E170: Tim Loughlin

Expert Advice on Finance, Investment, Due Diligence and Market Trends

tim loughlin black and white headshot

Podcast Overview

Money, money, money. A topic people love to hate. You can’t argue with the simple fact, sharp crisp cash makes the world go round. 

Cash flow is the lifeblood of any business, the rhythmic pulse that keeps its heart beating strong. It’s not just about the money in the bank; it’s the ebb and flow of financial vitality that determines a company’s resilience and potential for growth. 

Positive cash flow ensures that bills are paid, employees are compensated and opportunities for investment can be seized.

Effective cash flow management involves a delicate dance between revenue generation, expense control and strategic financial planning. It’s the conductor orchestrating the financial symphony that allows a business to not only survive but thrive in the ever-changing landscape of eCommerce.

eCom@One Presents:

Tim Loughlin

In this episode, Tim Loughlin, Chief Financial Officer at Salesfire, delves deep into the world of finance and business management. As a Commercial CFO working in the SaaS arena with fast growing companies, he has a wealth of experience that he shares with our listeners. 

From the daily habit of checking your bank account before making a cup of tea, to the importance of cash flow management and the impact of interest rate changes, Richard and Tim share valuable insights for business owners and managers.

They discuss the challenges and strategies of international expansion, the significance of benchmarking, and offer expert advice on metrics for analysing company performance and navigating market fluctuations. They also explore the dynamics of seeking investment or selling a business, emphasising the importance of due diligence and financial metrics.

This episode is packed with valuable information for anyone in the world of eCommerce. With years in accounting, investment and finance, Tim is more than qualified to share his advice on money with our listeners. So sit back, relax, and get ready to learn from the best in the industry!

Topics Covered

00:05 – Tim’s history of working in technology and finance. From an internet startup to private equity to his current role as CFO of Salesfire 

09:42 – Tips for scaling a business from £1 to £20 million

12:58 – Software offers competitive advantage in pricing and profit 

14:08 – Private equity background drives revenue growth and profitability. Customer retention and gross retention are key metrics. Aiming for 85% customer retention is ideal

17:32 – US firms seeking quality acquisitions in Europe for profitability, not just revenue growth

20:57 – When to seek investment or sell your business 

24:46 – Due diligence for buyers or investors

27:02 – Importance of keeping signed contracts for business support

32:19 – Planning, strategy, and seeking expert advice

33:46 – Benchmarking provides comfort and perspective on statistics for retailers

38:28 -Transactional sales and global expansion can be straightforward. But expanding to enterprise level requires US establishment and careful modeling of investment

43:28 – Book recommendation: “Operation Mayhem” by Steve Haney, MC – exciting read about a platoon’s daring mission in Sierra Leone

Richard Hill [00:00:04]:
Hi there. I'm Richard Hill, the host of eCom@One, and welcome to episode 170. I need to a 170. How did that happen? Happy New Year to you all. In this episode, I host Tim Loughlin, the CFO of Salespire. Quite an apt episode for this time of year, where we step through all things metrics and the things that you need to be measuring within your store on your store's finances to have a successful 2024. And we discuss the appetite right now for m and a, how to maximize your valuation and potentially steer you away from some of the hurdles when it comes to due diligence when you're looking to sell and maximise evaluations in your ecommerce store. And, of course, so much more in this episode.

Richard Hill [00:00:44]:
If you enjoyed this episode, please subscribe or follow wherever you listen to this episode. So you'll always be the 1st to know when a new episode is released now. Let's head over to this fantastic episode. Hey, Tim. How are you doing?

Tim Loughlin [00:00:59]:
Good morning, Richard. I'm very well. Thank you. Great. Great. Well, thanks for coming

Richard Hill [00:01:03]:
on the show. Now last time I saw you, we were playing a shocking 18 holes of golf, from about 6 weeks ago.

Tim Loughlin [00:01:10]:
I'm so

Richard Hill [00:01:12]:
Impossibly the worst rain I've encountered for about 3 years, but we plowed on the worst goal. I think there was a rumor that our team actually won, so I think somehow we may be that one point in Well, thanks for coming on the show.

Tim Loughlin [00:01:27]:
Thank you. Pat Thank you for asking.

Richard Hill [00:01:29]:
Looking for no problem at all. Looking forward to, talking all things finance, which I think is quite apt for this time of year. But I think before we do, I think it'd be great for you to jump in and introduce yourself to our listeners and how you got into the world of finance and ecommerce.

Tim Loughlin [00:01:43]:
Yep. So, my name's Tim Loughlin. I'm a chartered accountant of many years standing. So I originally Qualified with, a Dickensian sounding field called Spicer and Pegler that then became, Deloitte. So is Deloitte's lead office in 19 91. I haven't been tired, but, I then took a career in industry and have been through numerous sectors. Probably my first role in industry is with, in retail with Empire Stores Group Became Lara Doot. And it's interesting in the sense that I think those mail order catalogs, they had the Internet sewn up, but they didn't realize it in in the day in 1991.

Tim Loughlin [00:02:28]:
And, yeah, very clear, really focusing on technology. I worked for an Internet startup in 2000 It was related to Time Computers, if you remember them. I remember it very well. Well, Time Computers, I work very closely with We're now behind it, and, Tahir had start got that business, the 300,000,000 turnover when he was about 24. So it was an incredible time, but it was a lot of lessons learned in the IT industry from then, really. And then continue, I did 13 years with the firm in Wetherbee, based in Wetherbee, but it was private equity backed called Esteem Holdings. And that was where I spent the majority of my career, and we were an acquisitive IT services company And, left them to in 2016 to take up the sort of the current role I've got now, which is CFO of Salesfire. And it's built on those things of Salesfire, working with entrepreneurs, working in the IT and and retail areas, in particular, ecommerce retail, And most importantly, working with people who are nice to work with.

