The second major existential crisis Murray faced came from a much more familiar face. Despite having to work long and hard to secure the fourth key contract, constantly beating down the door of the one hold out, the business was growing quickly.
“We had four networks, top-ups were growing, pre-pay handsets were being sold even more and things were going really well,” she remembered, We didnt have profit yet, but it was only six months away.
At this stage a board had been assembled, comprised of executives and shareholder investors ” some serving as board directors. The business had monthly meetings, and sending out the usual papers on a Wednesday for the expected Friday get together gave Murray a pretty big shock.
I immediately got a call back from one of our investors, who said I see you’re running low on cash. I replied yes, but were moving some things around. His response was that he believed we were trading insolvently, which is illegal, and if we didnt have 50,000 of spare cash in the bank account by Friday hed put us into liquidation and buy the business back from creditors for 1 on Monday.
This put Murray fully into emergency response mode, needing to find a way out of a situation where one of her trusted shareholders was stabbing her in the back. Jumping in a car, she headed to the East End of London, where she knew a guy who was in distribution. Murray had resisted a partnership before, but it was a case of needs must and offered a deal which would be sealed with a good faith payment of 50,000 on his behalf commission that hed earn over the first six months.
He left the room and came back with a cheque and a bottle of champagne. I headed straight to the bank.
When the conspiring shareholder arrived at the regular Friday board meeting he was not dressed in his usual chinos, but a three-pice suit and had a stack of legal papers. Interrupting the meeting, Murray remembered him taking great pleasure in saying: Were only here for one thing, how much is in the accounts
However, Murray took even greater pleasure in sliding the accounts details over, turning him green and rendering him silent for the rest of the meeting. We never saw him again, and he was so close to stealing my business. We made a profit two months later, and in those moments your success determined.
So is it possible to protect yourself against the kind of unscrupulous shareholder Murray found on her board She readily admitted that she was obviously not very good at it, but had some words of advice. When entrepreneurs are picking directors and investors, they should be doing as much due diligence on them as they are having done on themselves. Its a two-way street,” she emphasised, and the best way to do it is talk to as many other founders in the investors portfolio.
The other big thing to sort out is a robust shareholder agreement. Shareholders in their own right are professionals, so make sure they have their protections in place why not the business owner as well
I didnt even know something like what happened to us could happen, it staggered me. I come from a country where what is valued is pragmatism and being open and down to earth. So in one sense I was probably naive, with it being my first business, but was stunned that someone could be so two-faced.
Since exiting her business, and then working for the acquirer for a while, Murray has taken a step back from company creation and adopted a more active role in supporting early-stage businesses with her experience and investment.
“Was it painful building business she asked herself, “yes horrendously at some points. Were the rewards worth it Well, we sold to Fortune 500 company. I thought it was going to be about money, but it ended up being more that I showed myself I could do it.”
Murray is now someone who is turned to by prime minister David Cameron, in a hope that the government can learn from successful entrepreneurs’ journeys and provide better policy for future business builders. Hers is a story worth hearing and learning from.
“Wear your scars with pride,” she urged the business community. “Nobody builds a business with out significant scar tissue. If you get wounded and respond, it provides a sheer veneer you can coat yourself with. Then next time someone does it you can respond better with bit more strength.”
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