Have ideas. Have a purpose. Tell your story. A user manual for being a company.
Hiut Denim is an extraordinary jean company in the West of Wales. This is what they wrote to explain to their shareholders why they are setting up the company. Explaining the thinking behind what they do and how they do it, this could speak from the heart of any entrepreneur. An inspiring read.
1. Watch every penny. We are in the business of building a global denim brand. But behind every strong brand has to be a strong business. In other words, we need to watch the pennies. We need to treat each penny spent like it matters. It will matter in the end. So it’s best to make it matter from the beginning. If we manage the business well from the start, our destiny will be in our hands. If we manage the business poorly, we will be in the hands of others. My experience tells me it is better to watch the pennies now than watch someone else come in and control your business later.
2. No debt. We will raise money for working capital by selling shares in the company. No loan to repay. No bank to answer to. We have to understand the importance of this. If we fritter our money away now, we will not forgive ourselves later. I know from experience once you get on the back foot, it is hard to recover. So let us be guided by this and do everything we can to spend our working capital wisely. We do not have to take risks with holding too much stock. It is better to pay a surcharge for materials than carry too much stock. Taking risks is not good for the business or a good night’s sleep. And a good night’s sleep should never be underestimated.
3. A small number of shareholders. It will take us 10 years to build a strong business and a global brand. To find long-term thinkers is not easy. They are a scarce commodity nowadays. But the truth is, they always have been. So we want to find those rare, crazy people who understand that it takes time to build something of real value. Those people who understand that there is no substitute for hard work, and that there are no short cuts to building something great. There is no lift up to the top of the mountain. This investment will require patience. That should be enough to put off most investors.
4. Have two types of shares. But just one type of shareholder. I learnt my lesson from the last company the importance of keeping control. I want my investors to be rewarded for their risk taking. That is only right. And we will work hard each day to make that happen. There will be two types of shares: One will be voting. And one will be non-voting. The voting shares will not be offered for sale. We want shareholders who want to profit from their investment, but don’t want to take control of the company. That’s the type of investor we want. The type who trusts us in the bad years as well as the good years.
5. Put the money in front of the customer. When I was a young copywriter I was taught a simple rule about making TV commercials: Make sure the money goes in front of the camera and not behind it. It was a good rule for making sure the customer always came first. To a greater or lesser extent our future will be determined by how well we manage our costs. The more efficient we are at running our business, the more we can afford to give to our customer in terms of quality. I like a company that puts customers before themselves.
6. Tell our story. (It’s a great story). We live in a town full of people who know how to make a great jean. They have spent decades making jeans. They are the Grand Masters, as I call them. And I know they will make a great jean on our behalf. But I also know a big part of the jeans business is about how you tell your story. We will have to tell our story every bit as well as we make our jeans. The good thing is we have a great story to tell: A town that stopped making jeans after 30 years. Then one day started making them again.
7. Monthly reporting. This time round we will be both the businessman and the creative man. We will control our costs. But we will not control our imagination. We fully understand the importance of maverick, scary, un-tried ideas. We will set our systems up to know where every penny is being spent, what our margin is, how much stock we are holding. Then we can manage the business with a clear understanding of where we are. We will start as we mean to go on. All costs known. All costs controlled. These disciplines will mean we will run the company, and not let it run us. It will also allow the company to have the freedom to be as creative as it dreams of being.
8. Do something you love. I love quality. I love longevity. I love good design. I love ideas. I love this town. But most of all, I love that I can wrap all these things up into a pair of jeans. There’s just something about ‘em. I love the way they get better with age, if they are made well. I love how they become yours slowly over time. I love how each cut, rip or splash of paint tells its own little story. And I love how they have become the uniform for the creative man and woman of the world. If we can spend our day working on something that we love doing, then that spirit will soon find itself in the product that we make.
9. Have a purpose. It gives you drive. I believe great companies change something as well as make something. They have a purpose and it propels them forward. We want to get this town making jeans again. We will only ever make jeans in our town that overlooks Cardigan Bay. This town is our ‘why’ we are in business. It’s good to know that. And it’s good for everyone else to know that too.
10. Have ideas. They change things. The great thing about ideas is they change things. They create new ways of doing business. They turn small companies into big companies, and the lack of ideas turns big companies back into small ones. The important thing with ideas is to recognise which are the good ones and which are the great ones. You have to be a good filter. Say no often. The things you don’t do will define you just as much as the things that you say yes to. Great ideas need be executed insanely well. Lots of great ideas die with poor execution. The best way to be a guardian of great ideas is to work with great people. Simple, really. Let them bring them to life. The design of it, the feel of it, hey, even the smell of it all matter. Yes, executing well is as important as the idea itself. And lastly, don’t talk about your idea. Don’t tell your mum. Keep your ideas secrets. Then launch it on the world. Keep the element of surprise.
11. Do one thing well. We make jeans. We will only ever make jeans. We will focus our minds on making jeans. It will keep us plenty busy. So no bobble caps. No sweatshirts. No mugs. No perfumes. No distractions from the main thing. The main thing will be the only thing.
