The challenges of scaling-up
The Business Magazine combined with leading law firm Irwin Mitchell to host this roundtable of experienced business leaders at The Vineyard Hotel & Spa at Stockcross near Newbury.
Archive for category: Other
How to power middle-market success
The UK middle market is home to some of the world’s most dynamic and exciting businesses. Growth prospects look bright for businesses in this market space but there is no room for complacency in such an uncertain world and now is the time to power middle-market success, writes Paul Anthony, partner, RSM.
Businesses in the middle market are conscious of the number of challenges they need to overcome if they are to maximise their opportunities and meet their long-term ambitions.
Through our support of the Solent 250, we have listened to businesses in terms of their strategy, discussed the issues they face and suggested ideas to support them in making the necessary steps to control risk and accelerate growth.
Harnessing technology for success
In an increasingly digital world, technology can make or break a business. The changes in the UK’s business environment has meant that technology is as valuable a requirement to a business as electricity. Technology is so fast moving, constant development results in current IT systems becoming quickly “outdated”.
The right IT solutions help organisations become smarter, more efficient and productive. Embracing technology and being ready to adapt to change allows a business to remain competitive and feel better prepared to meet changing customer demands.
The solution is simply put – “technology must be a fundamental part of the business strategy”. To move forward with confidence, businesses must first challenge their perceptions of digital change. Employees must be empowered and skilled to deal with the new developments if it is to have a tangible impact. There must be buy-in from the top, including a commitment to hear ideas and a willingness to invest and experiment.
Understanding overseas opportunities
International expansion can create big opportunities for the UK middle market, offering the chance to target new customers, secure larger workforces and reduce production costs. But in an uncertain global economy, how can businesses make confident decisions about overseas growth? The road to global expansion is often long and hazardous; businesses must successfully navigate through significant cultural, political and financial risks.
Recent events in Europe and the United States have only magnified challenges, with new question marks over global economics, currency trends and future trade tariffs. To make sure rewards outweigh risks, businesses must explore all routes to international growth. The right approach and timing has become ever-more critical with those that develop strategies that can adapt to changing world markets reaping the biggest returns. Our experience of working with businesses that have successfully grown overseas has involved focusing on a clear rationale, quantifying risks, developing a flexible strategy, understanding their tax implications and securing buy-in from key stakeholders.
Recruit and retain: managing looming tenure threats
The right people power business growth and create a basis for organisations to innovate, push forward and thrive. But while talent is often a business’s greatest asset, it is also its greatest threat. The competition for talent is fiercer than ever as work demands evolve and companies look for specific skill sets to allow them to grow and remain at the forefront of their sector and industry.
Over the past decade tenure has continued to fall as employees increasingly move companies or careers to stay ahead. To ensure talent does not impede growth, businesses need to improve internal processes to better support their workers. This might include using technology to boost morale, looking for people with the right personalities and cultural fit and creating a robust onboarding strategy.
With the recruitment outlook becoming more challenging in the wake of Brexit, the consequences of doing nothing should not be underestimated. The retention of talent and recruitment of the right people requires a strategic approach with strong board support. Talent and business strategy need to remain hand in hand.
Paul Anthony
RSM is a leading provider of audit, tax and consulting services to middle market leaders, globally.
With around 3,500 partners and staff in the UK and access to more than 43,000 people in over 120 countries across the RSM network, we can meet our clients’ needs wherever in the world they operate.
As an integrated team, we share skills, insight and resources, as well as a client-centric, collaborative approach that’s based on a deep understanding of our clients’ businesses. This is how we empower you to move forward with confidence and realise your full potential. This is the power of being understood.
News from the list
Welcome to a regular Solent 250 column, bringing together news about our annual campaign and the companies in our 250 listing.
• Clearvision, the software services company headquartered in Southampton, and number 202 in our Solent 250, has reported another year of record growth.
Turnover at Clearvision rose to more than £22 million at the end of 2017 (from £17.3m in its previous financial year) a 27% YOY increase.
Founder and CEO Gerry Tombs attributes the significant growth to the continued trend for digital transformation across all business types and size, as well as Clearvision’s innovations and expansion into new areas, in particular its capability to take teams and technology to the cloud. The independently-owned business operates across five locations, with headquarters in Southampton, and employs 90 people.
