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 thoughts behind what they do and how they do it.
1. Watch every pennyWe 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 debtWe 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 shareholdersIt will take us ten 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 sharesBut 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 customerWhen 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 reportingThis 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 loveI 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 purposeIt 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 ideasThey 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 wellWe 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.
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