Coast Digital CEO James Frost sold his price comparison website, Compareandsave.com, for more than £12 million, but he’s the first to admit it’s been a bumpy ride
When I started my website design business in the 1990s, I quickly learnt that money doesn’t last very long. I got through all of it (about £20,000) in the first few months.
My approach was just to get the work so I could pay the bills. I hadn’t written any cash flow plans or budgets and that was one of my biggest mistakes: it meant my business was just meandering.
I didn’t appreciate how much was needed and I had this unrealistic view that the bank would be falling over itself to lend me money. They made it quite clear they had been burnt from dotcom businesses before and would not view any application for funding favourably. I ended up having to draw money from my mortgage to get additional capital, which was around £50,000.
The experience taught me the importance of being able to take advice and support from people when it’s available, even though it can sometimes be easy to dismiss. After I got support from a business mentor everything became much more goal-oriented and the business started to find its direction.
Your own two feet
When I started out I was promised some contracts from old friends and colleagues from previous companies. However, once it came to the crunch, most of these offers evaporated. It taught me a valuable lesson: you have to fight for things as they aren’t going to be given to you. If they had followed through with their promises then that would have kept us going for longer in those first few months, but I may never have started the business if I had known they were going to change their minds. So, in a sense I suppose, they did me a favour.
I started my current business, Coast Digital, in 2002. It was a 50:50 joint venture, and what caused me a lot of pain and anxiety was that when it came to needing more money, my partner was nowhere to be seen. So I had to make the decision to buy him out.
It made me realise that if you are going to embark on a joint venture, you need to have a clear outline of each other’s expectations first. Friendship and business don’t mix otherwise. By the time I set up Compareandsave.com with another partner in 2005, I learned my lesson. Falling out with a good friend has got to be my biggest regret in the last seven years.
In the early days of Compareandsave.com I was trying to do everything on a shoestring, but my partner pointed out that the company would never achieve its full potential that way. It was hard to accept this at first, as we were running the company as a side operation and I didn’t want to lose him from working full-time at Coast Digital.
The problem was that I was consumed by the other business and didn’t want to get too caught up in a side project. It’s possible we may have made greater headway if we’d focused more on the new business, although it ended up working out quite well.
The key thing to remember with business is that you have to be prepared to evolve and change, but also be open to suggestions from other people.