The Business Magazine joined with Blandy & Blandy, Grant Thornton and HSBC, – sponsors of the TV250 listings of top private independent companies in the Thames Valley region – to invite some of the most vibrant TV250 performers to gather at The Vineyard at Stockcross, near Newbury in order to reveal How to build on success. Journalist John Burbedge reports the Roundtable highlights
OK, so give us the key ingredients
David Murray started proceedings by asking the opening question of the prime TV250 companies represented at the Roundtable: “What’s made your businesses so successful?”
“Passion!” came the immediate response from David Bloxham of recruitment specialists GCS. Unsurprisingly perhaps, GCS consider passion a key factor in their own recruitment process to both attract and engage the best of Thames Valley talent.
“We feel very passionate about what we do and want to hire people who are equally passionate about supplying outstanding talent to the best businesses. To succeed in recruitment you have to believe in the worth of what you are doing. Having passion for what you do means the role becomes much more than just a job.”
GCS, a company that has maintained its headquarters in Reading since 1992 has grown from a staff of three to a skilled team of 83 and a turnover in excess of £34 million.
“Naturally, as a recruitment company, we have worked with numerous growing businesses over the past two decades, and we have observed that the most successful companies buy into those that are most passionate about their business. If a company doesn’t employ the best, they risk slower growth. Setting higher standards sets them apart from competitors.
Tim Jones of catering business CH&Co employs just over 2,500 staff and totally agreed with Bloxham. “You have to have people with passion. Our growth has been all about our people. One other key is getting your company message all the way down to the lower levels of your business, and that can be difficult with part-time working and lower paid roles.”
To overcome this CH&Co has invested heavily in training programmes and internal communications embracing industry-relevant knowledge and awareness of what is going on in the company.
“For us a major ingredient of success is maintaining our high level of service delivery – such as work standards and keeping promises. We all know how tough such things can be in business and there are always bigger competitors who can compete very hard on price, but you have to find different ways of battling against that.”
“We are a food company, but it is how we deliver our overall offering that matters.”
Westcoast Group employs 800 people, with 500 in its wholesaling divisions based in Theale and Milton Keynes, Alex Tatham explained. “Actually our company tagline is ‘We are passionate about distribution.’ It is our only value and those with that passion are the people I want to employ, and it’s the value we want throughout the business.”
“Our internal communications and the ‘feeling that we are all in this together’ are therefore very important. We tend to compete with vast American organisations listed on Nasdaq but they are very much mass production businesses and we are very much a mass customisation business. So we flex our business according to what our customers want us to do.” Despite being a £1.2 billion turnover company, Westcoast remains a ‘small’, nimble business able to react and adapt, says Tatham, “The key ingredient for our success is that we have driven a customer focus within our business.”
Neil Grundon highlighted the people in his company. “We are a well established family business, and our people and their industry knowledge have grown with us, and so we benefit from a low staff turnover.
“When we do recruit, we usually do so from outside the industry. In that way we gain fresh thoughts and don’t repeat old practices or industry mistakes.”
While bemoaning the lack of engineers at present, Grundon added: “We would like to recruit more from the people who create the rubbish in the first place – the designers in fmcg and packaging industries – so that we can better understand how to process those products back into the supply chain to achieve a circular economy.”
Other ingredients of success for us have been innovation and a desire for continuous improvement. “In our business one bin is very much like another, but if we can tell the story to the customer about what happens to our bin after it gets picked up, it gives us a lot more credibility.”
Golfbreaks boss Andrew Stanley, revealed that his people too were the success ingredient. The average age of his employees is mid 20s. There is no pre-requisite to play golf, but the company tended to attract people who are passionate about the game. “Growing our own has been part of our formula.” Every year the company takes in 25 one-year placement students from UK universities and colleges, and on graduation offers around five full-time positions. “We call it our academy model, and it’s something that very much works, allowing you to discover team players, hard grafters and so on.”
Grant Thornton’s Bob Alsop added that success was often dependent upon having a strong management team that kept a good view of its market, and was agile and innovative.
The warm glow of work
Murray suggested that making a company a great place to work was also a key necessity today.
Jones agreed. “Sometimes things come by design and sometimes by experience in the job.” In founding CH&CO, he and his wife Robyn had quickly discovered the slim divide between home and worklife. “So we had to make the worklife a good environment or things weren’t good at home. Accordingly, as a family business, our team had to feel part of that happy family. That objective really has been a massive ingredient in our success. There is a lovely warm glow to achieving that within your business.”
“You get so much more from your team if they feel part of the business, particularly when you have success and they can share in that or in poor times like during the recent recession, they are likely to be far more understanding of difficult decisions.”
