Creating a Black Hole

Copywriter Ian Feber and designer Paul Senior founded The Black Hole in February 1991, in the grip of recession. We asked them about their experiences starting and growing a business during tough economic times.

Do you think that starting up in a rocky economy set you specific challenges that you wouldn’t have faced had you set up in the late 90’s when the economy was stronger?

Ian: We had been planning the agency for 18 months before we started and were lucky enough to have been offered space in another agency’s office. I don’t know whether challenges would have been different in other times, but if you set up in a recession you do what the market wants, and the market wants hard working DM. ROI was the focus, not creative for creative’s sake.

Paul: I think it helped us. We had low overheads, work that was promised through contacts materialised as did enough money to see us through the first 6 months. So we could be very competitive, although we were also very naive. Our focus wasn’t on the rewards of setting up our own business but the desire to do it for ourselves. We had very clear and agreed plans, including what we would do if it all went wrong and a time frame around that. Clients were looking to get a better ROI and we were eager to get business. We ended up initially working for marketing departments in big companies (YE and GE as was) who had their own expertise internally and were using agencies just for the creative. We understood strategy so filled the gap at a reduced cost to the client.

Were there lots of other start ups around when you set up?

Paul: Yes there were a few, RP&F, Pearson & Crossland. We even teamed up with some to provide services that they didn’t have and visa versa. Although as time moved on we all grew to have the resources in house.

Ian: And some went bust.

Did a client ever try to not pay you once you’d done the work?

Paul: There were one or two, although I think that it was down to our naivety and lack of administration. We were technicians, not business managers. You have to quickly learn those skills when the cash isn’t coming in. We did have a bad debt when a company went bust owing us about £3,000 which gutted us at the time as they were a massive company. Interestingly enough we received some money just a few months back through the receivers. Only 15 years later!!! We realised quite early on that we needed the administration infrastructure to prevent bad debt and non payers. Luckily we have not had a major bad debt that has threatened the business (quick, touch wood).

Did you ever get significantly let down by a client or supplier who thought you didn’t matter because you were a small & new agency?

Ian: In the early days, working with MBNA on a job with £250k print and production, we had a deal with an envelope supplier. The deal was that he would get paid as soon as we did. The timescales were tight, and at Christmas. The day we were due to get the envelopes in to send for immediate fulfilment the supplier got cold feet and called us demanding £100k before he would release the envelopes, despite a written agreement to the contrary. Had it not been Christmas Eve, the client would have been able to get the funds released and to us in time. But they couldn’t and we still had to get the mailer out on time. We had to go to the bank and put our own houses up as security for a loan to pay the supplier and get the envelopes out in time.

Paul: The management of that company has long since gone and has been taken over by a new company. We have always been very good at paying our bills, especially to smaller companies and freelancers who can’t wait for months to be paid. We have good terms with our clients and we pass them on to our suppliers. You will get more help from a supplier when you need it if you pay them on time. Also we have had some good recommendations that have come through suppliers.

Did you ever have an issue with advisors – whether financial, business or legal advisors – i.e. get bad advice and follow it?

Ian: None, any advice we received we also researched ourselves. One thing we learnt was not to make decisions on a whim.

Paul: We were a little slow on getting advice and training when we should have. We should have expanded earlier instead of doing what most start ups do and trying to do it all ourselves. Some good coaching, like Action Coaching which we have since done would have come in handy in our earlier years and would have helped us grow quicker.

Did you present work which the client used, without using you?

Paul: Yes, I think there was. There are always companies that will try and pull a fast one. We had one company in a pitch that said that another agency had come up with the same idea. How can you prove that they didn’t? The only way to protect yourself is to deal with reputable professional companies and have written agreements in advance.

In the early years, did you have to bolster your team with client services & studio freelancers? How did you make that work?

Ian: No, we just worked longer hours until we got to a point where the work necessitated taking on full time staff!

Paul: You cannot do everything yourself. You have to employ people if you are going to grow, and businesses do not stand still, they either go backwards or forwards. We have employed people that have grown with the business and developed and have left because we did not have a career path available for them at the time. Good luck to them, we got good value from them, they learned and improved. One piece of advice I received was ‘Never be worried about employing people than are better than you’ (just as well!) they can only take the business forward.

Did it ever get so tough you found it hard to forge on? How did you maintain the energy and enthusiasm to succeed?

Ian: That Christmas was pretty tough. But you’re motivated by a combination of desperation, fear and a belief in the quality of what you produce.

Paul: There are times in everyone’s life, whether you’re working for yourself or someone else, where you think ‘is it worth it?’ But the answer is yes. It’s much better if you’re part of a partnership or company where you can share the burden with your partner or fellow Directors, it has worked well for me and Ian. If one of you was fed up the other one would take the p*** out of you and tell you to get on with it. ‘Yorkshire therapy’ I call it, Ian being from Southampton took a while to understand that.

Energy and enthusiasm comes from doing good work, seeing the results and having a great team around you. We’ve been lucky on all counts. Winning the launch of MBNA early on was a major boost and then BankOne and more recently William Hill and Iceland boosts your confidence and boosts morale no end.

What’s the most important thing that anyone told you when you were starting out?

Ian: Double your prices in the first six months. That was from Judith Donovan.

Paul: Don’t trust your partner, have two signatures on the cheque book (Ha Ha Ha).

Ian: I told him that!

What’s the most important thing that you wish someone had told you when you were starting out?

Ian: Don’t rely on the bank lending you money, you’ll have to provide the money somewhere, for example not being paid for the first however many months. If we’d had any idea of how tough it is starting your own business, I don’t think we’d have done it. But if everyone knew, there’d be no new businesses! You genuinely don’t know what you need to know until you start running the joint. My advice to anyone would be always do your paper work, contracts and know exactly where you are with everybody.

Paul: Get professional management training or someone to do the managing/ admin.

What was the most expensive mistake that you made as a start up?

Ian: Employing someone without going through the proper process.

Paul: Not credit checking companies and trying to do everything yourself.

As you were growing did a client ever take issue when you stepped back from an account and handed it to an account manager to service?

Ian: No.

Paul: No, because we were still around to talk to and we made sure our relationships were maintained where they were needed. And at the end of the day the account handlers did a better job than we did.

Did you ever get ripped off by a member of staff?