Tim Loughlin [00:03:38]:
That's the, the key thing I've learned in my career. And, yeah, Salesforce has got all of those things. So, yeah, that's where I am today.

Richard Hill [00:03:47]:
Wow. That's quite a, quite a mix. That takes me back a little bit. The time computer days, that is actually the industry. I'm my, in my previous life sort of thing of preagency and podcasting, computer business. That sort of time's quite a while because That's quite apt, I think, for this time of year. When I when I look back to the computer days in the computer business, I remember it being, you know, in back in, I think, you you know, you're going back two thousand's there. And that's pretty much yeah.

Richard Hill [00:04:13]:
I was probably in the in mid mid of my career there in that industry, and and and you said it's only 300,000,000 that time got too. And, you know, and I remember the the the sort of people we were dealing with. It was tens of millions a year and hundreds of millions a year and the the buyers and the, the Dabs of

Tim Loughlin [00:04:29]:
the World at Ingram Micros. Yeah.

Richard Hill [00:04:32]:
Yeah. That was my that was my world previous, you know, for about 12 years.

Tim Loughlin [00:04:35]:
And And it's my you're gonna remember that. When I started, yeah, nobody had a computer at Deloitte, you know. I remember that that 1 guy had a suitcase size, computer with a screen about that big and, he was a computer on it expert and that's it, he's Computer,

Richard Hill [00:04:53]:
things. No times change. I think that that's really relevant to where I think we should go because I think, you know, back then, you know, it was a newish thing, you know, and it was so much everyone's buying a computer and they're £1,000 of pounds, you know, a couple of grand for a PC, You know, the margins, the money that was been made. But then fast forward how how many years, you know, the margins, I remember, being so horrendous at the at the end. And And if you think and if you think about how many sort of independent retail computer shops are on the high street now, I think I can't count any, you know, in my local town. Maybe 1 or 2, But they've maybe they've maybe pivot pivoted to that service, you know, and b to b, you know, and servicing companies and, you know, and doing, support rather than the sale of the items. Mhmm. So I remember it going from, you know, very, very, very, very lucrative business to very, very tough business overnight.

Richard Hill [00:05:43]:
And now I think, you know, we're sitting here, you know, it's New Year, And, you know, we've we've gone through November, December, which in theory should be a busy sales period for most of our listeners. But the reality, I think, we'll be hitting home quite hard now in terms of bright. It's a new year. You know, what do you think are some of the challenges, the biggest challenge. Do you start?

Tim Loughlin [00:06:05]:
Then the thing is, it all yeah. It all comes back to cash. And it is that point in terms of yeah. That's it. As we lock in terms of, you know, maybe the the challenges that face. The CFO is one of the things that we you're coming out And I think for a CFO at the start of the year, it'll all be about cash. And and it usually is in terms of have I got enough cash headroom? Is my working capital management up to speed? Not how do I get to get my cash in from the customers before I need to pay my Pleaurs. And it's it's always just Yeah.

Tim Loughlin [00:06:39]:
Simple things in a way, but that's the real focus. And it's it's having a a strong approach to cash. And all the successful entrepreneurs I've worked with, they all look at their bank account every day. And, the entrepreneurs I work with now, That's it. They opened the bank again and said, what's this? You know? And I still get questions every day. And Yeah. What's it? It's an online bank. It what's this? So it's keeping that close attention to cash that really makes a difference.

Tim Loughlin [00:07:07]:
So it's a it's Yep. Yeah. Well, let's say it's so think that it is in common with all of the successful entrepreneurs I would. I wonder how many people if

Richard Hill [00:07:16]:
we if we could take a poll right now, which is quite tricky, but if you listen to this podcast and you're a owner, manager, MD, and you've got access to the bank, you know, how many of you wake up And do you check your bank before you make a cup of tea every day?

Tim Loughlin [00:07:32]:
That would be a good poll, actually. That would. There's certainly I think it'll be yeah. Always does it.

Richard Hill [00:07:37]:
Would it be t o t o bank? I think is that that's maybe a LinkedIn poll right there. T o bank in the morning. Yeah. Top of

Tim Loughlin [00:07:43]:
T o bank. I think I am I am bank. It's alright. I'll just check. But again.

Richard Hill [00:07:49]:
But yeah. So in terms of cash flow then, so cash flow, especially this time of Yeah. We know we've got, you know, a few weeks left to the end of the month, and the likelihood is, you know, half that revenue that you pulled in in December, November It's gotta be that that stock's gonna be paid for if it hasn't already fairly soon, maybe end of Jan end of Feb depending on the terms. So in terms of improving specifically cash flow, What's your sort of couple of 2 sort of core things that you would recommend Alice's to look at? One of

Tim Loughlin [00:08:16]:
them's a bit of preparation in that making sure your your actual Terms of trade are appropriate. So when we were in IT services, it was make sure we get paid on 30 day terms, say, And and before we can pay our supplies on 60 day terms. And as long as that works Yeah. It's fair and reasonable for everybody, it's fine. That so it's terms of trade and employing a good credit controller. Those are the 2 top hit. I'd have to say. I would say in terms of terms of trade, it's the standard might be 30.

Tim Loughlin [00:08:50]:
There's nothing wrong with 15 days, and there's nothing wrong with, you know, is it alright immediate payment? It's It's been as reasonable as you can in terms of collections so as to not to defeat a sale, you know, because the salespeople will always say, oh, This customer really likes the service, but can they pay weekly, or can they pay monthly, or can they look. It's an annual subscription. It's a lot easier at a larger company to be an annual subscription for a software service. Yeah. Because It's quite an interesting one

Richard Hill [00:09:19]:
with with that term in ecommerce specific specifically because, obviously, most sales through websites, obviously, you're getting paid straight away. You might have a couple of days delay with the merchant merchant payments coming through. If you're then getting 30 days, you've been paid. You've also gotta be careful. The that that's the trap that I think a lot of merchants can fall into. They've checked that bank. Oh, we've got, you know, that's insert Yeah. A 1,000,000 quid in the bank, but hang on a minute.