Bloxham added: “When it comes down to it, although companies are looking for the skills, workers are looking for the right fit for their career and their life, and asking what this extended family in their workplace can provide. Having a ‘great place to work’ culture is important, and makes a huge difference for prospective employees. If a business gets the feel of the interview and, subsequently, the first three months of employment right, they often have the person’s heart.”
Lawyer Sue Dowling pointed out that although employment laws constantly change, “…time and time again when you are asked to advise on an employment situation which has got out of hand, there has always been a breakdown in communication, along the way.
“The whole culture of a business is fundamental because if you get this right from day one, you are much less likely to hit problems down the line.”
Along with good communication, Dowling suggested flexibility, moving with the times, and developing a happy dynamic workplace were success ingredients. “If you have a happy and friendly culture in your company, then business can flow from that too, because customers work with people they like and who clearly enjoy what they do.
“Training of staff is also really important in business.” She revealed that Blandy & Blandy invest heavily in trainee solicitors. “Some Thames Valley legal firms have stopped doing that (perhaps employing paralegals or temporary staff instead). We think this is short-sighted. If you train people correctly in the first place, then people stay and move up through the ranks developing your business, along with their careers.”
Murray queried if upskilling of managers was necessary nowadays. Tatham noted that as a culture, Westcoast encouraged managers to “manage underneath their people, rather than above them”, providing support and acknowledging that poor performance could be as much poor management as the fault of an individual.
“We don’t spend a lot of time training managers by sending them away on courses. There is a lot of training gets done in the business, however. Mostly it’s on the job or through our IT vendors such as Apple, HP and Microsoft, and we even train our customers. So, it is a vital part of our business generally, but individuals feeling that they are a valued part of the business is the most important aspect to achieve.”
Survival through the downturn …
Murray wondered how businesses had managed to survive in recent years, and planned to thrive now in the recovery.
Jon Stradling said that HSBC had benefited through the financial upheaval and economic downturn by being seen by businesses as a ‘safe haven’. “For the past couple of years boards have been understandably cautious about making large decisions such as M&A etc, because life has remained hugely uncertain. Now, in the past three months we have seen positive signs and a genuine uptick in activity.
“We are not completely out of the woods yet, but a lot of companies now want to make investments in their fixed assets. There are more companies wanting to re-finance or overhaul their capital structure so they have more firepower for strategic activity.
“There are some concerns that a lot of the incentives and stimuli in the UK economy may not be sustained and are merely the froth of the moment, for example in the housing market. There is still a bias towards consumption activity rather than investment, but overall I think business owners and boardrooms are feeling a level of confidence and security in their businesses that they haven’t felt for some time.”
Funding was not impeding market activity he felt. “I see no lack of appetite among banks generally to support the growth of successful business.”
Stradling agreed with Murray that the finances of many companies are now in good shape “Cash holdings on corporate balance sheets are at a record level. M&A activity does not always mean that you have to borrow money. The environment is there for people to act if it is right for their business.”
HSBC colleague John Wilkinson, pointed out that strong businesses have been paying down debt and waiting cautiously for the right time to invest and act. “It is still a fragile recovery but there have been a number of indicators in recent months that point to a more robust growth going forward.”
Tatham revealed that Westcoast had almost doubled in size over the past five years, and used invoice discounting to finance the business, ironically to help cope with the pace of technological change. Five years ago iPhones weren’t yet launched, now iPads and the advent of cloud technology have arrived. “Our company will distribute 100,000 tablets in the coming four weeks.”
Grundon: “We took a conscious decision to continue marketing throughout the recession and our business is growing well. I envisage our headcount going up, and I feel a lot more comfortable than last year.” He also noted an indicator that the economy as a whole was recovering: “Rubbish tonnages have gone through the roof in the past few months.”
… and better times ahead?
Grundon: “We also sought to invest in complementary businesses. For example, recently we bought the UK arm of RecycleBank which has 250,000 members, and we are relaunching that under our ‘Green Redeem’ brand, a venture which will reward consumers for their recycling through a voucher system. Recycling behaviours are pretty well established in the home and at work, but a lack of recycling facilities and motivation are baulking their adoption when people are out and about or ‘on the go’.
This is a significant change for us as it’s all about educating consumers, understanding their behaviour and promoting change rather than simply the collection and recycling of waste.”
Stanley said his business remained vibrant with 15% growth over the recent September/October booking window for 2014. “But, there are around four million golfers in the UK. We book around 200,000 golf breaks annually so there are still a lot to play for.”
He was optimistic of reaching the £50m turnover milestone within the next five years, not least through the boost of Golfbreaks new American office and uptake of the company’s online booking services Teeofftimes.co.uk and BookaSpa.com.
Tatham: “We had a good ‘recession’, and I anticipate us growing by around 20% this year, and potentially adding £200m to the business topline. We are very optimistic, but we have always delivered on our optimism. We always set ourselves targets that stretch us and make us think differently; if you set small targets, you can achieve them by working a little harder.
