Margaret Manning always wanted to be an entrepreneur, but it took time for her to find the right idea. Her father had run his own civil engineering business and, as a girl, she would accompany him to work during weekends. This is where she got her first taste of entrepreneurial life. “There was this sense of being in control of your own destiny,” she recalls. “But I learnt from an early age that you have to put in some hard work.”
Manning didn’t go straight into owner-management, first becoming an accountant, gaining valuable skills that would prove useful later. When the age of the internet dawned, she knew it was her time. “I had wanted to do it forever, but what I had been looking for was the right idea, so when the internet came along, I jumped in straight away,” she explains.
Techy and geeky
It was 1997 and the internet, while popular with the geeks and technocrats, was still looked upon with suspicion by the hardheads of the business world. Indeed, the web was yet to prove itself as a serious place to do business. Starting in classic entrepreneurial style from their back bedroom, Manning and her partner Simon Usher began to offer web services to the sceptics that the techies were never going to be able to convince. “Back in 1997, no one was really looking at what businesses wanted to get out of the internet; it was all rather techy and geeky,” she says. “So we saw a gap in the market. This is why we called ourselves Reading Room, because it was about providing content people actually wanted to read.”
With a gap in the market and a big idea, Manning began building the business. But ever the accountant, she adopted a conservative and ultimately successful route to success. Her first client was the Institute of Chartered Accountants (ICA), and later, groups such as the Law Society and government bodies joined the list. Her early clients were, on the whole, a little grey, but there was a reason behind this. Manning saw that the boom in internet companies was turning into a bubble and so deliberately drew back from the big brands, playing it safe with clients who were not going to go down when it went pop. “We actively decided to get out of the big brands,” Manning confirms. “We decided that the crash was coming, the market was totally over-priced, people were getting paid far too much money and this is why we were better sheltered than our competitors.”
Values and advice
While its rivals floundered, Reading Room emerged from the dot-com crash relatively unscathed. Later, as the market recovered, it began to work with the big brands again, and has grown steadily since. In 2004/05, the company entered a new phase, and took on £1m venture capital (VC) funding from Octopus Investments, in return for a 20% stake. Now, in addition to its HQ in Soho, London, the company has offices in Manchester, Sydney and Canberra, and a total of 155 staff.
But VC money is often a double-edged sword and many entrepreneurs fear that investment will subvert the business’ path leading to a loss of control. Manning appears to have avoided this by using a stated values approach before and after the company’s rapid growth. It held the business on course and meant that as it grew from being a small to medium-sized company, most staff felt that the business still stood for the same things. “We saw that the market was coming back and we went into a period of rapid growth,” Manning explains. “After this, we did a branding exercise to see if we had lost our values – we were pleased to find we hadn’t.”
Firms that maintain their values and direction are often able to retain their staff as they grow with the business. Reading Room exemplifies this, and what were some of its most junior staff are now board members. “We have seven people on our board and six were promoted internally. Our director of operations started as a junior designer, my client services director started as my PA,” says Manning, citing this as one of the business’ biggest achievements.
Reading Room’s philosophy is old-fashioned in a refreshing sort of way, with company values such as honesty, quality and passion. It doesn’t employ salespeople, preferring instead to send the creative and technical people to meet clients, as they better understand the work being done. The clients seem quite comfortable with this and its earliest customers, like the ICA, are still with the company. “We’re a straightforward organisation. We aren’t afraid of saying no to clients. We go in there and know what we are talking about,” explains Manning.
Many firms chase the corporate contract, sometimes at the expense of their values and ultimately their staff, direction and long-term success. Manning’s ‘no cold calling’ approach and Reading Room’s earlier rejection of big brands has led to an element of stubbornness, which is admirable. Most of the company’s business is through referrals and repeat trade, which reinforces the necessity to produce quality work. Smart entrepreneurs realise that, rather than money, job satisfaction is the key to happy employees. The company now produces digital content for the likes of Skoda, Glenlivet and Royal Mail, but in the same breath Manning could name check the Worcester Porcelain Museum.
“Don’t go after the big brands because you think it is sexy,” she warns entrepreneurs. “Although we like working for bigger companies, it was never on our road map. The big brands have a lot of money, but there’s also a lot of competition.”
New territory
For Manning, the big challenge came when the business passed the 70-person level and advanced towards the 150 mark, where it is today. A real change in management style was required. Strategy needed to be filtered down from the board, and this was new territory for the company. But she responded in the way entrepreneurs need to in such circumstances: if you don’t know how to do it, then find someone who does. That someone turned out to be Ken James OBE, formerly the chief executive officer of the Chartered Institute of Purchasing and Supply (CIPS), who is now her business mentor. James guided Manning through unknown waters without attempting to take over. “Finding a good business mentor isn’t easy, but you need one,” says Manning. “But remember you are still the one making the decisions. They are the advisers, and you are the one who has to make it work.”
For Manning, the most important step in building a business is to accept that growth as opposed to short-term profit is the plan. Money needs to be reinvested not enjoyed as salaries, and although the end pay-off is set to be greater, the venture is all the more risky. “You have to take an active decision that this is what you want to do and decide that you want to grow the business to a certain size,” she explains. “We could’ve made more money if we had settled for a smaller business, but we wanted to create a large profitable company and knew it was going to take three to five years to do it.”
As business owners step out of the ranks of the small and into the medium-sized enterprise world, a significant test is how to allow others more responsibility. But the transition from owner-manager to fully fledged chief executive involves letting go.
Manning admits this wasn’t easy. “Can entrepreneurs give over responsibility to others? This can be very hard,” she warns. “You can probably do the job better because you’ve been doing it for longer. However, unless you give others the chance to do so, you become a drain on those around you.”
A good recession?
Reading Room survived the dot-com crash by playing it safe and Manning is prepared for a slowdown now. The signs of decline were clear to her a year ago as clients were proving ever slower to agree to new contracts. However, she believes that the economic and financial arguments that underpin digital as opposed to traditional forms of communication mean that the company and the industry will emerge from the recession stronger. “The winds of recession are blowing across all businesses and it means that organisations are thinking more before purchasing,” she says. “However, digital is very cost-effective, more so than any other form of communication. Therefore, I think the recession could speed up the process of change and by the end of 2009 the impact will be positive.”
What will Web 3.0 be?
Margaret Manning spotted the potential of the web and also foresaw the bubble bursting following the first phase of the internet. We asked her what she expects to happen next in the world of the web
“I think that we will see the death of the banner advert and new models for monetising websites, but it is just not easy to predict how that will happen. Interruptive adverts are not liked by the user and the models of advertising currently available aren’t strong enough. Integrated content – where your content isn’t confined to your website and can be used anywhere – could be the way forward. There is the technical ability to do this, but it hasn’t been defined yet. That’s what was crucial to Web 2.0; the technical ability had been in place for a long time, but people couldn’t define it, so they couldn’t buy it. There was nothing new about it, but it needed a term. It isn’t the technology [itself] that is changing, but now the people doing the purchasing have got the terminology to do this.”
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