In addition to maintaining strong relationships with existing clients, Clearvision gained more than 100 new clients in 2017, including Apple, Fox, Bentley, Blackberry, BT TV, Money Supermarket and Playtech Software.
Tombs added: “While we’ve enjoyed year-on-year growth as a business, this last financial year has been particularly strong for us and is set to continue.
“It’s widely accepted that software is empowering the world and almost all large corporations have now actually become software development companies. Software development has become instrumental to all business.
“The speed of change, especially in the Software Development Life Cycle (SDLC) space, means there is increasing demand for our breadth of services and skills to enable businesses to not only implement changes necessary to keep up in today’s digitalised world but to drive through innovation and stay ahead. The number of businesses calling on our expertise in hosting Amazon Web Services (AWS) is an upward trend that’s set to gather even more pace in the coming year.
“While we work with businesses of all sizes, as an enterprise-certified Atlassian platinum solution partner we continue to attract large enterprises and the public sector – providing consultancy, technical implementation, hosting, training and support packages for JIRA, Confluence and the rest of the Atlassian stack.”
• Companies in the Solent 250 list meet on Monday March 19 for a private dinner at the Harbour Hotel, Ocean Village, Southampton. Special guest speaker will be renowned workplace consultant Kursty Groves.
The Business Magazine celebrates 25 years this year
Founded in 1993 the company – Elcot Media & Events – has grown to become the leading independent voice of business in the south – and one of the most active B2B networking and awards organisers in the region.
David Murray, founder and managing director, was recently interviewed by Sir John Madejski on his personal story, and the growth of the business over the years. Go here to listen to the interview, which was broadcast on Breeze FM.
Listen in on the interview here
He said: “We can indulge ourselves a little by looking back on our 25 years of success. But I also like to look forward – and in that respect, we have all sorts of exciting things happening – from a new Thames Valley Tech Awards, to the AIM 50, to plans for a special seminar looking at the next 25 years in Reading and the Thames Valley…..
“Standing still always means going backwards, so we are pleased to be growing our portfolio of events and activities. And as I write this, the latest magazine is a whopping 88-pages which I believe is our biggest ever. Onwards and upwards has always been our motto.”
The heat is on at Williams & Co
You get plain speaking at Williams & Co. And that’s what its plumber and heating engineer customers like. That, and the best products, at the best prices, backed by the best service, managing director Ray Stafford explains to Tim Wickham.
Independent and proud to be different is how the company describes itself and that comes through loud and clear from Ray Stafford. The company was founded by Mick Williams in 1972. His father, Harry, was a local plumbing contractor and following a car accident in 1971 was unable to drive. Mick Williams left his job to help his dad out by collecting materials from merchants. The experience convinced him that he could do a better job of supplying materials than other merchants.
The company gradually built up a network of outlets across the region. It has averaged 20% annual compound growth every year since 2000, except during the recession in 2009. It grew from 215 staff and £64.3m annual turnover in November 2016 to over 250 staff and £73.1 million turnover in the year to November 2017.
In 2015, Stafford and Mick William’s daughter Rachel Moore, director of business improvement, led a management buy out. “Mick didn’t want to sell to an outsider who might change the company ethos or reduce headcount – many of our staff are long servers,” said Stafford.
Williams & Co: No 49
Employee ownership
Other than its directors, around half the employees own 15% of the company. “Staff remortgaged their houses, cashed in endowment policies and used their savings. They are linking their financial futures to the business. That’s why we’re proud to be independently owned and will try very hard never to become too corporate,” said Stafford, who arrived at the company in 1986 after Mick Williams replied to his advert in a local newspaper ‘situations vacant’ column.
“In the advert I said I was young and hard working. At the time, Mick was looking for another pair of hands to help him out. I worked in the office and warehouse in Fareham and drove the van. In 1990, I helped open our third branch in Petersfield.”
Stafford’s job titles have taken him from general manager, branch manager, and commercial director to managing director. Further outlets were opened, until the company reached the point where it couldn’t be operated mainly by family members and friends. In 2000, with staff of around 40, Mick Williams, Moore and Stafford sat down and decided whether to just keep going doing the same thing, or take a more ambitious step to scale up.
Trade focus
“We decided it wasn’t possible to configure the business to profitably serve both trade and retail. So we became trade only,” said Stafford.
