From the top · 16 February 2018

The Icelandic financial crash nearly killed my business

lcelandic financial crash
There was nowhere to hide when Iceland’s banking system went into freefall

Ingvar Gudmundsson was making good progress when the financial crash hit Iceland in 2008. The well-documented collapse brought about a pivot in his business and instilled in him a resilience that holds true today.

His current business, SimplyBookMe, interacts with thousands of small companies everyday – helping each with automated bookings and cancelling services. Gudmundsson sat down with Business Advice to share his journey and explain his appetite for risk.

Please tell us a little about your entrepreneurial background

I’ve always felt like an entrepreneur. From a young age I was trying to get something off the ground. It’s ranged from a failed magazine venture when I was 12 to a company where my friend and I would drive round town finding wooden pallets that we could sell to a manufacturer.

My first real big idea was when the internet was still so nascent. I took the chance, quit my job, got $3m funding and launched BePaid.com in New York. Unfortunately, less than year after the launch, during the second round of funding, the internet bubble crashed and my company with it.

I had been in shock from the failure of BePaid.com and not sure what to do next. Then less than a year later a plane flew into the World Trade Center, only just above the floor where our office had been. I was in total shock, horror and disbelief as I watched it on the television – and realised how lucky I was.

I licked my wounds from my parent’s cellar and began to learn to programme. I programmed an online sales and accounting programme and launched it in 2002. We did so in English but with not much luck, so I took the business back to Iceland where it was moderately successful with a few hundred clients. We expanded by adding a subsidiary of programmers in Ukraine in 2006 and reprogrammed the whole software to relaunch in 2007. Not long after our launch of the new software, we knew something was wrong as fewer businesses were signing up and many were quitting. We suspected a financial crash was coming.

How did you nearly lose your business?

After the Icelandic financial crash, the majority of our clients went bust – which meant it wouldn’t be long before we did the same. I had to let nearly all of our staff go and cut my own salary to zero. We then outsourced our services and company invoicing to another company. Three core staff stayed, and any proceedings we had went to paying them.

It was at that time we began to focus on an appointment service we had done for a client. We launched the software in English and focused on it. Revenues started slowly but we kept with it.

Gudmundsson has had to deal with countless challenges

What were your thoughts at the time?

I’m always positive and try and see the bright side. I was lucky because my wife was still in a good job and I had staff willing to defer salaries for many months – so we got through it. Those core staff are still all with me today and are part owners in the company. I often think about how lucky I am to be with these people because they are not only good programmers but good friends. Many of them are positioned in the Ukraine, but we are in constant communication.

How did you put in place a strategy that allowed your business to recover?

The most important decision was to look beyond Iceland and launch our product in English. We changed the name of the company to SimplyBookMe and simplified the service we offered, which really changed things and got the ball rolling.

What were the biggest learnings from that period?

I learnt that it’s important not to give up and always think globally. I also don’t think you can underestimate how important it is to retain your best staff. Everything I did in that period was based around that, and I knew there was a vision we all believed in. I try to always see the positive in the little things and believe they are indicating the beginning of big things.


 

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How has it shaped your approach to risk and having plans in place to deal with set-backs?

Since I was in both the dotcom crash and the Icelandic crisis, I know there are no guarantees and you have to be on your toes with everything. As a result, I stay focused on offering a great service and trying to work as globally as possible to diversify the risk.

Having the right investors is incredibly important – I’m pretty sure not every investor would have stayed with us through those hard times. Having said that, after the Icelandic financial crash it was actually our investor that went bankrupt and so we had to buy all our shares back from the bank.

What are the primary challenges your business faces today and how has it evolved?

We now have offices in three locations and, while we are growing, we are trying not to do it too fast. We are extremely strict with hiring and only recruit the best. Our main challenge is finding the right people that we need.

However, I think we could also be more visible in the different markets we work in. We are in a market with literally hundreds of companies offering these small services – the task we are faced with is to make clients realise that ours is the best.

Reykjavik, Iceland

Is it hard running a company from Iceland?

When I launched the online accounting business in 2002 it was very hard. I would say it was almost impossible to run a global internet company in Iceland then.

Since then things have changed an incredible amount and I see no hindrance running the company from Iceland. I now live in the south of France and it is easy because communication is so easy. Screen sharing is accessible and video chatting is simple. These are amazing times and I really try to make the most of these possibilities and enjoy work.

What have you learnt from the thousands of small business customers you work with?

That they often go through hard times. Often, we are with businesses from the very beginning and I’ve seen some people with very good intentions give up too easily. People can start businesses but quite often don’t know how to become known. This is behind everything we do at SimplyBookMe. With software like ours, that instantly makes you appear professional with little to no costs.

The hardest part I’ve found is getting the word out about your company. Some small business owners are really savvy in this respect and they are the ones who make it. Those that don’t know how to use the new online world are the ones who fail.

My advice to a small business starting out is to ask “how are you going to let the near community know you are there?”. Take risks, use social media, do online ads, spread flyers and ask your friends to help spread the word. These are the ones that we see really succeed.

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ABOUT THE EXPERT

Hunter Ruthven was previously editor of Business Advice. He was also the editor of Real Business, the UK's most-read website for entrepreneurs and business leaders at the helm of growing SMEs.

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