Entrepreneur profile: Colin Hewitt, CEO of Float

Colin Hewitt, CEO of Edinburgh-based accountancy software firm Float talks us through his journey of becoming a fintech entrepreneur.

Long a traditional industry, accountancy is bringing itself into the 21st century as cloud accountancy services. Now, it’s delivering quicker cashflow forecasting so business owners can keep an eye on their finances without spending too much time on admin.

What is the business, when was it started and what were you doing beforehand?

Float is a cashflow forecasting tool which helps small business stay on top of their finances, stay out of the red, and plan for the future. Four out of every five failed businesses are the result of poor financial and cashflow management, and it’s a critical issue for all small businesses. This includes businesses that think their finances are in good shape and that they don’t need to forecast. In fact, these businesses are always the ones hit hardest when the unexpected happens, so may need it the most.

Prior to Float, I ran a digital agency for ten years, called IfLooksCouldKill. Despite it being a successful business, I still dreaded speaking to my accountant and cashflow issues kept me awake at night, which is ultimately how the concept of Float came to be. I knew first-hand how much time and effort it took to keep excel spreadsheets up to date with financial data, and how monotonous this can be. I set out to create an tool that could give me a reliable cashflow forecast which would update in real-time, and this became Float – which I started rolling out to other small businesses after selling my agency stake.

How did you get the idea for the fintech company, and what opportunity did you see when you started the business? What are your sales and what do you expect the turnover potential to be?

I saw a massive opportunity in cashflow. Any business with four or more employees will have cashflow issues somewhere down the line and will need to know their how much money they will have to effectively plan for the future. For instance, understanding whether they can afford to hire a new sales manager, and how much they would have to increase sales each month to cover the cost.

At the time, the accounting industry was also being dragged kicking and screaming into the cloud era, with services like Xero, Quickbooks and Freeagent growing their market share year after year. The market for cloud-based accounting and finance services was booming; it still is.

Today, we have customers in the UK, US and a massive user base in Australia. We broke even in April 2018, which was a huge milestone for the company and allowed us to invest more into the business. At the start of the year we also set a stretch goal of reaching £1 million in annual turnover by the end of 2018, which we’re on track to do.

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How did you finance it and what were the challenges of that?

Selling my stake in IfLooksCouldKill helped get Float off the ground, but I didn’t have the luxury of not needing to secure additional funding.We raised a modest £20,000 to seed the company, alongside a similarly sized Scottish Enterprise grant. Scotland has always been very good at supporting start-ups and smaller businesses. The following year we raised a further £110,000, having been able to demonstrate the potential of the business and map out a clear path for growth – which is what investors really want.

Raising funding is incredibly hard and I have a lot of respect for anyone who has been through the process. You are constantly pitching your business and you face a lot of rejection. The best advice I can give to anyone seeking funding is to find people who have done it before and ask them to give you feedback on your pitch. We all have our blindspots and they will tell you yours. They’ve done it all already, they know what to expect, the questions that will be asked and the reservations investors may have about your business.

What were your key marketing strategies?

Back then, partnering with Xero and other big names in the industry made a huge difference. These brands had far more resources, reach and credibility than we did. Xero helped us with our first big launch in 2013, at Xerocon in Australia, where we won an award for best emerging add on. This was a big moment for the business and this accolade was a God-send in terms of marketing, industry recognition and sales. We continued to play the new kid in town ‘card’ well for a while after that, along with traditional marketing tools like display ads and mailing lists.

What’s the revenue stream?

Float’s revenue stream is split 80/20 between small businesses and accountants, who use the service to help advise their clients. We’re trying to work with accountants more, but we’ll never stop selling direct to businesses since our product was created primarily for their needs.

What are the main challenges you have experienced and seen?

Fundraising was the biggest challenge early on, now it’s scaling the technology to thousands of users with so many datasets. We may have got that wrong when we started. We were too focused on the user experience and needed a bigger technical team with different types of developers.

Another big challenge was moving past the start-up garage band stage, when there’s just five of you on a room. It’s a big step up to create sales and marketing teams and it’s tricky to finally hand over the product to a dedicated product manager. You get used to the product being your baby, but you have to trust other people. You also need to recognise that, as the founder, sometimes you muddy the waters when you get involved in the day-to-day minutiae of product development.

Managing cashflow is always tough for any new business, but thankfully we know what we’re doing there.

What advice would you give to early-stage businesses looking to disrupt markets?

Early-stage start-ups need to think about office space and growth, and should seriously consider co-working spaces like Codebase in Edinburgh. The benefits are invaluable, since they provide a ready-made network, and you can scale up without having to invest in bigger offices at each stage. Considering smaller cities like Edinburgh or Brighton can also keep costs down when compared to London.
Even if you’re not doing cashflow forecasts, I would encourage all start-ups and even sole traders to use online accounting software, many of which are free to use or offer trials. Financial uncertainty weighs heavy on any business and if you feel on top of your finances, you feel better about everything your business does.

Find out more: Float

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Michael Somerville

Michael Somerville

Michael was senior reporter for GrowthBusiness.co.uk from 2018 to 2019.

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Cash Flow