Richard Hill [00:09:42]:
That's you owe 1,100,000. So, yeah, actually yeah. So I think it's, any any tips around, you know, I think this I think this is straightforward things. You know? Obviously, Obviously, we're we're talking to a lot of different people here whether they're, you know, they're they're trying to scale from that 1st 1,000,000 to 2,000,000, 2 to 5, and 5 to 10, and 10 to 20. I I think there's some very different things, you know, that you can implement. But let's say you're, you know, a merchant doing, you know, 1 to 2,000,000, in terms of, sort of that cash specifically, you know, around it.

Tim Loughlin [00:10:18]:
Is there anything you recommend around Doing things with bank accounts and having different separate bank accounts for cash. I do think separate bank accounts is a good idea just because Split your current account. Actually, keep as much as you can in the deposit account to, manage the interest that you will get. And with interest rates as they are now, that's the one benefit. We've certainly seen a Yeah. Substantial increase in our return that we were getting. Around. Yeah.

Tim Loughlin [00:10:42]:
Because I think Whilst it's a real pain opening a bank account these days for most peep yeah. If you get to a certain level, the corporate, banking. And I'll Yeah. I will give a plug to Santander. They've been really good, and, my previous bank, which is one of the high street ones. Awesome. And, we were Yeah. We've been able to triple the amount that we get out as a return by switching banks.

Tim Loughlin [00:11:08]:
It's a pain, But it it is worthwhile in keeping your relationship manager on their toes and actually, you know, getting them out to work with you. So, again, they've done very well on that.

Richard Hill [00:11:20]:
I do think, like you say, obviously, interest rates have gone up, which if you're borrowing, obviously, is more challenging. But if you're sitting there, even if it's even if it is supply cash, you know, potentially. I mean, you you would be out there, but you're moving it. But if you're you know, let's just take them, you know, straight 100 k sitting in the bank doing nothing or whatever it may be, 100 k, 500 k, whatever. You know? Put that over a year, 100 k in the bank right now. What you're gonna get you know, obviously, this is gonna change, but you're gonna get, You know, 8,000 or 2 or 3.

Tim Loughlin [00:11:48]:

Richard Hill [00:11:49]:
You know? Or 4 maybe. You if you're pushing somebody else's. Yeah. Or and and whereas, Yeah. Whereas you may be in the habit, pre interest rate changes, what, a year ago say, where, you know, it was inevitable whether it was worth it. Yeah. So now, you know, simple change, online. Open your bank account savings.

Richard Hill [00:12:07]:
Obviously, some of them you gotta be bit careful with because, obviously, it might be like that 30 days where you're not allowed to or there's a penalty, you lose x, y, and z, but, you know, quite quite straightforward and potentially then having separate bank accounts. I think as you alluded to, people wake up, look at the bank account, and then they go, oh, we've got a $100 or a 1,000,000 quid. But the reality is that isn't your money quite often if you're not allocating parts to the tax man, the VAT man, the, you know, supplier.

Tim Loughlin [00:12:31]:
So What's what's generally all about everybody's tax returns? So it's so it's Yeah. Got money there.

Richard Hill [00:12:37]:
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Tim Loughlin [00:12:58]:
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Richard Hill [00:12:58]:
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Richard Hill [00:13:43]:
So what other sort of key metrics would you say you know, when you're analyzing a company, you know, know you, you know, you've worked in in various functions, in various, you know, 300,000,000, you know, plus, you know, Salesfire right now, which I know is, again, we

Tim Loughlin [00:13:57]:
know we know we do

Richard Hill [00:13:57]:
a lot of work with you guys, you know, large company. You know, what sort of metrics are you measuring, Marjorie, that you'd also recommend to our listeners to analyze the financial health of a company? So the

Tim Loughlin [00:14:08]:
the metrics are really, again, driven by, say, my background in private equity. And as you look at the the numbers in any company, The the metrics that are involved and always will be is revenue growth, which where's the business going? Yeah, Profitability is becoming increasingly the most important metric for a lot of large companies. And there were customer retention and and two measures of customer retention, which gets into the bit of the detail, but it's gross retention. How much do you win a customer on a subscription business in, in month 1? How many of those customers have you got left at month 12? And yeah. Yeah. In terms of pounds, it's a percentage people look at that and you need to be about the 85% mark, So you've still got 85% of your customers. Anything above 85%, you're doing really well. Yeah.

Tim Loughlin [00:15:05]:
And then they look at net retention, and net retention says, okay. You had those customers 12 months ago. You've lost this much, but you've also been able to upsell them packages. And that net number, if you're getting towards A 100% or above, you're doing very well. Yeah. So and those metrics, they apply to a great many SaaS businesses. Yeah. And, the profitability one though is the one that's I would say, I missed it 2 years ago.

Tim Loughlin [00:15:37]:
Everybody was just talking about revenue growth. It was purely revenue growth. If you raised investment, You take a couple of £1,000,000 and they say, right. Go on. Spend it. Get it get it out there and spend it on your marketing and advertising. How much can you grow by? And you need to be growing by Yeah. 40% plus.