That meant overnight losing 18% of the company’s £3m annual turnover. But rather than the anticipated couple of years to regain lost revenue it took just 10 weeks. “We underestimated the power of the ‘trade only’ sign and the loyalty of the customers we kept,” Stafford explained.
Williams & Co also dropped many of its larger, higher maintenance, low-margin trade customers. “They usually demand 90-day payment terms and don’t show much loyalty,” said Stafford. “We also removed all tiers of discounts to have a single price list for all customers. It cuts out the need for lots of salespeople
and administrators trying to negotiate deals, manage prices, then sort out the inevitable invoicing and discount queries.”
National expansion
On the wall of Stafford’s office is a map of Great Britain with 33 pins clustered around the south showing its outlets. The company targets towns with populations over 100,000, high owner occupation, and not within a 20-minute rush-hour drive of each other. There are also white pins in Manchester and Milton Keynes. “These are our next geographic targets. We’ll open an initial outlet and expand as we establish the brand’s reputation – like waves created by a pebble in a pond,” said Stafford.
Xtrac gears up for expansion
The next chapter in Xtrac’s impressive automotive engineering success story is underway. Tim Wickham finds out what drives chairman Peter Digby.
Many of the winners taking the chequered flag at motor races around the world rely on Thames Valley engineering expertise, courtesy of their Xtrac gearboxes. The roll call for 2017 includes the Indianapolis 500, 24 Hours of Le Mans, MSA British Touring Car Championship, 24 Hours of Daytona and many more
Engineered for success
Xtrac prospers in the punishing and unpredictable world of high-performance racing through its uncompromising commitment to quality. Mike Endean started the business in 1984 in Finchampstead. He was joined by Peter Digby in 1986 and sold the business to him when he retired in 1997. Digby went down the employee share ownership route, with 51% of the company owned by managers and 49% by employees.
Digby trained as an engineer at British Airways before working at Formula 1’s Williams and Haas teams alongside motor racing pioneers Ross Brawn and Adrian Newey. “I had a lot of F1 and racing contacts; Mike had rally and rallycross contacts. We gelled and worked well together – me on the commercial side, Mike on the technical side,” said Digby.
“Our secret is offering unbelievably high levels of service. Everyone at Xtrac is taught that you’ve got to look after your customers. Treat them, and your colleagues, how you’d like to be treated,” he said. “We pay massive attention to every detail, buy the best materials and the best machinery. We’re not the cheapest, but people choose Xtrac for quality and durability.”
In 2000, the company moved to Thatcham where a new extension due to open in August will add around 30% of extra manufacturing space to handle growing demand. A satellite operation started in 2003 in Indianapolis to service gearboxes for US customers, has also recently doubled in size.
Homegrown global leader
Xtrac may be an international brand, but this is very much a local success story. Many staff live close by and most of the gearbox components are British made, including high-quality Sheffield steel blended to Xtrac’s recipe. “We’re in the UK’s ‘Motorsport Valley’ – from Newbury to Rugby and into the Cotswolds,” Digby pointed out. “Nearly all the machining companies we use are based within 50 miles and our two main competitors are within 100 miles of here. We have looked at sourcing work offshore, but the quality and dedication of staff is here in the UK.”
In 2015, 10 senior managers increased their shareholdings, with long-serving former technical director Adrian Moore taking over Digby’s CEO duties. Turnover for the year to September 2017 was £50 million and Digby expects this will rise 10% in the current financial year.
The workforce almost tops 350 people, including 18 based in the US. To meet its customer service commitment, the company runs night shifts five days a week. Apprenticeships play a big part in ensuring a new generation of engineers comes on board and Xtrac has close links with Newbury College to help achieve this.
Electrifying future
Xtrac is now poised to begin its next chapter. It recently brought in private equity firm Inflexion as a majority shareholder. In July, former Ford UK chairman and Jaguar Land Rover CEO Joe Greenwell CBE will replace Digby as chairman. “I’ll continue looking after our larger customers and liaising with race organisers,” said Digby.
The company has a flourishing high performance automotive division that makes gearboxes for high-performance road going super cars. Customers include McLaren, Pagani and AMG. As Digby pointed out, when you’re paying £2m for a car you expect its transmission to be the best.
Xtrac is also increasingly involved in supporting the automotive industry’s move to electric vehicles. “Motorsport gearboxes are efficient, lightweight and durable – the same requirements apply to electric vehicle transmissions,” he noted.
