and question the ethos that I started with in the first place: do I really want to grow beyond a lifestyle business that pays a reasonable income?”
That perspective on the dilemma is offered by Paul Grimster, managing director of Angelfish Software, who founded the business in 2007 to provide a property management and online booking system for B&Bs and small hotels, as well as websites for business in general.
“When I started the business, a lot of guest house owners were not business people; they were typically aged over fifty, not very tech savvy and they ran their businesses using spreadsheets, Word documents and paper diaries,” he explains. “I felt there was an opportunity for software to replace all that and help them do things like work out their finances and occupancy more easily. They would have been daunted by the cost and complexity of heavyweight solutions.
“What would normally happen before is that they would have a system for booking and then one for front of house to manage the guests, and then one for billing, and the packages wouldn’t ‘talk’ to each other. But we integrate all of those requirements into one, which also gives the customer at a B&B a better experience. And a B&B owner can easily see what their profit was last week, or keep notes of a customer’s allergies.
Grimster’s ambition at the outset was primarily to make a comfortable living doing what he was good at. “Knowing the bed and breakfast sector I had intuition as to what owners would want and I could combine that with my software expertise and make a niche market for my business,” he explains. “I’m not massively motivated by fast cars and big houses but it’s good to know that every penny you’re bringing in is because of your own effort.”
Remaining small, he says, means Angelfish have a low cost base which is reflected in what they charge, and can provide a single point of contact who is working on a customer’s project. Not only do Angelfish customers tend to be long term, but even when a bed and breakfast is sold, the new owners usually take over the existing booking software. And most new business tends to come from existing clients talking to their peers. “We get a B&B client in one town and before we know it, we have five there because they speak to each other,” says Grimster.
Is there scope to grow the business by developing more bespoke tools, perhaps for other sectors? “The challenge,” says Grimster, “is that we don’t want to sell more complex systems to customers who haven’t a need for them or don’t have the ability to pay for them.”
Grimster describes himself as risk averse, but as he points out, in some ways being in business is more secure than having a job. “We have two hundred active clients and until recently nobody accounted for more than 10% of income, so the risk is spread,” he says. “Yes, you can lose clients for reasons which are outside of your control, but you can replace them. And you have the chance to sell the business when you decide to retire, which is better than the golden handshake you get, or used to get, after working for forty years for a big company.”
He accepts that a “conservative” attitude to money is a factor which might mitigate against growth in the meantime. “When I play Monopoly I can’t bring myself to part with cash and at the end of the game my wife has all the property!” he laughs. “In real life I have never borrowed money except to buy a house. The logical part of my brain knows that companies can expand by borrowing, but it cuts both ways. If things go wrong, debt can leave you in a heap.
“You have to ask yourself what you want out of life. I originally planned to bring in other people to gradually increase my income, feeling that having more employees can be rewarding and a way of generating wealth. But now, that step up to having to pay a bigger wage bill regardless of turnover seems quite daunting. I have heard about business owners who end up working work twice as hard for the same net income.”
That’s maybe a reason why some smaller rural firms take on family or friends, and maybe on a less formal basis in terms of hours, he muses. “It is definitely not nepotism; the owners are often harder on family members than anyone else. But it would be difficult for me to go from a situation where the other person in the business is my sister – who I know is loyal – to hiring people who will not be overly concerned about my interests or my mental health.”
And Grimster is also aware that his rural location means there is a smaller talent pool of developers, compared to companies in an urban environment, especially those with a university close by. “One of the issues of our location is that though it’s a nice place to bring up children, it’s more difficult to persuade younger people to move here,” he says. “It’s certainly not ideal for a young, hungry programmer. A guy who was studying maths at Cambridge did a project for us and he would have been ideal to take on the technical work so that I could have got out on the road to promote the business. But of course after his degree, he went off to the city.” Grimster himself graduated from Oxford.
Not surprisingly, he finds himself ‘living’ the old issue that as a consequence of constantly being in the business, a small company owner doesn’t have time to work on it. “I enjoy being at the coalface but I rarely have time to think about how to take the business forward,” he says. “It only takes one query per client per day to tie me up full time. Perhaps an entrepreneur has more time to work outside of the day-to-day, but I see myself more as a technician than an entrepreneur.”
His sister, Caroline, who looks after the sales and marketing, comments: “We are very aware that the business is tied up with Paul in terms of skill set. We might be able to find someone to come in and do what I do, but the business would retire with Paul if we weren’t able to replace him.”
Grimster chose his rural location for the business simply because that’s where he lived. “An urban location would at least double my costs,” he feels. “With the internet, London is no more remote than Athens or Berlin.
And in any case, most of his clients are also rural because of the nature of B&B, although they’re far from local since they range from Scotland to Cornwall. “Businesses might not have much choice in terms of IT resource because of where they are based,” says Grimster, “so they tend to look online and then they find us.”