Tim Loughlin [00:15:53]:
That sort of changed, and I think now in in looking at the sort of general market research, it's saying You need to be generating profits. And you can see there's been lots of those high profile SaaS businesses that have gone bust because they'd achieved revenue growth, But it wasn't sustainable. Yeah. Yeah. And they just didn't have an eye to cash. And so even in the past couple of weeks, we saw the demise of CloudIQ. Now their last set of accounts Yeah. Had said they were hoping to raise 2 and a half million, and, obviously, it didn't come through.

Tim Loughlin [00:16:24]:
But it's one of those where they'd achieved growth, But just couldn't achieve the the cash headroom, and runway on it. Yeah. So yeah. It's Yeah. Tough market mix. Verita have changed this yeah. Yeah. It has.

Tim Loughlin [00:16:37]:
I think for retailers, it's always been a different marketplace. It's It is revenue, but it's revenue that is sustainable, and again, meets those working capital requirements that get your cash in before you have to pay your supplies. Yeah. So yeah. No. That's great. It's a a very different marketplace than it was even just a couple of years ago, I think.

Richard Hill [00:16:57]:
So those so those listeners that are maybe thinking about, you know, either growing their business through acquisition,

Tim Loughlin [00:17:04]:
or obviously selling selling their store.

Richard Hill [00:17:07]:
What's the appetite like at the moment? You know, obviously, you obviously, things have changed this last couple of years in terms of, you know, investors and valuations. Yeah. I think we're saying are a lot more cautious around looking at profits rather than simply just revenue because obviously there can be, you know, a lot of, You know, a lot of could be a nice nice loss behind, you know, 10,000,000, 2,000,000, 50,000,000. You know, revenue is one thing. But what would you say the appetite's like at the moment in the ecommerce space?

Tim Loughlin [00:17:32]:
I think it's still a conservative market, but particularly in the US There's firms that have raised an awful lot of money that, need to find quality horns for it, and they need to grow through acquisition. So that Yeah. I think there's a lot of activity in the US certainly looking towards Europe. The the exchange rate's quite favorable, but the focus is very much on on profitability as opposed to revenue growth as it was in the past. Yeah. So if somebody's down there and as a SaaS business. It's the technology behind it. It's the underlying profitability of the business that if somebody acquired it, what can they make of it that they'll be interested in.

Tim Loughlin [00:18:15]:
From a retailer, it probably still is volume. It's still that one is if you're 5,000,000 revenue, you're gonna get a better valuation than if you're at 3,000,000 revenue. So there's still Yeah. It's still an element of volume to it in terms of the business. Yeah. But, there's, You know, lots of advisers out there that publish some very good market research, so they'll tell you the direction that valuations are going in. And you could Yeah. Yeah, usually get a very good idea before really seeing if he has the right time for you because timing is the secret to all of these things, I think.

Tim Loughlin [00:18:48]:
Isn't it

Richard Hill [00:18:48]:
just yeah. I had I had somebody on the podcast not so long ago, and they they sold their ecom store, sort of, just before COVID hit or just right at the beginning. But then, yeah, but then COVID took he sold it. He he did very well out of it. Then it where it sort of tripled in about 5 months, the business. So if he'd wait if he'd wait in 6 months or so, you know, the valuation, but that's, Yeah. That's the game we play, isn't it? You know?

Tim Loughlin [00:19:13]:
It is. And then We obviously have to say the post COVID bubble would have burst, and then but they said, oh, well, we bought it. Yeah. So it might have got away With not the maximum value, but probably the one that's best for all parties. You don't wanna sell your business and then, see it disappear. I said, I'd I'd Against this this is our revenue. Yeah. The revenue went from, from one Business reseller.

Tim Loughlin [00:19:40]:
We were selling so we were at 30,000,000 revenue, and then in 1 year, it went to 20,000,000 because Oracle Acquired Sun Microsystems. So it it just the the pain for the business afterwards, it it's like, wow. That was a big hit. Yeah. It's a long time ago.

Richard Hill [00:19:56]:
Guys. Yeah. I I mean, I saw that a lot firsthand on the in the going back, you know, the sort of circa 15 years ago when I was very deep in the ecommerce in the ecommerce and, PC space. Obviously, PC is very Yeah. Lots of margin. And then, Literally, it felt like overnight, but it was, you know, a 2 year thing, really. Yes. I remember I remember the same thing.

Richard Hill [00:20:16]:
The validation of my business at a certain time was, You know, it was a very interesting number, shall we say. And then, 18 not not even, I think, a year later, it was not a

Tim Loughlin [00:20:25]:
very pretty picture, you know, at that time. Oh, nothing. These things go in circles, Richard, Don't they? So you you need to oh, yeah. Yeah. I have a view in terms of where you are in the cycle, I think. But it's also one of those way if you've got a sustainable business, You can work through it and it's then you can choose the right time with a bit of preparation as long as you're not tied to a deadline. You know? And if I After exit in 2 years, then you're gonna take what the market's there. So it's just a question of keeping being patient, I suppose, with these things.

Richard Hill [00:20:57]:
I guess the question I would say is when. You know? When, you know, you're sitting there, you know you know, you and you're running a successful business, And, you know, and you're you're in the thick of it, and you love the business. You're doing well. You're riding the wave of, you know, you know, you start if you like a lot of things, they start almost like in a back bedroom, sign a few things, essentially. You know, trying an idea and then fast forward whether that's 2, 3, or 5 years, you do it for £20,000,000 a year or $30,000,000. Let me finish. Jade Ray is quite that good, but, you know, and all of a sudden it's gone from, you know, 1 man band to a 50 headcount and there. And obviously, I guess what I'm driving at is, you know, when is when do people, Like, in terms of getting investment or selling a business, you know, when are what are some of the plateaus or some of the triggers or, you know, what do you see? Obviously, you've been involved with, You're the current business you're in now in terms of investment and obviously in a lot of other businesses.

