My Biggest Mistake Steve Bennett: I forgot we were mail order

Steve Bennett, 33, founded Software Warehouse in his early 20s after being made redundant from his job with a small computer dealer. His company, the UK's fastest growing over the past four years, now has 350 employees with an annual turnover of more than pounds 100m. He has also written a book, `Serve to Win', and is launching a computer magazine, `Internet Monthly'

MY BIGGEST mistake was to lose sight of our core competency and move into manufacturing, after we had been going for seven years. A lot of our customers were asking for us to supply PCs; we sold software, printers, scanners, and it was the final piece of the jigsaw.

I started out cold-calling, knocking on doors on an industrial estate, selling anything to do with computers. After a year I found some really good software in America and started to import it. Then we grew into a mail-order company.

In April 1997, we started building PCs. We had a customer base of around 300,000 and 15 stores. Customers were asking us for PCs and we had two options: either to sell major brand names or build our own. We decided to build our own.

We had a ready market, and we felt we weren't in any way diversifying from our core business - it was the same thing. From the customer's standpoint, it was, but what took us ages to realise was that we had built this big company and what we were really good at was mail order. There was probably more synergy in us selling golf products or perfume via mail order, than manufacturing.

We sold quite a few computers, about 1,000 a month, but we were spending a lot on marketing. Another thing we did wrong was that we didn't put a director on it at board level. We shared responsibility, and started de-focusing from our core business.

In January 1998 we had a board meeting and I wanted to close it; others said we had to give it more of a chance. But by May, it was risking the whole ship. We were all focusing on getting manufacturing working.

You have this tangible you can see - the money you lose - but there's also an intangible; the lost opportunities. In the end, we laid off 19 people. It was painful. In nine years, I had never had to make anyone redundant. Until you close it down, you can gloss it up as an investment. The day you close, you are writing off that money. But if we hadn't, I'm convinced we wouldn't have got back to the old strength.

We still launch subsidiaries like, Internet Monthly. But we have taken an existing director, who has set it up as his own project. The rest of the board don't need to get involved. It stands on its own two feet.