12. Judge the business over the long-term. The early years are never easy. It takes time to build a business. The first couple of years are inevitably tricky. The basic systems and the infrastructure all have to be built up from scratch, the customer will have to be found, and the product refined. It is a time when the business is both time and cash hungry. But we should not be quick to judge the business. It should be given time to grow slowly. Patience is what will be needed. Hard work takes time to show the fruits of all that labour. We should view a young business as we would a young child. It needs love, time and a set of rules to adhere to. It will make mistakes, it will fall and it will need the parents to be there for it as it grows and becomes its own person. We should not make too many demands on it when it is young, let the child play for a while. It will grow up before we know it.
14. Lets not underestimate the importance of lady luck. Luck matters. You can have a great product, a great team, and an idea how to change things, and still fail. All businesses need luck. The best way to get luck on our side is to work hard at what we love doing, and have ideas that haven’t been done before. And be honest with people, keep our word, and sometimes do things for people without expecting anything in return. The other aspect to luck is its close cousin called talent. To have a feel for what the customer wants, to imagine something that doesn’t exist, to come up with something that captures a zeitgeist, well, that has little to do with luck. These two things are often confused with each other. But both are vital to success.
15. Stay independent. Stay in control. (See point 1, 2) It is important to be in control of your own destiny. William Blake said it best “you need to create your own system or be enslaved by another man’s”. The reason our independence is important for us is that it allows us to shape the business by what we feel is right, it can grow at a pace that the company feels comfortable with, it can make decisions for the long term, it can do things that make no sense to the bottom line at the time, but may well do in the future. This may mean that our company will not be the biggest, but it should ensure the company stays true, creative and loved. And, importantly, that it will keep making jeans in this town when there will always be cheaper places to make them. I will settle for being great at this thing over being big at this thing.
16. We won’t pay a dividend. We will keep re-investing. Our investors are going to be asked to invest in a start-up company. Start-ups are not without risk. Indeed, most fail. That said, we have confidence in ourselves to build a global brand and a strong business that goes with that. The key to these two things is to work with great people. And make a great product. They both go hand in hand. At the same time, keep investing back into the business. The compound interest of investing back into the business will overtime be far greater than giving dividends to shareholders. This requires long-term thinkers and those who have an unshakeable belief in what we are doing. They tend too go hand in hand too.
17. Make us all proud of the company we own. We measure things mostly in numbers. But there are other important ways to measure how well a business is doing. These are things like ‘Are we proud of it?’, ‘Is it loved?, Is it insanely creative? But these are just as important as ‘Are we growing?’ ‘Are the margins good?’ ‘Are the customers happy?’ If we build something we are incredibly proud of, that is loved, that is insanely creative, you can be sure that it will also be a great business too.
18. Work with great people. Go home early. We are going to run a creative company. The good thing is we know how to work with creative people. If we work with great people, they will challenge us. They will push us. They will frighten us. But ultimately it will be a much easier life than working with average, mediocre, or middle of the road. When we find great people, we will do the following: trust them, give them room that their talent deserves, and let them fly like they have never flown before.
19. Make it fun. Make it easy.The wrong stress is not good for a business. Or, for the people running it. But you can minimize the wrong stress by planning for less sales than you hope for and for keeping your costs lower than the business requires. And you can put in systems so that the business is easy to run. Systems that work almost without thinking. Then we can get on with the serious stuff of making the business as creative and as fun as we possibly can. The ideas that will come out of that culture will make us stand out. They will increase sales. Help us get known. And define us. In time, that will produce good stress of ‘how on earth are we going to get all these orders out of the door’. And ‘how do we come up with another idea as good as the last one’. That is good stress.
20. We are the audience too. We won’t second guess our customer. We are a small part of that creative community. And have been for over two decades. So when we say ‘we will make jeans for the creatives of the world’. We are also saying we will make jeans for people like us. For me, I feel the most comfortable when I am around creative people. I enjoy spending time with them. I trust these people the most. I am inspired by their ideas, by what they make, and what drives them forward. They write the music -They make the films -They start the companies. I love how their ideas change this world. And I would love to make their jeans for them.
21. We all work for the silent shareholder. We live on a planet with limited resources, but an almost unlimited appetite for consuming more and more things. Our best answer as a company should be to make things that last. We want to make legacy products using superior quality materials and craftsmanship. Longevity, of course, doesn’t just come from the materials used but also from timeless understated design and great fit. Things are thrown away not because they have stopped working but because we have stopped loving them. Great design is more important for the environment than lots of people give credit for. We should run our business knowing that there is a silent shareholder called planet earth. And we have to keep that shareholder happy too.
22. Meet up once a year and talk about stuff. Once a year we will invite all our shareholders down here. Meeting up will give us a sense of community that am yet to feel from a spreadsheet. We can share ideas, challenge what we are doing, talk about the business. But equally talk about family, talk about sport, or whatever is grabbing our attention. To eat some good food, drink some wine, and just to enjoy each other’s company as well as the company we all own. These meetings may not feel like business but they will help shape the company.
23. Don’t be average. Be great at what you do. Life is short.
This was taken over from the Hiut Denim website. You can find Hiut Denim's user manual here.