Richard Hill [00:21:52]:
Voila. What you know, as a as a business owner, you know, I think a lot of some people, they leave Too late and then it's worth nothing, you know, oh, if only I had sold the damn thing or Yeah. Or, you know, they they or they get, you know, did this, you know, they they sort of don't enjoy it anymore, so maybe that's Trivia, or

Tim Loughlin [00:22:08]:
they wanna go from 20,000,000 to 100,000,000, that's that's more challenging without the cash. Yeah. It's it's it's there's There's a lot of motivations behind the the entrepreneur's desire to to exit or to go to the next stage. In one of the businesses I worked in, Very successful entrepreneur, built his business from scratch to, 25,000,000. And But he said, right, the next stage to take it to 50,000,000 means that I'm gonna have to do an IPO or take on an external investor,

Richard Hill [00:22:36]:
And I

Tim Loughlin [00:22:37]:
I don't wanna work with an external investor. I like being my old boss. So he didn't want to be a new boss. Yeah. He's there right there. That was the time to get a management buyout in place, which we did in 2000, yeah, 3, and and move on to the next stage. So that's one, motivation. And then another motivation, it's still a challenge now even for Salesfire.

Tim Loughlin [00:23:01]:
When we took our 2,000,000 investment for Mercia. It was, do we want to book have another person sat on the board? No. Yeah. Should we just Continue bootstrapping the business. Yeah, and, grow more gradually, or should we take the money on board and try and grow a bit faster? It's been the right decision to date money. We are growing faster and we're yep. As long as you really do your homework upon the investor you're going to be working with. Don't take the best offer on the table.

Tim Loughlin [00:23:34]:
Take the one that's the or don't take the highest value offer that's on the table. Take the one that's best for you because these are the people you're gonna be working with and for. Yeah. And it's worked out well for us in terms of that relationship. But I think that every private equity or external investment firm that you work for will talk about relationship, but it actually really is key, in terms of their approach. And, everybody's happy when you're hitting your business plans, but you really want to know what's the relationship gonna be like when you don't hit your business plan. And, Yeah. Yeah.

Tim Loughlin [00:24:08]:
I've been there. I'm not there now. I'm pleased to say it. It's but it's a tough world. And that's why Yeah.

Richard Hill [00:24:13]:
I mean it weird accounts. Yeah. I think that's the thing, isn't it? There's there's a lot of options if you're sitting there thinking, right, I'd like to investment or I want to get out of the business. I wanna sell. I wanna we need a couple of 1,000,000 to to take it to the next step. So, you know, we might Sell a percentage of it. You know? But then when we sell a percentage of it, what's that relationship gonna look like if I'm still in the business? Do I wanna be the other business? You know, more more so, less so. Right? So it's probably getting a feel for what you want as an owner, isn't it? You know, if you wanna That is.

Tim Loughlin [00:24:43]:
You wanna you wanna you wanna exit and sit on the beach, that's One that's one

Richard Hill [00:24:46]:
end of the scale. But, obviously, if you wanna then go from the 50 to the 100 mil, you know, but you need the expertise, you know, and the the the couple of 1,000,000 quid, then that relationship. I guess you could soon that's a key one, isn't it? Because you could it could obviously go very wrong if you've now got Somebody that's got x percent of your business that you you know, there's a lot of friction there or there's some challenges. So, yeah, doing that Due diligence on the people. But I guess going to due diligence, you know, when when when, you know, you're you're at that stage, you know, where You built the valuation, you know, up. You know? Mhmm. Sort of touched on a few things there, you know, building the, you know, the retention, the profitability, the rev the revenue growth, and the right revenue growth and so 4th and, you know, built that, you know, the the processes in the business. What are some of the things in the due diligence stage When that buyer or investor is looking to get involved to either purchase or invest,

Tim Loughlin [00:25:43]:
you know, what are sort of maybe 3 things that our listeners should be aware of in the due diligence stage. The due diligence is is all about proving that you are what you're projecting yourself to be. So it's just saying Yeah. Here's the story. It's a great story. We love it. Yeah. The numbers stack up behind it.

Tim Loughlin [00:26:01]:
So the financial due diligence is I suppose it's all about being prepared. So it's it's it's knowing that these are your key metrics, and you've got all of the data behind it that Somebody can come and look at it and say, yes. That stacks up. We track our contract space every month, and we see what the movements are. So those Gross retention, net retention numbers really genuinely stack up and the revenue growth stats. Yeah? So it's preparation is the is the key part of it. The the the trend these days in terms of acquisitions is to sort of have this a virtual data room where all of the data of the business of the financials are there. All of the data of the contracts are there.

Tim Loughlin [00:26:43]:
So consistency of your contracts with clients is a really important point because Yeah. Somebody buying the business wants it all. These are the legal terms on which you operate. Who do they apply to? Do they apply to everybody? Have you got 1 big customer, or no they've got a different salesperson?

Richard Hill [00:27:01]:
They just they haven't

Tim Loughlin [00:27:02]:
got a contract. Oh, no. They haven't got a contract. So I have it written down somewhere as a signed contract, and keeping that contract keeping a contract database is actually a really helpful thing, You know, into, yeah, whether you do that on your HubSpot or whether you do it to just, you know, a good old filing cabinet. It doesn't really matter as long as you've got something somewhere, where you've got signed an on track that said this supports the business. And yeah. It's it's that preparation phase, and it's having access to that data. I've been able to say to anybody who who wants to look at it, yeah, this is you know, sign up your NDA, And you can have access to this data that supports the story that we're telling you.

Tim Loughlin [00:27:45]:
So I don't think there's anything to be feared other than the price they charge for the better services. You know, it's it's if you do everything that you say you do, it's It's relatively straightforward. You shouldn't get any shots.

