Advertisement
|08 November, 2018

Removing the stick in the wheel

Wadih Haddad is the founder and CEO of Dubai-based self-storage company The Box. The company, which he founded in 2007, is now one of the Middle East’s biggest self-storage firms with operations in four cities and 50 direct and 50 indirect staff working for the company.

Website: www.theboxme.com

In the second of a series of columns, Wadih Haddad of self storage firm The Box explains how and why he bought out his co-investors after just four years

It was around 2011 and my four-year-old startup, The Box, was growing at a rate I had never experienced and one at which I intended it to keep running.

The only challenge was funding. My silent shareholders at the time had neither the appetite, nor the resources, to keep investing at the level I needed to build my team and gear up for substantial growth. It was apparent I had a stick in the wheel.

Just as pressure produces diamonds, creativity sparks when you’re in a stressful situation, and although my business was still very young, I realised I had to undertake a management buy-out. This was not easy. I had to find a way of continuing to grow the company, while at the same time committing the cashflow it would take to buy out my silent partners. In fact, it was one of the toughest decisions I’ve ever had to take, but it was a necessary one to continue our growth, create jobs and expand our reach. 

Advertisement

The only problem was where could I find the money to pay them? During the company’s second year, I’d already paid out a dividend which had covered my silent shareholders’ initial cost of capital, so this was already a risk-free investment for them. But I knew that funding this share buyback for a four-year old company, while continuing to fund growth, was another hurdle I had to overcome.

I structured a deal to buy back the whole of the company, which I funded from banks and from cashflow for a period of 12 months. Since we had three years of financials behind us showing healthy growth, the banks were comfortable with providing me 50 percent of the funds needed. The rest, I had to generate.

How did I do it? By focusing on my customers. A customer-funded business is what I was in the process of building and the more cash I needed, the more customers I had to recruit. This pushed me to bring in more customers and it’s a philosophy we still follow today. Our biggest stakeholder is the customer – they are the reason why we exist.

To keep things moving, I made sure that all of the stakeholders, team members and vendors focused on one vision, plan and target. If I didn’t have everyone on the same page, there would’ve been another stick in the wheel impeding movement. Thankfully, we were able to accelerate our growth at the same time as doing the deal.

Those 12 months were a struggle, but struggle is part of the process and it became the fun part – a challenge to overcome.

Nike has a slogan that I think sums up the essence of entrepreneurship—‘Just do it’. It’s so simple, yet so powerful. Early on, I discovered that it is much quicker to make a mistake, learn from it and move in the right direction, than to stay idle. I had a ‘yes man’ mentality – by that, I meant I just said ‘yes’ to every single opportunity that came my way. I had the bandwidth to try, learn, fail, trash and focus on what worked and multiply it.

Any opinions expressed in this article are the author’s own


Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.