Having folded his previous business, Rob Stone was left with no job whilst battling to feed his nine children alongside spiralling consumer debt.

Determined to create a business that would support his family long-term, Rob was inspired to create the Instaloft brand, which provides a range of loft storage services, after Googling franchise opportunities.

Although he didn’t have money to invest – or experience in loft installation – Rob purchased some tools via a £200 credit card, secured an early supplier agreement and set to work. Fast forward over seven years and Instaloft now turns over in excess of £14m in revenue, generates a seven-figure profit and employs 127 people across the UK. Rob shared his experience of not getting it right all the time and his key learnings when it comes to the financial side of the business

Looking back, what were your prioritises in the early weeks, months and years and how do you reflect on those now?

“To be honest, in my first few months and even the first year, my priority was just to market and get some jobs in because I was flat broke, so every penny counted. I did everything on a shoestring budget as I couldn’t afford to do otherwise.

“I don’t regret those days as it taught me that you don’t always need to spend a huge amount of money to achieve a goal. However, during my second year or so when I tried to expand the business a little, I found I wasn’t making much money again and it was then I had to start really trying to understand the balance sheets and P&L [profit and loss]. I had to learn how all of those numbers related to each other and how small increases in one area might affect others.”

Going into the business, what experience or knowledge did you have in relation to the financial side of running a company?

“None at all really. I knew that if you buy something for £50 and sell it for £100 then you make a profit. If only it was that simple.

“I had to learn through trial and error from weeks where I seemed to make nothing to weeks where I made what seemed like a small fortune. Then I had to learn why and how cash flow works so that I could learn to plan better.”

By not paying close enough attention to this business discipline, what issues and problems have you come across?

“I recall a time when we had three vans running daily but, each week, I never seemed to be making any money. I had taken on a small unit by then that had costs involved that I hadn’t effectively accounted for. Then I had a new team to pay wages for and no idea about cash flow forecasting.

“My sales method at the time was to offer people a 15 per cent discount if they agreed to the installation on the day I did the quote, but I often honoured that even when they didn’t. I asked a business coach I had been introduced to what I could do as I wasn’t making any money and he said, ‘stop doing those discounts!’.”

“The idea terrified me as I thought no one would buy if I didn’t do it. I reluctantly agreed to give it a try and said I would do it every other day in order to see how it worked. The next day I went out on my four or five quotes and offered our services without the discount. That night I came home amazed – people still bought from me without the discount. Nothing changed. I decided I would carry on not offering the discount and suddenly my business was selling for a higher amount with no drop-in conversion rates. That was one of my most valuable lessons and I always say now to my sales team “provide value, not discounts’.”

At what point did you start to realise the significance of understanding what having a solid grasp of things like balance sheets, profit and loss forecasts and cash flow forecasts?

“This period of time is such a painful memory. I had joined a business coaching mastermind and they had set me a target in my first quarter membership to open another account and save £30,000 in that first quarter. I did it and was so proud, and I felt so rich too. I’d never had £30,000 in the bank. This was the time when I had decided to grow the business to three vans. I got that third van and stormed ahead, throwing caution to the wind and going for it.

“At my coaching group the next quarter I wasn’t quite so proud to stand up and say that I had lost the £30,000 I had saved and was no longer making any real money. They asked me to pull out my P&L so they could offer help and I realised I didn’t really know what that was. It was then that I really started to look into the financials and learn how to interpret them properly, as well as how to forecast the cash coming in and out so that I could really start doing something.”

What was your approach to remedying the situation? How did you seek to make sure this oversight didn’t continue?

“It was a lot of hard slog really. Throwing myself into books on business finance and harassing my business coach to help me to understand. Then creating my own version of spreadsheets for my cash flow forecasts (so detailed they listed even a DD for £1.99) so I could see exactly when my bills and wages were due each week and each month. I am a firm believer now that if you don’t learn the financial side of the business and how all of the numbers across the reports interact with each other, then you can never really scale or plan properly without falling flat on your face.”

What impact did this have on the business?

“I started saving £3,000 a week every week. It is surprising how quickly this can mount up and before long I was saving more each week as I grew the business. This way there was always money in the pot for unexpected costs, growth funding or other investment.

“I created my own version of a cash flow forecast which was extremely precise. I knew exactly what expense was going out and when. The only part that was mostly guess work was the income during the 13-week period. I based that on the weekly averages for the past six months. Most of my expenses became a fairly consistent percentage of my revenue so, if I wanted growth, I could work out how much one van could generate in revenue and, almost to the pound, how much extra that would cost me each week.

“I learned to reverse engineer the cash flow forecast then to plan what the next 12 months might look like, starting at the goal and working backwards to formulate a plan. At every step of the way I knew what it would cost, what I would be able to save and how soon I’d be making money. I scaled from one depot with 2-3 vans to three depots in 12 months and the savings pot grew the entire time.”

How would you make an enticing pitch to business leaders who still bury their head in the sand when it comes to the financials? How would you sell the upside of changing their ways?

“Look, I’ve been there. I’ve sat night after night wondering how I am going to pay the wages and the suppliers. I’ve argued with my wife over nothing because I’m shutting down mentally due to the stress of trying to hold it all together and not knowing why it’s going wrong or how I can fix it.

“If this is what you want and you get a kick out of the daily palpitations and your family falling apart then by all means carry on, but if you want to grow and scale and really create something then get yourself a business coach that’s right for you, read books on business growth and strategy, listen to audio while driving. Don’t assume you know it all because none of us do and it’s amazing what you can pick up and learn from others that have been there and done it, or that work with those people day in and day out."