Richard Hill [00:28:01]:
Yeah. Yeah. I think that's a fair point is that you you know, in reality, you know, you're on the You've got the shiny website, the shiny brand, and you're saying you're doing x, y, zed. And a set of account a set of accounts can be Tweak, shall we say? You know, and can say one thing, but the reality reality is I like the phrase of where the tide is out, what is the reality I'll tell you if, what you know, are you swimming naked, or are you actually Yeah. You know? Are you swimming without your shorts? It's another day. It is.

Tim Loughlin [00:28:30]:
I mean, you go through the number of big business failures that they've been, and you think, how are they doing? Yeah. I mean, that week there was one called 2 weeks. There was a Holstein business back up there. Yeah. Quiet. So Yeah. Businesses. And we were competing against it.

Tim Loughlin [00:28:44]:
I was thinking, why can't we pay more and build it? And It just was it was pyramid. They were just building and building and got to a point where nobody could then acquire it. It was too big, and they were always hoping for the next reality. And and things like Carillion in the construction industry. You just think they're stretching it all of the time. So I think that's where DD will pull things out if there's you know, if things are out there that that, you're not growing as you should be. But Yeah. That's where the market cycles again look after themselves.

Tim Loughlin [00:29:15]:
The businesses that go bust are the ones that We're pushing it, and then maybe there's a bit of karma there. I suppose that you see Yeah. Go really rapidly and but they don't Yeah. Get the fundamentals in place. So, yeah, that's where yeah. The market has moved to being more conservative and looking for quality businesses, then that's when the good guys should win. That's awesome. So

Richard Hill [00:29:38]:
So in theory right now, those that are maybe, should we say, swimming naked Yes. Yeah. Then that you know, that's obviously gonna be a challenging time for these guys right now. But for those that are, you know, that are invested in their finance function,

Tim Loughlin [00:29:53]:

Richard Hill [00:29:53]:
You know, that are on it on it with their cash flow, but have the you know, obviously, there's a lot more to that, you know, have have their CFO in play, potentially, and they have Here's an interesting one. I know we we sort of semi joked about it before we jumped on camera or talked about it, but, you know, I think, You know, I can attest to since I started paying a lot more for my finance function in my businesses, business has never been so good. But and now, Obviously, there's there's some there's some ups and down.

Tim Loughlin [00:30:21]:
There are.

Richard Hill [00:30:21]:
You know? And I think and, again, I'll

Tim Loughlin [00:30:24]:
go back to my Tyne days of Tyne Computers. Yeah. They did start to hit trouble. You know? It was always, well, we need to close this store. It's not making us any money. And, Tahira would say, well, that's okay, but I need to lose 1 person for the finance team. So it's there's also a a discipline to it. I think also it's as a part of my career since 2016 has been as a portfolio FD.

Tim Loughlin [00:30:51]:
So I've worked with a lot of companies that Can't afford a full time FD, but know that they Yeah. They need some of the skills. And most of it's about just going into the business and Challenging and and looking at what's there and saying, well, which bit can you do better and which bits can't you do? And some of the best finance functions I've got Aren't necessarily very big, but they've got people who really care, and people in, you know, dude, go that extra mile. So I think as well as expense, it's it's it's quality of your mind that's should

Richard Hill [00:31:26]:
but I think it, you Now it goes back to doing the same old thing that you might have been doing for years until, yeah, you've gone from that maybe mindset of, you know, Yeah. You start a business, and then all of a sudden you've got this 20 minute I know it's not quite all of a sudden, but you got this, you guys take a 20,000,000 turnover business.

Tim Loughlin [00:31:42]:

Richard Hill [00:31:43]:
You know? And, yeah, and you're you were the guy that was, you know, back in the day was, you know, logging into the bank and paying all the bills and, you know, and deciding on this, that, and the other. Well, obviously, those days should have well passed if you're doing 20,000,000, but Absolutely. Is then recognizing, you know, and investing and starting, you know, whether that is, you know, taking a, you know, sort of part time for fractional sort of, CFO that's doing x amount of time. Somebody coming in and just shying our light on just Just some of the things we've talked about, you know, whether whether that's just allocating certain cash for different areas of the business, whether that's, you know, forecasting. I think that's a

Tim Loughlin [00:32:17]:
lot of people a lot

Richard Hill [00:32:19]:
of people I think, you know, that I've seen struggle. Just they should really struggle to, you know, set and plan that. You know? So even to plan that next month, it's quite it could be a challenge for some people when they're going from maybe that mil to 2 to 5, and it's like, hang on a minute. You know, mil It's absolutely our 1 year 1 year picture, 3 year plan type conversation, you know, and taking some time out of the business. You know, we we actually just came out of a a full planning day yesterday. You know, not not so much finance yesterday, but more of a, you know, an overriding sort of strategy day. We touched on we went went through the figures for this year, but we did a full day out of the office, you know, off-site, which we do every year or every 6 months we do. But just recognizing that you need to do things like that and then then having conversations with experts like yourself, Just shining a light on certain areas.

Richard Hill [00:33:07]:
And, actually, you know, in 6 months, we could have a real challenge. Well, rather than finding that out in 5 months when it's too late, You guys are just I'm a say, Paul. That's

Tim Loughlin [00:33:16]:
it's it's a different one. In the in the agency world, you talk that you've got, you know, that retained base and and some elements of predictability of it. In the retail space, most retailers will have some seasonality as they'll see at Christmas peaks, 170. Yep. And then other retailers will say, well, hang on. What's the weather been like this month? You know? Is it a good spring? Is it a, is it, you know, warmer than usual? The garden furniture is gonna come out and it's it's gonna sell well. Yeah. And that's one of the one of the great tools that Salesforce has got.

