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Richard Allum’s story is a salutary lesson for all small business owners

When Richard Allum fell seriously ill he realised just how vulnerable his business was and the kind of people he had in his team, he tells Rob Kingsbury. If he could wind the clock back, what would he have done differently?

In 2014 Richard Allum, managing director of outsourced paraplanning firm The Paraplanners, found he was seriously ill to the extent that he had to ring his deputy, Kim Bendall and out-of-the-blue, literally hand over the running of the business to her.

The problem was, Kim had never run a business before, nearly everything about the business was in Richard’s head, she had no access to key things like bank accounts, and they were in the run up to the end of tax year, one of the busiest times for the business.

“The illness had been creeping up on on me for some time and I had been so busy working, both running the business and doing hands-on paraplanning that I had ignored what was happening until it was too late,” Richard says.

“I was a typical small business owner, doing the job and also running the business, to the extent that I was regularly working 15-hour days often six days a week. At the time we were coming to the end of the tax year and we were so busy that everyone in the team was working full days and then some.

“Then overnight we had one full-time paraplanner (20% of the team at the time) and the person running the business taken out of the equation. That was what Kim was faced with. In addition, one person was totally new to the business and hadn’t worked for an outsourced paraplanning operation before,” Richard explains.

Kim literally had to get to grips with running the team, managing the workflow and running the business, including dealing with clients, many of which only knew Richard. “She had to make a decision about whether or not to tell clients, as we didn’t know how long I would be away; pay day was coming and she didn’t have access to the bank accounts to do the payroll, and there were no written down processes and procedures to help her manage the workload.”

Looking back Richard says it is easy to see where mistakes were made.

“It was a typical cobbler’s shoes situation. I would spend all day doing risk assessment for clients putting in place protection and risk management processes but I hadn’t done it for my own business. As a business owner you think it’s never going to happen to you.”

It was wake up call for both Richard and the firm. “It opened our eyes to a lot of things. I had grown the business organically and I had everything in my head. Often you don’t realise how much of the business only you know about because you are doing it every day. Then when you are not there, the people left behind have to pick up the pieces. And that is really, really difficult to do.”

The fact is, the other four members of the business responded extremely well, working even longer hours to get the work done and not let down the clients, while Kim had a on-the-job crash course in business management.

Richard says: “It made me realise how lucky we are to have such a great team of people working in the business, who were not only able to rise to the occasion but pulled together, supported each other and got through some really tough times.”

It reinforced for Richard just how important it is to have the right people in the business. But creating a responsive team needs the right environment and Richard says one of the key criteria for the business has been that it should be a place that “we all want to work in. When you set up the team like that and you have to call on them to do things they never expected to do, that’s when the quality and the skills of the team show through.”

It also made him realise how important it is to work with the right clients. “Kim made the decision to tell our clients straight away and they were amazingly supportive,” Richard says. “They gave Kim reassurance, and even made some changes to help make it easier for the business. We couldn’t have wished for better clients. It reinforced the decision to be upfront and honest. It also showed our clients that while I was the face of The Paraplanners, it was not a one-man band operation and there was a bloody good team in place that would continue to serve them well even when I was not around.”

If he could wind the clock back, what would he have done differently?

Asked what he would do differently in hindsight, Richard says: “First, I would have shared my situation. I knew for a while that things were wrong and what I should have done, rather than ignore it, was share it with Kim. Then we could have started putting contingency measures in place.

From a practical business perspective, he adds, he would have put in place the simple set of safeguards that the business now operates:

1. The management of the company is shared between Richard and Kim. Kim was made a director of The Paraplanners in 2014 and offered the opportunity to take a share in the business. “This spreads the responsibilities across two people’s shoulders and ensures two people know what’s going on with everything at any one point in time. That reduces the risk to the business,” Richard says.

Kim now runs the operational side of the business, the team and the workflow. Richard is the managing director and looks after special projects, the software and the creative side of the business.

2. The business has an operations manual. “Everything is written down, all the processes and the systems.” Both directors have access to everything and other members of the team have access to the areas relevant to their work.“Everything to do with the company is now written down so someone can literally pick up the manual and follow it.”

3. Protection policies have been taken out “The third thing we have done, ironically, is put in place key man insurance and income protection insurance for everyone. So if anything did happen in the future the business has a lot more financial protection.”

4. Cash reserves have been formalised. “We work to a business metric for cash reserves in the business. We were fortunate in that the business is very successful and in 2014 we had built cash reserves into the company for a rainy day. But the team pulled together and supported each other so well that although our capacity for work did dip, and in consequence, our revenue, the company didn’t suffer financially anywhere near what it could have done without such a good team on board.”

5. Finally, key personnel have access to the things that will keep the business going, like bank accounts and passwords. “We have an emergency ‘black box’ which the directors have access to which enables us to do things like pay the staff, do the VAT return, and so on – information which before was either in my head or encrypted on my computer, to which only I had access.”

Concluding, Richard says: “What we’ve done is implement very simple, very basic small business risk management items, which I think it’s true to say, hardly any small business ever does.”

If he has one piece of advice to adviser business owners based on his experience it is “treat your business like a client. Look at everything as if you were ensuring a client’s business would be covered.

“Also, trust your staff. I was an ‘I must do everything’ business owner. What this has taught me is that if you give people responsibility they take it. they thrive and they grow. Now I wouldn’t hesitate giving anyone in the team more responsibility.”

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