Jones expected CH&Co to grow 15-16% this year and similar in 2014. He admitted the company had “battened down the hatches in the past”. Now, it was about getting the right balance of cautious expansion and robust growth. “You don’t want to dampen enthusiasm, but you have to be mindful that this frothiness could be short lived.”
While his company was proud to have achieved a £100m turnover milestone, he stated that the real focus now was to improve profit margins eroded during the downturn and strengthen the company’s finances.
Bloxham’s GCS has doubled in size over the past three years and he said his focus is on achieving continued growth. “I see vacancy levels up 14% year-on-year. Obviously, this is good for us, and offers the opportunity for our consultants to make placements within growing companies.”
Future recruitment worries?
Alsop queried if company costbases were likely to increase as a result of competition for good staff as the recovery takes hold, thereby leading to reduced margins.
Bloxham commented that GCS’s most recent quarterly review showed that professional and technical salaries are rising. “All businesses today are driven by some form of technology. Highly-skilled people are needed to keep things moving forward. I read recently that the number of technology start-ups has risen by 40% in the past 12 months – that’s new businesses creating new jobs but competing for the same talent.”
“At the same time, increased recruitment within established and traditionally high-paying businesses in The City, such as banks and long-standing accountancy firms, is also causing salaries of technical staff to rise while drawing talent away from the Thames Valley and towards London.”
Stradling agreed that The City was a big draw, particularly for young CV-aware recruits. He also accepted that good people always cost more, but pointed out: “There is nothing in corporate banking terms that we cannot give such people within the Thames Valley, so we just have to make it more appealing, a better place to work in their minds.”
Bloxham also highlighted that changes in the UK immigration laws have had a huge effect upon recruitment. “Five years ago it was very easy to hire skilled people from outside the EU. That’s not the case anymore.”
Apprentices, legislation and zero hours
Hiring apprentices was an issue in the Thames Valley said Tatham. “I am passionate about apprenticeships, but, although hiring interns and sandwich students is easier because they look for business experience in their third university year, I find getting apprentice candidates into our IT business is difficult.”
Jones agreed. “We are not seen as the glitzy, sexy side of the catering industry. Everyone wants to be a Ramsey or a Heston, or work in the hotel or restaurant scene.
“Contract catering is not fashionable and we have to push hard to find the right calibre of youngster coming out of college at apprentice level. It’s amazing really given the state of the economy.”
CH&Co had got involved in several initiatives – even working with competitors – to encourage uptake of a career in the catering sector.
Grundon said recruitment in his sector was less troublesome, with its focus on a ‘green’ environment. Employment law was where he had recruitment concerns. “At the moment legislation discriminates against the old and the young, because employers don’t want to employ either. The young seem to want to throw themselves in harms way and the old don’t want to leave.”
Murray queried if flexibility, part-time staffing and zero hour contract issues were causing problems for employers.
Jones: “We’ve got people on zero hours contracts and we are not embarrassed to say it. It’s necessary in certain elements of our business, but what we do is constantly review such contracts then look to shift them across onto a contract that suits their work pattern, as well as us. But, it seems to me that it’s one of those things that the media has got hold of. There will be some people who may abuse it, but the vast majority of businesses use them for good valid reasons.”
Get out of the bunker
Bloxham suggested that many businesses that survived or, indeed, thrived in the downturn had got used to a ‘bunker mentality’ and now have adopted an austere, tougher, more cautious approach to business. This is potentially counter productive, he explained, and suggested that such companies now need to expand their horizons and look positively for growth.
Grundon had noticed ‘bunker mentality’ among businesses in the south east. “They ask those difficult decisions: What sort of recovery will this be? When do you start adding more people? When do you start not making a silly decision?”
Jones said hospitality had “fallen off a cliff” during the downturn, and admitted CH&Co had initially drifted into a ‘bunker mentality’ cutting back on certain investments. “But, we realised we had to get out of that mood, or things would be catastrophic. So we made new investments along the way, restructured the businss and we are now back on track.”
He agreed with Bloxham that some companies, even blue-chips, were still suffering from ‘bunker mentality’.
Grundon: “We did not decrease our capital spend during the downturn. We knew what we wanted and it just seemed the right thing to do, whereas our competitors took on debt or sold or merged or whatever. In doing what we did, we think we will come out in front of our competitors.”
Jones: “The majority of our clients are starting to realise that there are better times ahead. There are positive shifts in behavioural patterns, which is good because confidence breeds confidence.”
Stanley who operates in the B2C market was pleased to announce that golfers still played golf during the downturn and his business had doubled in the past five years.