For Digby, the long hours, pressure and commitment are rewarded on race days. “You can’t beat the thrill of standing on the start/finish straight at Indianapolis as 33 cars roar past together at the start of the race. The noise is incredible; there’s an amazing buzz. And it’s humbling to know Xtrac gearboxes are in every car racing the Indy 500.”
Stuart Turner pumps up the volume
Tim Wickham talks to Stuart Turner’s managing director Mark Williams about more than a century of growth by the water solutions company and its plans for the future.
Henley-on-Thames is home to an important part of the UK’s engineering heritage. But it’s quite easy to miss. Hidden behind an antiquated archway off the picture postcard town’s popular market square Stuart Turner’s modern office and factory unobtrusively assembles high quality water pumps and water pressure and flow boosting solutions for all kinds of domestic, residential and commercial applications.
Always innovating
Stuart Turner has been synonymous with pumps since the eponymous engineer began the company in 1906. Its fascinating history began with steam, gas and petrol engines for driving electricity generating plants, small tools and boats.
There was once even a Stuart Stellar motorcycle. Explorer Earnest Shackleton switched on a Stuart engine for electrical power on the Endeavour during his ill-fated 1914 Antarctic expedition. Fast-forward to the 1970s and the company invented the centrifugal power shower pump. Its Monsoon and Showermate brands dominate the premium end of the market.
The foundry may have gone and manufacturing is now outsourced, but the busy assembly lines in Henley output 10,000 pumps a month. Many of the 100-strong workforce are local. One exception is Williams, who was brought up and cut his engineering teeth in the Midlands. As a manager, he ran divisions for several large multinational manufacturers, including Armitage Shanks and Union Locks.
Re-energising a leading brand
In 2008 the company invited him to replace Adrian Mettem, who retired after 43 years, the past 26 years as managing director. “I was looking for something where I would be in control of the destiny of what I’m doing. The company was at a point where it needed fresh blood,” said Williams. “They’d constantly re-engineered products so they were very high quality and had a great reputation, but the business needed to move forward.”
Williams arrived as the global recession hit. Ironically, it was a timely opportunity to shake up the company. While turnover initially dipped, increased profitability proved there were efficiencies to be made. A key move was to fill gaps in the shower pump market by extending the range. Within 18 months of Williams’ arrival, an entry-level shower pump had been launched and immediately racked up annual sales of 40,000 units.
The company also looked at new revenue streams. “We opened new channels, including online, which works if everyone can make a margin. It can be a difficult balancing act,” said Williams.
Turnover of £12.8m in 2008 rose to £22m in the year to September 2016 and £24m for 2017. “We’re growing at about 7-8% a year, which for an established manufacturing company is nice, steady growth,” Williams noted.
Exports and Brexit
Stuart Turner is extending its export footprint beyond Bahrain and Qatar to the rest of the Middle East and Africa. Exports now account for about 25% of sales. “Overseas buyers love the quality and the British connection. There’s big potential with exports,” said Williams.
Brexit and a weak sterling have so far had little effect on the business. “We both buy components and sell products in both euros and dollars, so we benefit from some natural hedging. Our exposure to exchange rates isn’t massive considering our turnover,” he said.
MBO secures long-term outlook
Last August, the company’s shareholders agreed to sell their holdings in a management buy-out led by Williams. Williams and five other directors combined with mid-market private equity firm Lloyds Development capital now own the company out right, with Williams being the largest individual director shareholder,
“It was a very difficult decision for the 300 or so shareholders many of whom have had a long family association with the company, but the company couldn’t carry on as it was. In 10 or 15 years’ time most of our core market is likely to be in decline. We needed a capital injection to move into new markets, grow organically and make acquisitions,” said Williams.
Stuart Turner has a strong desire to keep tradition going in the royal regatta town. “Henley is part of our heritage. We are perceived as a high-quality engineering company and Henley’s status as an internationally known town fits nicely with our brand,” he said.
10 deals of HMT – the disposal of Swift Worldwide
To celebrate its 25th anniversary of leading corporate finance deals, HMT is reminiscing on 10 notable transactions from its archives. Having completed over 500 deals, producing a shortlist of 10 has not been easy but advising on the disposal of Swift Worldwide Resources to US buyer Wellspring is one of our biggest deals, and as such has certainly made the list. Read more →
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