"After 6 months in the office we had no deals. I had to decide to stick to our plan or retreat."

How do you know when to cut your losses on a major investment? Make sure you have the right data, says Condeco's Paul Statham.

by Adam Gale
Last Updated: 12 Apr 2019

In an ideal world, your business growth would be nicely linear – or, if exponential is your ambition, at least the curve would be smooth. You wouldn’t have to make one-off investments so large that they could make or break the company.

In the real world of course, big opportunities sometimes land in your lap, and sometimes you wonder if you have the capacity to take them on – or to pay the price should they fail. Many an SME has faced this dilemma, and not all of them have come out with happy endings.

When CEO and co-founder Paul Statham looked to take his enterprise software company Condeco in a major expansion into the United States, he knew well what could go wrong. Years before, when starting out in his family’s electronic security company, he had seen firsthand how big risks sometimes don’t pay off.

"Back when I was running the security business, a large multinational firm came to us to discuss selling our products through their networks. It was a big opportunity for us but it required a lot of work. We resolved to make it happen but we had to make sacrifices along the way, in terms of opportunities that we had to say no to - personally and professionally. Nevertheless, we were focused and determined, and we completed the project on time.

"Unfortunately, it failed completely. The partner’s sales people couldn’t sell our products and it wasn’t long before they pulled the plug. They hadn’t really had a clear understanding of how we would fit into their business. That whole experience taught me of the dangers of relying on somebody else’s information.

"I thought about that when, years later, we were expanding Condeco into the US. We faced three established competitors and we had limited funds with which to take them on. Nevertheless, we believed in our product and thought we could succeed, so we went all-in.

"After three months with no deals signed, people were starting to get concerned. At six months we had plenty of leads but still no deals signed. We had to decide whether to stick to our plan or retreat. The crucial difference this time was that I wasn’t relying on other people’s information.

"Throughout our expansion to the US I was visiting regularly to see for myself what was going on. I knew that were on the right track. Our pipeline was growing and we were getting a very good response in our meetings with potential clients.

"In our third quarter in the US, when the operation there was pretty much running on fumes, we secured enough orders to run for the next 12 months. Today, we employ 40 people in the US and it accounts for 40 percent of our revenue. The US expansion has become the template for every international expansion we make, and we now have 12 offices around the world.

"If those deals hadn't come or if we'd pulled the plug earlier, then we might never have expanded outside the UK. We stuck to our plan but it wasn't a gut decision. We believed in our product, we modelled our plan correctly and we understood our business. Along the way we were continually testing the feedback and data we were getting.

"What I learned was that, if you're going to make an expensive, risky decision then make sure that you understand your business and the data. Don't rely on someone else's understanding. Doing that doesn't eliminate the risk but all business decisions involve risk. We had a plan that reduced the risk as much as possible and we stuck with it."

Image credit: Jalil Shams/Pexels


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