Tim Loughlin [00:33:46]:
It's just benchmarking, and so that the statistics that, you know, the the the ecommerce retailer thinking, well, it was just a rubbish weekend or what a rubbish one. Is it just us or is it everybody? And if you can Yeah. Just have that bit of comfort as I said, actually, that's the market. That's the trend. Yeah. Yeah, it's very helpful just to To give you a bit of that sanity check, and it that fits again to having somebody, as you say, from the outside look and say, your numbers are good, but Across the industry, this is what it looks like. So I'd Yeah. Yeah.

Tim Loughlin [00:34:18]:
That's a great point. That's fine. Advisers in now and again. They're always Business advisers like the the corporate finance firms, they're always keen to come and meet people who are going to be successful businesses. So they'll always, you know, pop in and have a coffee and and, you know, share their their thoughts and wisdom on things, so I think that's well worth keeping in touch with those guys. Yeah. Yeah. I think having yeah.

Tim Loughlin [00:34:43]:
That's a great point around have also having like, if you're talking to your financial person, And, you

Richard Hill [00:34:47]:
know, that they've got potential expertise in your industry to to benchmark against other 8, stores in that industry. You know, going back to the you know, if a certain industry has a dip or you have a dip in in the outdoor area, you know, you sell it on barbecues. And it's the worst summer in on this planet, which I think this summer was one of those almost, I think, compared to last year when it was like he weighed.

Tim Loughlin [00:35:12]:
Probably was.

Richard Hill [00:35:13]:
Yeah. I mean, last last year, we bought everything notes about for the guy. You know, you name it. We got it. I got a nice day. Nice day, Ned. Nice day bed about the size of

Tim Loughlin [00:35:21]:
a flipping house that I've used about 3 hours, to be honest. Yeah. Complete waste of money. But it looks nice.

Richard Hill [00:35:27]:
And then this summer, I think, you know, I bought some charcoal, you know, so I had quite a different, Quite a different pattern in spend, but, obviously, if you're speaking to some you know, your finance function or somebody in that industry and and you know That it's either not just you or, okay, it is just you. It's not just the seasonality. We do engroned and the grim in our promotion Yeah.

Tim Loughlin [00:35:49]:
That says, well, we should we try something else on the website? So I

Richard Hill [00:35:52]:
think that's where it's really helpful, in terms of having that data there. So we're talking about planning. We're talking about forecasting. Now for those that, are looking at that sort of global expansion. You know, I know you guys, you know, are, you know, have got plans for, yeah, to take over the world. Yep. Maybe not quite, but yeah. Yeah.

Richard Hill [00:36:14]:
Yeah. Obviously, I know you a lot of your team been out in the US a lot this year, and I think, you know, well, it's called prize for our listeners, but I have a feeling there'll be a few more of your team out there next year and so forth. So those that are looking at that sort of global expansion, But then tying that back to the finance side of things, you know, what advice would you give to those guys?

Tim Loughlin [00:36:34]:
Well, we we're approaching it. I guess it's one of those where, particularly with international expansion, you can see that the marketplace is there, so the market's attracted. And, you can therefore think, right, we should try this. And it's all about getting a test of what works best. Now everybody had lots of advisers I've spoken to said, I you need to have a, you know, establish an office, 1 or 2 people, get them out there, Make sure it's a senior person and go ahead and do that, but that type of international expansion still will take 2 or 3 years. And I've Been in businesses before whether it be said, alright. We'll we'll open an office in Texas or whatever, and and it just doesn't work unless it's unsupported and it's They're not wholeheartedly invested in it. So we're still at the stage, I would actually say, they're still dipping our toe in the water.

Tim Loughlin [00:37:24]:
We've got some great clients we've won in the US, yeah, it encourages in terms of the expertise. What we've really found is, particularly on the, the SaaS side of things, You can sell from the UK as easily as you can from the US. You don't need an office in Michigan to be able to sell out. Yeah. So to sell somebody. The the, The ecommerce model actually hooked in our favor and that so we're you're seeing some success in the US, but I think what we're actually seeing is On some frustration of mine is that actually you see people overpaying massively for a service. And then, well, why aren't we winning that business? And I look at it and I well, suppose if somebody's paying 40,000 a month for something that we would be charging ten thousand four. They'll say, oh, yours isn't as good.

Tim Loughlin [00:38:11]:
I think yeah. Yeah. It's actually better. But if Yeah. Yeah. You don't believe it in terms of the price because he used Yeah. Being ripped off. And it's that I suppose, challenge of the FDA again is is saying we need to talk to the FDs and say, are you really getting the value for money you think Yeah.

Tim Loughlin [00:38:28]:
So I I would say the transactional sell in the US and global expansion Should be relatively straightforward. The way it gets more enterprise level, that's where it's more of a challenge and you do need the establishment in the US. So I think, the way that we'd model it or I would suggest you model it is you you've got your base case in terms of the business as you're planning forecast, and then you have to have the, the funds and the, the investment decision that says it's worthwhile investing this much money for us to take 2 or 3 years to see it to be realized. But you don't do it in a way that, lots of people raise lots funds and go and build a fancy office and, you know, employ 30 staff and just say, right. We're just gonna do this. They're all in marketing, and then there's There's no profit? Yeah. Yeah. Yeah.

Tim Loughlin [00:39:19]:
So it's Yeah. It's it's having, again, the finance challenge of what's it's gonna cost, what's the return gonna be, and over what period. So I think as long as you're approaching from those simple questions, yeah, it it's the same in the UK, or is it the same in terms of global action? Yeah. Yeah. No.

Richard Hill [00:39:36]:
I like that. I think, you know, the pricing one's an interesting one, isn't it? I think in any any products or service, SaaS, ecom, You know, pricing can be very different and depending on your territory.

