The Holdsworth Group provides consulting services to clients in the healthcare industry, primarily helping fire departments, ambulance services, hospitals and municipalities evaluate and improve the emergency response system. Bob Holdsworth founded the company more than 26 years ago with a folding table and a rented computer in his living room. The Holdsworth Group now employs 22 individuals in a 6,800-square-foot office.
Holdsworth recently spoke with us about how he’s parlayed diverse career experiences into a successful business.
How did you get started with your business?
I was working as the emergency services director at a hospital. Within the scope of my job, I was interfacing on the hospital’s behalf with about 30 different agencies. All of those agencies were coming to me asking questions about how to do different things like marketing or state compliance paperwork or increasing revenue, none of which was in my job description for the hospital. I said, “Yeah, I do know how to do that,” because I had previously run a couple different ambulance services. I started out working for steak dinners. I’d say, “You buy me dinner, and I’ll help you with it.”
Then somebody said, “Why aren’t you doing this as a business?” I said, “Well, I work at the hospital.” I looked at the upward mobility in the hospital and thought that maybe I should hang a shingle. So I did!
To date, several of the companies I helped while working at the hospital are still with me. They’ve been with me since the day I opened my doors and they’re still here. We have 94 percent client retention across a 26-year span.
How did you fund your business in the beginning? Have you taken on any additional funding since?
We funded ours the same way a lot of people do, with cash on hand. I didn’t own a house at the time, so a lot of it was funded on credit cards in the lean times.
Having emergency cash on hand can be your key to managing cash flow.
We now have a line of credit that we maintain, specifically because of our close ties to the healthcare industry and its relative volatility. We maintain a credit line that we can use if receivables dip a little bit and we need it for payroll or something like that. Or so we can take advantage of something like an opportunity for a bargain on infrastructure upgrades like computers. We’ve also used it to put a down payment to lock up an acquisition of a smaller company.
Running the Business
How did you learn to run your business?
My dad was a banker in Boston and I learned fiscal management from him and watching what he did.
I was fortunate that from the time I was 18 I was in a managerial role, first in the hospitality industry as a unit manager for a couple of food service companies. I learned food cost, I learned labor cost, I learned union issues, I learned budgeting and projections and profit margins and markups, and then I transferred that knowledge to the healthcare industry.
I then took a job as director and general manager of an ambulance company. I was 26 at the time. It was me and the owner of the company. I started on a Monday and on Wednesday he left for the Caribbean for two weeks. He said, “You’ll do fine. Don’t screw it up. Don’t call me unless the building burns down.” I very quickly had to find out where everything was, where are the funds, what does cash flow look like, how do we do payroll, etc. I learned and learned and learned there. I learned the business from somebody who was in it and now my job is to take what I’ve learned there and help train other people.
Who was your first customer?
For most consultants, their first customer is a vendor they were working with at their previous employer or it is their previous employer – I had both.
I was very forthcoming with the hospital. I said to the president of the hospital, “Listen, we could add a consulting division to the hospital’s EMS division. I would be more than happy to run it and it could become a revenue source for us.” He said, “Nah, not really interested in doing that.” So I said, “Do you have any objection if I do?” His answer was, “If it does not impinge on your primary duties here, do whatever you want.” Sounds good to me! Less than six months later, I was in his office again saying, “It’s going really, really well and I’m leaving.”
When I announced I was leaving the hospital full-time to start my own business, I was very fortunate to have six clients the day I opened my doors. Those were clients I had been assisting anyway. The hospital was actually one of my first clients. They wanted to retain my services for a period of time to transition some projects that were still ongoing. They’re still a client to this day.
What’s the biggest mistake you made in the first year?
I started with six clients who signed on with me right away for various services, but those services were not consistent and did not have continuity revenue. When I opened up my business, I did not do retainers, I did project-based work. That means there were lulls and cash flow problems in those lulls. Now we work on retainers and have some continuity revenue built into our models. Cash flow is a lot more level.
