Entrepreneurs Ed Reeves and Rachel Clacher, a dynamic brother and sister team, tell us how they changed their jobs recognising a gap in a potentially highly lucrative market.
In 2000, they set about creating telephone answering business Moneypenny with no experience in the industry; an idea of how they wanted it to work, very different leadership styles and just £15,000 between them. Fast forward 14 years and Moneypenny is the UK market leader, handling around 8.3 million calls a year for over 7,000 UK businesses, employing 400 people and growing – fast.
With his company only weeks away from taking on the US market and with a £10 million new office build scheduled for completion in 2015, Ed shares the story of his success and explains how an unexpected twist led to the birth of the company.
A sense of adventure was instilled in me at a young age. The middle child of three, I spent much of my childhood overseas. I was born in Mumbai where my father, a civil engineer, was designing dams. We moved every few years as he took on new projects but at the age of eight I was sent off to boarding school in Britain, flying back to stay with my parents in the holidays.
After completing a degree in sports science and business studies at Manchester Polytechnic I followed my dream to become a professional windsurfer. Sponsorship from phone company TIS paid for flights to Australia and I spent a year there taking part in competitions, but I failed dismally!
At 23 I returned to the UK and settled in London. I struggled to find work so TIS offered to pay me commission on selling outdated landline phones, suggesting an asking price of £5 each. After finding no takers, I raised the price to £25 – and promptly sold a thousand to a big telecoms company. I made £20,000, which paid off my overdraft and I returned to my original dream; opening a windsurfing shop at Bala Lake, in the Snowdonia National Park, where my parents had, and still have their home.
After two years, I realised I was fighting a losing battle and finally admitted that the shop was never going to make much money. There are only so many days you can sit in the freezing snow on the side of a Welsh lake in the middle of winter and will a customer to walk through the door.
I sold up, having covered my basic costs but with no profit to speak of, and went into partnership with a friend who owned a windsurfing shop in Manchester city centre. We went on to open a second shop in Congleton, Cheshire and five years later, in 1995, I sold my share back to my friend for £40,000.
From there, aged 27, I worked freelance in marketing in London for two years before returning to Cheshire. With new found skills, but only £200 to invest, I started a firm from home supplying councils with the livery for their vans. It was a profitable niche business but in all honesty my heart wasn’t in it. It was great to make the money but it didn’t excite me and proved a useful stop gap while I worked out what to do next.
I had itchy feet but wasn’t expecting what was to follow. Still running the graphics business I went away on holiday, hiring a telephone answering service to take my business calls. A council client rang to say he could not fax through an order because my machine had run out of paper. The woman who took the call told the customer she was unable to help because she was simply the answering service. I was livid and phoned my sister Rachel to go straight round to my flat to put more paper in the fax machine to salvage the situation. But the damage had been done; I lost the contract and at the time it seemed like a disaster.
It seemed crazy to me that the people at the answering service just followed a script. I spoke to Rachel and we both agreed – there had to be a way that a person could truly represent my business and be accountable for the outcome of every call.
So, with this model in mind, in 2000 Rachel and I found some office space in Wrexham where Rachel’s husband has an optician’s practice and set about creating just that. We took the calls ourselves initially and gradually built up a small team. We were determined from the start that whoever took the calls would not have a script to follow and that clients would be assigned their own dedicated PA, someone they could get to know and trust as an integral part of their own business.
Everyone thought it wouldn’t work. We talked to business advisers and the banks and everyone said no. I knew it could work and went into the market wanting to lead from the off. We borrowed £5,000 from an aunt and used £10,000 from overdrafts and credit cards and pressed on regardless. Those early days were tougher than I expected, though. It was a slow start and it took a year to get the technology right.
Cash-flow was a major issue for us in the beginning and a struggle ensued with the banks as we knew the setting up of BACS and Direct Debit was vital for the development and scalability of the business. With one ‘no’ after another, we were delighted and relieved to finally find a bank to say yes. With this in place we could start to build our client base with confidence and we had no debt worries, as clients were always paying in advance.
We realised we needed a big building but no one would lease us one, so we went for broke and bought a 12,000 sq. ft. office space that 15 of us at the time were rattling around in. Those around us thought we were crazy and I hasten to add this was before either of us had the responsibility of children so it was a time when we had so much less to lose. Thank goodness we did what we did when we could as we may well have acted far more cautiously under different circumstances.
Taking that risk was the best thing we could have done although we made the mistake of selling off land round the office that we could have been used for expansion as we have since moved into three additional office spaces on the same technology park.
Turnover in our first year was £50,000 and word began to spread. We started out marketing our service to small businesses but it soon became clear that it was a product that could work for businesses of any size. Today we have over 7,000 clients of every shape and size, from sole traders to ‘top ten’ law firms, with our service dovetailing with theirs either on an overflow or fully outsourced switchboard basis.
We made mistakes early on recruiting staff based on their experience rather than their attitude but quickly realised that the business would only work with absolutely the right kind of cheerful, positive, ‘can do’ people delivering it. We purposefully employed people better than ourselves at whatever it was we knew needed doing and that approach continues to this day.
We’ve had an exciting last few years and for me it’s all about creating, innovating and never standing still. With the opportunity to bring everyone back under one roof, we have high hopes that our new purpose-built office, also in Wrexham, will be the start of an amazing new phase in our development.
Since 2012, initially in response to the growing demand from our larger legal clients, we have been sending teams of staff on a six month rotation to our New Zealand office, where we have followed the sun so they answer overnight calls for UK businesses during their daytime. It’s an expensive way of doing it but we weren’t prepared to risk the quality of the service by having tired people working over here doing nights.
Standing still isn’t an option. In 2013 we launched Penelope – a technology product for start-up and micro businesses. It’s a virtual phone system solution aimed at a lower price point in the market, enabling small businesses to control their calls via a smartphone app, wherever they are and whatever they are doing. Our marketplace has been expanded further with the
introduction of Digital Receptionist, bespoke voice recognition technology that seems to be changing the way larger businesses look after their phone calls. For me it’s always about the next big thing.
Rachel and I have very different styles and we complement each other well. If someone says I can’t do it, I’m even more determined to prove them wrong. Rachel is a great calming influence, a wonderful people person and moderator. I need that around me. We’re a good brother and sister team!