Tim Loughlin [00:39:45]:
That's that's You know, one of the ones where it ends up having that, you know, ability to look out in the marketplace and look at, Well, what are competitors charging? And that pricing question, it's it's it is about value. You know? It's a yeah. Or I actually think Yeah. But, development is is becoming you know, the products are very similar out in the marketplace. So it is about Yeah. What are you really getting for your money? And that's where the attendees these businesses should be challenging them.

Richard Hill [00:40:14]:
And I think that that's where listeners. The the the savvy listeners that are with us now. You know, our sponsor for the podcast is pricing, and their dynamic Their dynamic pricing function will enable you to price differently, you know, based on different variables, criteria, location, etcetera. So Little tip for you there, where, you know, obviously, pricing in certain countries is very, very different. You know, different tax literacy.

Tim Loughlin [00:40:38]:
And I think that's where he had a really strong business case there in terms of the solution to our yeah. But but he switched old guys.

Richard Hill [00:40:46]:
So, Tim, it's been an absolute pleasure, but I think before we finally wrap up, I'd be keen to understand if you're willing to share a few more things or things that are on the road map for Salesfire. I know we're working very closely with you guys in this coming year on some new initiatives. But Yep. Anything you could share with our listeners Cool. Around the road map.

Tim Loughlin [00:41:08]:
Conference, remind me of, you know, when it was because, you know, it I know I know it was raining. And and About 3 about 3 and a half ago, wasn't it? Yeah. Back in September, we, we launched our email sequences, solution. Yeah. And really the product development over the next 12 months with Salesfire is all about building out from that email solution into more connected journeys so you can see, Now now which individual users you're targeting and contact more of your users. So from a retailer's perspective, The more accurate and personalized emails you can generate through, you know, customer identification, It really makes more success, in terms of your business. And I think that's really the focus still of Salesfire over the next 12 months is getting Improving the conversion rates on businesses just so you can really drive, you know, personalized selling messages that Mhmm. That work.

Tim Loughlin [00:42:03]:
Mhmm. The more emails you send or the more communications, to be more general, yeah, that are focused to a a buying decision. It's it's gotta be the right thing to do.

Richard Hill [00:42:13]:
And that ties straight back in to that valuation, that retention, that growth in repeat business, that longevity, that lifetime value, which is really, You know, I think, you know, is the key to most ecom stores' success. You know, acquisition is, you know, obviously, that, yeah, you need to invest, but We're getting everybody to then recommend, share, buy again, you know, impress, delight, and the customer turns into

Tim Loughlin [00:42:38]:
a lot. Easier to Use the customer base that you've got, then then go and try and find a new one. So Yeah. Yeah. Next talk.

Richard Hill [00:42:44]:
Look after your customers. It's it's simple, isn't it? Whereas, you know, Burning everything on acquisition, which I know not many people do now, but ultimately, you know you know, we're sitting here at the beginning of the year. You know, what are you doing in your retention, CVO, lifetime value mix? Yeah. I'm sure you I'm sure that's where, you know, where we when you step back over the November, December silly season. Yeah. You're thinking, Yeah. If only we'd increase back basket size by 15% in the last 2 months, what would that now look like, you know, in terms of, our Bottomline. Well, thanks, Tim.

Richard Hill [00:43:21]:
It's been an absolute pleasure. I'd like to finish every episode with a with a book recommendation. Do you have a book to recommend to our listeners?

Tim Loughlin [00:43:28]:
Well, I've I've got a couple. I I can answer this question. Well, the the the series one or or rather one that I just find is book of Operation Mayhem, and it's by Steve Haney, MC. So it's, I suppose you'd call it a tale of Daring Do, But it's all about, a platoon, the Pathfinder's platoon in Sierra Leone in 2007, I think it was. Just a a brilliant read from start to finish. It's just what I was reading. You can't actually believe that a troop of 26 soldiers defeated 3,000 terrorists in the jungle, in the middle of nowhere. It's it's just you read it and it's, I suppose I recommend it because it's a guy from Middlesbrough that, that Webb is in Salesforce.

Tim Loughlin [00:44:18]:
But just, it's just a fascinating read. So that's that's the Wow. That's my serious read. Yeah. And then the other one's Winding the Willows. I love Winding the Willows. But mostly because Hey.

Richard Hill [00:44:29]:

Tim Loughlin [00:44:30]:
It's I've never been able to look at Boris Johnson without thinking that he's toured of Todd Hall. So You'll have to read the you'll have to read the book again to see what it's,

Richard Hill [00:44:40]:
you know, it's left. I'm I'm almost visualizing now. I think I have it. We might have to maybe our our, Our producer can, mock something up about now. Mark Johnson.

Tim Loughlin [00:44:52]:
Toad of Toad Hall.

Richard Hill [00:44:53]:
Let's do it. Ahead of Zoho. Alright. Let's see what happens on the edit.

Tim Loughlin [00:44:57]:
Oh, great. That's all.

Richard Hill [00:44:58]:
Well, thank you, Tim.

Tim Loughlin [00:44:59]:
Talking to you.

Richard Hill [00:45:00]:
Been an absolute pleasure. For those who wanna find out more about you, more about Salesfire, what's the way to do that.

Tim Loughlin [00:45:06]:
Check our website, salesfire.com. And, and there are far more interesting people at Salesfire than me, so I you know, People who actually talk about ecommerce, you know, I only talk about finance. Yeah. Yeah. So so yeah. Check out our website tillspire.com. Thanks, Ted.

Richard Hill [00:45:23]:
It's been an absolute pleasure. Speak to you soon. Alright. If you enjoyed this episode, hit the subscribe or follow button wherever you are listening to this podcast. You're always the first to know when a new episode is released. Have a fantastic day, and I'll see you on the next one.

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