My Biggest Mistake: David Davies
Sunday 15 August 1993
MY BIGGEST mistake was in being over-ambitious and wanting to do everything simultaneously. As a design business in the 1980s, we had been incredibly successful - within three years we had a fee income of pounds 4m. But we were very young and didn't realise how successful we actually were. I thought everyone had massive positive bank balances. We remained very modest in our spending and drew low salaries, but we financed every venture ourselves, including a company which made promotional and television videos. We even had our own quiz show on Channel 4, Eye to Eye.
Meanwhile, since we were already retail and design consultants, working with companies on product development, it seemed a logical step to open a shop. Davies in Covent Garden was supposed to be the first of many outlets for our products. It cost hundreds of thousands of pounds to get started, and again was self-financed. It built up a turnover of more than pounds 1m but struggled to make a profit. Looking back, it was completely bananas trying to juggle so many things in the air simultaneously. It was a classic example of losing sight of your core business.
By 1988 we had 150 staff, but a creative business is only made up of the DNAs of the people who work within it. While I love the idea that you can delegate to other people, in reality you have to get stuck in yourself.
Gradually I realised we were unable to grapple with the size of the organisation, but the banking facilities for each company were inextricably linked. By 1991 we were in a serious cash-flow crisis. We spent about eight months seeing various banks in an attempt to refinance, but though everyone could see the potential of the individual businesses, the relationship between them was so complicated they couldn't see how they could help.
The end finally came when we saw our own bank about extending our overdraft facility. Instead, they reduced it and called in the receivers.
It was a Friday, and I felt virtually suicidal. After all, the design consultancy had continued to be very successful and still had a huge number of projects on its books.
Fortunately we had a good firm of solicitors who worked with us over the weekend to help us buy the company back. We relaunched the following week under our present name and had fantastic support from our clients.
We certainly won't be diversifying again in a hurry. Ultimately, what we were best at - and still are - was being design consultants. I now find the idea of offering advice and creative inspiration to other businesses much more desirable than I did then.
And we're lucky: we had a second chance.
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