It requires a huge leap of faith to start a business of your own, but realising that your business would be more successful if it changed direction needs an even bigger one. And acting upon your realisation is incredibly hard – something I know from first-hand experience.
I first launched my business, Sonovate, in early 2012. When my co-founder and I started, Sonovate was a business built to provide a complete ‘solution in a box’ to small and micro recruitment businesses. This included all the tools these businesses need to function; website management, CRM, help with branding, time-sheeting software and contract finance. It was successful, too; the recruitment industry was very receptive to the concept and we had a lot of happy customers. We gained a lot of attention within the market; people had heard about us and knew what we offered.
Despite there being a huge demand for our software package, we soon began to receive a lot of enquiries from recruitment agencies who were after a stand-alone contract finance solution. These recruitment agencies were fed up of the off-the-shelf, outdated products they were being offered by the banks, feeling that they were too generic for the unique needs of their businesses. The banks were (and still are) trying to serve too broad a market, and as they are split into so many divisions they can’t be niche in all sectors and provide finance to support businesses overcome their particular challenges.
Contract finance was at the heart of the package we already offered recruiters, but we heard from many who wanted it as a separate service which would completely meet their requirements for placing contractors. Having done our due diligence, it became obvious that pivoting Sonovate from our role as providers of a complete recruitment package to focusing solely on contract finance would lead to an even more successful and viable business model.
The decision to change the business was a huge one, but luckily it was welcomed by everyone in the Sonovate team. Internally, we all recognised the potential of our Plan B and knew that it would benefit us considerably. Not having to run the change in direction past a board or committee and knowing we had an investor who believed in our ability to deliver helped our progress enormously – and we were very lucky in that we knew the demand was there from experience. Externally, keeping our existing customers happy as we set about the launch of our new product was more of a challenge, but one we were prepared to face.
That wasn’t our only challenge, unsurprisingly. There are associated costs with any degree of change, and the scope of our plans meant that we needed to invest hugely – both time and money – into our new technology on top of our previous investments in the old service. Managing the creation of new technology, including all the internal staffing changes we had to make, while maintaining a high level of service to our existing clients was one of the biggest obstacles. Then we had to ensure that our existing happy customers were migrated smoothly to our new technology and remained our customers, safe in the knowledge that their best interests were being served, while we scouted for new business. We needed to make people aware of our shift in focus and change their perception of us from the old ‘solution in a box’ Sonovate, to the new contract finance Sonovate.
The change in the direction of the business also meant that we had become much more of a technology business. In our old model we integrated third-party platforms and services to give recruiters everything they needed, but suddenly we had become a bespoke, technology-driven business with a product we owned and developed ourselves. We had transformed ourselves into a genuine London fintech company and were part of an incredibly exciting, thriving market. We were, and still are, really proud of the technology platform we built.
My experience of moving away from Plan A has taught me that finding a niche is a great way to penetrate a market and find success. In the recruitment industry, recruiters used to have no option but to turn to the banks for contract finance, but this meant they ended up with products that didn’t support their needs. Working in a niche presents opportunities for fintech start-ups to specialise in particular areas and markets, so they can provide a specialist service to businesses who will really benefit from their offering.
If I could offer any advice to entrepreneurs who are looking to change the direction of their business, it would be to start with a business you believe in but remain open to change. You could very well realise a few years down the line that the real opportunity isn’t where you first thought it was when you began. It’s so important not to shy away from this realisation, but to embrace it and act upon it.
I was fortunate that everyone at Sonovate came to the mutual decision that contract finance was the best way to grow our business, but it’s important to work with investors who realise that your business may change direction. Make sure your investors recognise that the potential is in you and your team, not necessarily the first version of your business. The idea you start with is likely to develop with you as you grow, and you might well realise that the ‘golden nugget’ lies slightly off your original course. If the investor realises that it’s you who holds the talent, they will have the confidence to invest in your business whatever direction it ends up taking.
Ultimately, moving our business to Plan B was a great commercial decision. There were a lot of challenges to overcome as we pivoted, but once our new product was up and running we saw significant growth in both the size and opportunity of the market we were operating in – the recruiters who wanted contract finance and led us to change loved what we had produced.
Richard Prime is CEO of Sonovate.