'Don't be ousted from your own business' - founder's warning
Elizabeth Gooch reckons she’s seen most things in her business career but says the only thing that nearly ‘crushed’ her was the day she almost lost control of the company she founded.
The award-winning entrepreneur launched Staffordshire-based back office software supplier EG Solutions in 1988 and is disarmingly honest.
Gooch believes it’s important people are open about their mistakes and admits she floated on the AIM market before they were ready in 2005 and sold out to US tech group Verint for a bargain £26.3m in 2017.
However she says the only experience that nearly broke her was the day she almost lost control of the company she founded to the board she helped appoint. “It nearly crushed me,” she recalls. “I’m a pretty tough cookie.”
We’ll come back to exactly what happened later but Gooch’s story begins with a fictional friend called Patsy Fagan.
“I was definitely a bit different,” she smiles recounting her childhood. “I used to have an imaginary male friend called Patsy Fagan and I’d go up the garden to speak to him. My family still bring it up.”
The young Gooch modelled herself on her grandmother. “She was completely different to everyone else,” she says. “She was the main earner in the family. She was the first person in the village to get a car and a TV. She was a really hardworking woman and I think I took after her mostly. The ability to graft comes from her.”
After deciding she didn’t want to go to university her dad told her she had to get a ‘proper job’ and she started a management training role at a high street bank.
“After the first six months I said I didn’t want to do the management training scheme anymore,” she recalls. “I wanted to leave because it was boring. They suggested I go into the productivity improvement team and I adored that.”
Despite having no formal training Gooch had a knack for helping companies improve their productivity so she decided to launch her own business in 1988 at the age of 26.
“I was fed up of being told I could only have the job of assistant manager,” she says. “It was nothing to do with sexism, it was do with ageism and my credibility at that point. I had no fear of failure. It was not possible to fail.”
The business was originally called EG Consulting and advised companies in the financial services sector on how to improve operational performance.
“I was asked by one customer ‘why would I go with you and not a big accountant?’ she recalls. “I said ‘I’ll guarantee you the benefits and you can pay me when I deliver them’.
“That methodology stayed with us throughout our business. We got paid on the results that we delivered. We promised a minimum 20 per cent improvement in six months or you don’t pay. On average we had a 36-50 per cent improvement.”
As the company’s reputation spread Gooch expanded into tech because they needed real-time business intelligence but 75 per cent of their revenue came from one-off services, like their consultancy work.
In 2000 she met financial industry veteran Rodney Baker-Bates, who became her chairman. He focused on selling software and was influential in changing the name to EG Solutions.
Five years later the company floated on AIM – much to Gooch’s regret.
“It was way too early in our evolution,” she says. “We went from no investors at all, no knowledge, to being listed on AIM. We gave away 40 per cent of the business for £2m!” In 2012 she was awarded an MBE in the Queen’s Birthday Honours list for services to industry and 12 months later Gooch received a note from Panmure Gordon that changed her life. The broker suggested appointing a new chairman to take the business she founded forward.
“Both Rodney and I felt we’d run out of steam ourselves and we needed someone else to take it forward,” she recalls.
Step forward John O’Connell. The high profile London-based technology entrepreneur and serial tech investor had co-founded, floated then sold Staffware to Tibco for a reported $237.1m in 2004.
He had an ambitious strategy to grow the business and joined originally as chairman in March 2013. “We were spending more money but making less,” says Gooch.
Gooch prefers not to dwell too much on what happened but admits it wasn’t the match made in heaven that she’d hoped for.
“It was meant to be a non-executive role but within a week he wanted to be executive chairman and he wanted me to move aside and appoint his own man to run the company,” she claimed. “I was being brushed aside.”
Gooch went to the majority shareholders, who presented O’Connell with a set of conditions that Gooch herself describes as ‘onerous’. O’Connell resigned after just eight weeks as CEO.
O’Connell declined to comment when contacted by BusinessCloud.
Gooch returned as acting CEO and chairman and admits the experience massively knocked her confidence.
“Founders need to think with their head and not their heart,” she says. “Founders are very generous. They want people to help them but they’re willing to give equity away when they don’t need to.
“When I returned we were back in start-up mode. We were 100 per cent back to basics.”
She brought back daily cash-flow forecasting and began calling up all the customers personally which drove up sales.
By 2017 EG Solutions had grown to 120 staff and turnover of £11m when US tech group Verint brought them in a £26.3m deal.
By then Gooch had 17 per cent of the equity. “We’d previously been offered cash a couple of times before and said ‘no’,” she recalls. “I still think to this day it was not sold at the right price.
“It was never about the money. I adored what I did. It can’t be a job, it was who I am. I went from being the CEO of an AIM-listed company to being no-one instantly. That was hard for me to deal with.”
She was offered a few non-executive directorships but decided at 58 she was too young to only sit on boards and resolved to use her experiences to help others.
Although The Tech Growth Factory has not been officially launched, it will offer training and mentoring for tech start-ups and scale-ups to help founders achieve their dreams.
She’s also invested in two tech start-ups in Manchester-based FinTech Nivo and Stafford-based business intelligence expert Connexica.
Nivo offers a secure instant messaging platform and is Barclays' first technology spin-out. It’s the only instant messaging network that banks can trust for sensitive and transactional conversations. Processes previously taking six weeks have been reduced to 15 minutes through Nivo’s platform.
Gooch enthuses: “The product is absolutely amazing. The thing that swung it for me was the feedback from the early customers. It was phenomenal. I don’t even know what number it can get to. It has huge potential.”
The entrepreneur has won countless awards and says being a woman has had no impact on her success.
“One thing I would say is be open about making mistakes,” she admits. “You can be open about making mistakes in America. Business is never perfect. If you’re not making mistakes, you’re not learning. How you recover from these lumps and bumps defines you.”