The Business Owner: Ed Molyneux, FreeAgent
The CEO on his journey from "bashing" the credit cards to gaining £8m in funding and why their unique referral scheme was key to success
Founders: Ed Molyneux (CEO), Olly Headey (CTO), Roan Lavery (Product Director)
Proposition: To ‘democratise accounting’ and give freelancers and micro-businesses the best online accounting system and service on the market
Size: 80 employees
How is your business different from what’s already out there?
Our accounting tools are designed with the business owner in mind rather than an accountant. Because Headey, Lavery and I were freelancers and knew just how painful it was to manage our business accounts, we wanted to create a solution that would take the pain out of doing the books.
FreeAgent was designed to put freelancers and small business owners in control of their day-to-day financial management and that’s a mantra we still follow today when we introduce new features into the system.
How did you finance your business?
My co-founders and I ‘bootstrapped’ the company for the first couple of years, working without pay and in our spare time. Luckily Headey and I were working on fairly well-paying freelance contracts at the time and Lavery worked full-time in the day and on FreeAgent at night; however the credit cards did take a pretty serious battering back then.
We raised two rounds of seed funding in 2009, enough for us to work full-time on the business and since then we have gone on to raise over £8m – including our first ever crowdfunding campaign which we recently closed after exceeding our £1m target.
What is the most important thing to keep track of in business and why?
Every business has different metrics which help to align everyone along the right lines, but the only thing you absolutely must watch is cash! If you don’t have a realistic forecast of your cash position for at least the next few months you may well be sleepwalking into a crisis.
What is the biggest day-to-day challenge you face?
Growing a business is hard work and each stage presents new challenges, so you have to be constantly evolving your processes and plans to respond to that. When we first started the business, I liked to get my hands dirty with everything from developing new features, taking calls from customers and promoting the product right through to managing the financial side of the business – but my role in the business has changed dramatically over the past eight years.
The challenge for me now is keeping my CEO hat on and concentrating on the high level decision-making and running of the business, rather than each individual area. It’s been tough to take a step back and delegate responsibilities, but thankfully we’ve hired some brilliant people who I trust to manage these parts of the business.
What marketing techniques do you use to attract new customers?
We’re web-based, so of course the internet is at the heart of our strategy. Without referrals from our customers, it’s doubtful that FreeAgent could have become the success it is today. We may not even have survived at all if it wasn’t for people telling their friends about how good our software is and how much it helps them.
We introduced our own referral scheme at a very early stage in the business, and that’s been vital in encouraging word-of-mouth recommendations. Every new customer receives their own personal code and, every time they successfully refer someone to us (who goes on to become a paying subscriber), they get 10% off their bill. The discounts are cumulative, so if you refer 10 people, you get to use FreeAgent for free and that’s something that has really resonated with our customers.
We also write a lot of content on the subject of accounting and tax which goes onto our blog and out to lots of small business websites. We’ve also built up an excellent relationship with the media who give us an opportunity and platform to raise our profile. And then there’s also a range of wider advertising, SEO and PPC work that we do to ensure our brand remains prominent and visible to potential new customers.
Do you think it’s important for small businesses to export, any tips?
When you’re starting out in business, it’s unlikely that you’ll be in a position to reach multiple foreign markets or set up satellite offices around the world. Unless you have a huge amount of investment behind your venture – and few new businesses are so lucky – you’re more likely to focus and build your business on home soil. When you’re confident in your product and/or your service then you can consider expanding to another market but do plenty of research beforehand.
Of course, that’s not to say you shouldn’t sell to foreign customers – and in fact we have a lot of FreeAgent users who run small businesses and do this, particularly within the EU.
What’s the business app you couldn’t do without?
There are a few that spring to mind! We’ve used Trello for many years, which is a fantastic organisational and planning tool that enables our staff to collaborate on the projects they’re working on. We also introduced Slack in the past year as our new internal office chat room and that’s also been great in enabling our growing team of staff to communicate and work together.
Describe your company’s culture in three words:
Energetic, collaborative and ambitious!
What would you like the government to do for small business?
Money and innovation is vital and we can’t grow and develop without it. I’d like the government (and the banks for that matter) to give more help, support and incentives to not only help people set up a small business, but also to help them grow.
Who’s your biggest small and medium enterprise hero?
I don’t have a personal hero, but I’m regularly blown away by the innovative, amazing businesses that use FreeAgent. It’s really inspiring to see how entrepreneurs continue to build great new products and services – and I’m delighted that we can help them when it comes to managing the financial side of their businesses.
Where do you want the business to be in three years?
We have big plans and are on track for significant growth. We have gone from 3 to 80 employees and from zero to 40,000 customers in just eight years and we’re now in a position where we can further accelerate our growth and product development.
There are around 5 million micro-businesses (i.e. those with fewer than 10 employees) in the UK and we want to show as many of them as possible how FreeAgent can revolutionise the way they manage their finances.
What’s your top tip for keeping it lean and making profit?
Sometimes lean is good – especially if you’re still searching for a proposition that customers are willing to pay for. But once you’ve found that proposition, and especially if the opportunity is large and each customer is individually profitable – the right thing to do is invest in growth. To fail to do that is to cede the market to those competitors who are willing to invest heavily. Provided there is profit to be made from each new customer, overall eventual profits will follow.
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