By Howard Pepper, Managing Director, Momentum Broker Solutions
Having spent my entire career in the corporate world, a chance meeting with a former colleague led to thoughts of a more entrepreneurial venture……
I have had the great benefit of working for twenty years within a highly sophisticated global business, crammed full of very smart people, followed by five years in a business focused on growth by acquisition, working with a lot of people who had successfully built their own business. When the opportunity arose to strike out with a new venture the time felt right and my education felt complete. Turns out I still had a lot to learn, but I had a good network within the industry and people I could rely on to provide help and support so I went for it.
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The plan itself was to provide broking and support services for independent and start-up insurance brokers.
It was clear from many years in the business that the most successful insurance brokerages are driven by individuals with a strong client and sales focus. Insurance is heavily regulated and the last thing they want is to get bogged down with administration – compliance, systems, client money, agency management etc. Broking is a combination of art and science, requiring dedication and deep knowledge to get the right products at the right price for clients. We knew that if we took all this away you would have a happy insurance broker (our partner) who can focus all of their time on clients and building their business.
Making our partners successful was our aim – after all their success was our success.
Our idea was not unique. This is a dominant model in the IFA world and in general insurance in other countries, Australia and Canada to name two. Yet in the UK there was only one business dedicated to providing this service. The market was wide open for a new business to take advantage of a latent need and lack of competition.
I didn’t want to start from scratch – too slow – so finding an investor who would be prepared to provide funding for a new venture was important. Although personally the timing was great, economically the tide was in the wrong direction – 2010 was not the best time to raise finance for a modest start-up in the financial services sector. Nonetheless, I was introduced to an “angel investor” in the engineering industry. Pitching for funding was interesting; turning your own belief in to a well-articulated, properly documented plan, with comprehensive financial analysis and well thought through objectives was a huge task but a very valuable process. You never really know if your plan will work but writing it down and challenging every bit of it certainly gives you a different perspective. They liked the idea and although it was not a world they knew anything about, they were comfortable that we would be worth investing in and were fantastically supportive.
The chicken and the egg
Funding in place, we faced an even larger challenge. Before you can build your business you need to be authorised. Before you are authorised you need to have built your business. Our business model was not cheap and there are many barriers to entry into the insurance broking field – a fact our business model relied upon in many ways! The regulation process is no picnic. There are no guarantees and the timing is completely out of your hands.
Constructing the core team was massively important to our success. I’ve had the benefit of working with very talented people in the past and, thankfully, some were prepared to take a leap of faith and join a start-up business, which had no income and not even in a position to trade. Looking back I appreciate how lucky I was to be able to attract the support I needed.
We knew we would need a first-rate trading platform which would enable us and our partners to operate highly efficiently and to take advantage of current technology. Expensive but essential if we were to give our members the edge in the marketplace.
So, we were then in the unenviable position of paying salaries purchasing an IT platform and spending investors and our own money with no revenue. Four months later we finally got our approval from the FSA (now the FCA) and in December of 2010 were able to issue our first invoice.
Of course this is only the start of the journey. Building our brand getting our message out and attracting members in the early years was challenging. We were fortunate that a number of individuals quickly brought in to the concept and we attracted some very smart people.
We grew our membership steadily and our partners were growing their businesses – some quite dramatically. As our revenue was completely aligned to how successful our members were, we quickly found ourselves in a strong growth position. We put in additional investment in year two to fund our expansion and as cash-flow became a little tight, the Directors made personal loans to the business.
After three years of trading we were close to breaking even – not quite in line with the plan but a great start – and in the fourth year we made our first profit. As we come to the end of our fifth year we are making a good return. We expect to repay the investment over the next two years or so, our revenue is in excess of £1m and we have grown on average at 40% per year.
We have a great bunch of partners who are rapidly growing their businesses; added an in-house marketing team to provide them with even greater levels of support and constantly looking at ways to further improve what we do for them. Our team is now 25 strong, we have a positive culture, everyone knows that our partners rely on us for their own livelihoods and going the extra mile is just what we do.
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It feels like we are still at the beginning; there is much left to do and a great opportunity to grow. The excitement of starting a business has not diminished and although we face a new set of challenges every day, the corporate world now seems like another universe…
The lessons learnt
There are many but among these, here are some of my main takeaways:-
In a small business you have to be prepared to do everything – that is fine, assembling desks can be fun!
Focus on quality and the numbers will follow, in the early days we jumped in to the unknown. We know a bit better now.
Our members are our clients – each has a choice, if it doesn’t work for either it’s all right to say goodbye.
You will make mistakes. That’s OK, everyone does – we try not to make the same mistake twice.
Work with people who share your values, one of the great privileges of starting your own business is you get to choose who to work with – don’t waste it.
Always look for ways to be better. There are times when you think you have got it right – you haven’t, you never will, so keep pushing yourself.
Celebrate success learn from failure. It’s all about the team. Do your best to make it everyone’s success.
Five years is a short time in business, we have made a great start and the future is looking good but we are far from complacent.[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]