There were some lean times when nobody had projects and we had to hunt for the next one. A lot of my clients were municipally funded, so the lag time for doing the work now and getting paid in a couple of months is not something I had really calculated as well as I should have. We did a couple of projects for the federal government and they didn’t pay for 90 days! Having clients signed and having cash in the bank are two completely different animals.
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What’s the smartest thing you did in the first year?
I listened to my customers.
I went into the business with a very clear-cut idea of what I was going to do, what the business was going to look like, and how my life was going to go. Today, it doesn’t resemble that – not even close. I expected to run a business from my home with an administrative assistant and provide certain services. Twenty-six years later, I drive from my home to my office. We don’t provide those original services anymore, but the ones we do are significantly more lucrative.
What’s the most rewarding thing about running your own business?
I control my schedule for the most part. When my kids were first born, my wife and I worked together. We actually met here. She is our CFO and I did not hire her! I give our former manager credit for that. We had twins and it was tough to decide what to do – who was going to go back to work and who was going to take care of them. What I ended up doing was, for nine years I took every Tuesday off to be with them. It was affectionately known as “Boys Day.” I would take them, even as infants, to the mall or shopping or whatever. As the kids grew up, we would go to the airport and watch airplanes or take off for an afternoon baseball game. The clients actually embraced it to the point where people were trying to figure out how to emulate it. The most rewarding thing is that I have all those years of memories of Boys Day.
Then, after the boys started getting more heavily into school and other things, Tuesday became the day my wife and I took off. That was our day to reconnect as husband and wife and get some time without the kids while they were in school. We’d go to lunch, go do something, or just hang around and talk.
What’s the most difficult/challenging thing about running your own business?
Wearing multiple hats. I wrote an article years ago called, “I’m an Entrepreneur, Where the Hell’s My Secretary?” People come out of a corporate world and they don’t realize that in the beginning, they’re going to need to be the marketer, the developer, the fulfillment person, the accountant and the planner – and there’s only so many hours in a day.
A lot of people go into business and think that since they were working a 40-hour week before, now they’re going to work a 36-hour week because they can control their schedule. Most people don’t realize that with wearing all those hats, it’s more like 60-, 70-, 80-hour weeks. But there’s an old saying, “I will do for several years what other people won’t so I can do for many years what other people can’t.” That’s exactly how I feel. I’ve done a lot for a period of time and now I’m able to recoup from some of that and enjoy life a little bit.
What’s the most surprising thing about running your own business?
If you’ve not come from an entrepreneurial background, the surprises are the pitfalls and landmines that lay there because you don’t know what to expect. Even if you’ve written a business plan and it looked great on paper, sometimes you don’t know what you don’t know.
What business owner or entrepreneur do you admire most? Who is your role model?
A couple of people taught me the business, and they’ve passed away.
There are two people who I currently look up to and follow what they do. Dan Kennedy is an extremely well known marketer who I follow closely. I’ve worked with him in small, intimate groups to learn more information. I also follow Joe Polish who started out as a carpet cleaner and is now in the information business, teaching other people how to run their businesses.
What I’ve Learned
What advice do you have for others starting their own business?
Think honestly about your strengths and weaknesses. Everybody looks for a partner who complements them. But for many people, “complement” means “thinks like I do.” “Thinks like I do” and “likes what I like” often leave big gaping holes in the business because neither partner is, for example, detail oriented.
If you’re going to choose a business partner, choose them more carefully than you would a spouse, because you’re probably going to spend more time with that person, especially in the beginning years. And do the “how are we going to break up this business” paperwork at the beginning when you’re still having a lot of fun and being friendly. Take care of the buyouts and what will happen if one of you is incapacitated and all the other “business prenups,” because it will cost you a bloody fortune if you don’t.
What do you wish you had known before starting your business?
What I just said! In one case, it cost us an awful lot of money when I went from having one partner to having two. We brought someone into the business for a very specific reason. But then my original partner didn’t like the way the business was going. We had done some of the paperwork, but not all of the paperwork. It ended up costing us an awful lot of money to separate it back down to a two-person partnership, which ended up running successfully for 17 years.
About the Author — Ashley Sweren is a freelance marketing writer and editor. She owns her own small business, Firework Writing, located in San Jose, California.