Invest in technology to keep pace with customers
Another Westcoast growth indicator Tatham highlighted was that businesses have been investing in machines not people over the past five years, trying to squeeze more efficiency out of their companies or to change the way they operate. “As technology has rapidly changed and become cheaper, more and more companies have been investing in new bits of technological kit for their businesses, to improve productivity and efficiency.”
“Cloud will make another dramatic change to businesses and we are shortly going to see the Internet of everything,” Tatham predicted.
Grundon agreed with the future impact of technological change. He predicted some companies, lagging in the rapidly changing technology market, might yet jump ahead by simply missing out one stage of technological advance, and adopting cloud, for example.
Stanley: “The challenge we see is how to engage with customers and that is ever more via iPhones, tablets, social media, apps. The buzzword for us is multi-device channels and we now need to use all of them to attract, inform and get our messages out to customers. We have invested heavily in technology to do that, but we should remember that our customers are constantly investing in it too.”
Bloxham’s company has fared well because it supplies personnel to the sectors currently leading technological advances but he warned that as demand for technical skills grows, and businesses overall begin to look for growth, the recruitment market will shift to favour the job seeker over the employer.
Time for M&A and investment?
Corporate finance director Alsop stated that growth prospects had improved: “There are generally more people looking for acquisition opportunities. There was a time when some people simply focused on their business and brought their costs down in order to survive. People have paid down debt and are now thinking what should we be doing next?
“Before the credit crunch, many businesses generally had some form of term debt. However, many have reduced this significantly or are not leveraged at all, so there is the opportunity to introduce leverage to acquire good quality businesses. The demand is still for high-quality assets though, and there is strong competition for them.”
“There is definitely more confidence and activity in the market now, but the businesses that have been brave, have strong management teams, and have invested in people, assets acquisitions during the downturn, are the ones that will be able to make most of the opportunities that are coming. It is an interesting period we are entering.”
“All the indicators are saying that the economy is beginning to tick up, although I suspect that recovery will be steady. The challenge for those businesses that really cut back to survive in the downturn is how they will satisfy the increased demand for their services or products.”
Most of the Roundtable companies had made some small acquisitions during the downturn, but predominantly their growth has been organic.
Bloxham suggested that the time maybe coming for GCS Recruitment Specialists to consider a major acquisition in order to make a step-change within its market segment.
Jones said CH&Co had looked at several M&A opportunities and would continue to do so. His concern was that potential vendors, having waited for the M&A market to pick up, would now have increased valuation expectations.
Looking for growth in new overseas markets?
Bloxham commented that GCS has only recently expanded into Ireland. “UK recruitment, as a mature, sophisticated industry, is a leader within the world, and other recruitment companies have moved out into other parts of the world such as the Far East, Australia and America. We elected to not do that, partly because of our Thames Valley roots and the fact that we have been able to be very successful focusing on out primary location in the south east of England, which is one of the best places to be a recruitment agency in the whole world.”
However, he stressed, GCS does place people within companies throughout Europe stating: “I do believe however that we need to focus on certain key foreign markets, such as Germany. Given the different employment laws in some countries, it could make more sense to acquire an existing business rather than attempt to open a new ‘branch office’, but the question is, whilst you can buy and put a badge on it, will it have your company culture?”
Migration within the EU was beneficial to the recruitment industry, he added, noting that GCS was currently placing people in Ireland from high unemployment areas of Europe.
Wilkinson highlighted that HSBC was actively supporting businesses to grow abroad. “Our new lending to SMEs last year was £12.3b, of which £5.1b was to enable them to connect with international markets overseas.”
Stanley: “We are UK-based, but we have just opened an office in Charleston in America. We see that as a huge growth market, but Scandinavia and again Germany are huge opportunities for us. The question is do we seek funding and go over to make an acquisition or do we try to achieve that growth organically? It’s a very exciting time and we certainly wouldn’t have been thinking so optimistically about those expansion plans 2-3 years ago.”
Grundon: “Geography is difficult for us because we tend to be UK-asset based but we have made strategic land purchases last year to take us into new markets.”
Tatham said Westcoast had spread its Thames Valley-based operations to Scotland, Ireland and Wales, the latter through cloud data storage. The company had also bought a small Belgian business that was yet to prove successful. “But, I think our focus will be to expand into new markets and new ways of business.”
He exampled Westcoast’s efficient distribution systems, which could be transferred to a whole new range of distribution channels such as office products. The distribution of cloud services through Westcoast’s existing IT channels was also an option.
Murray pointed out that cloud technology had no set geographical boundaries.
Tatham: “Yes, but one of the joys of having a cloud data centre in the UK, is that it is in the UK and you know where your data is.”
Stradling stated that although HSBC operated worldwide, its home markets still remained as UK and Hong Kong, but he noted that HSBC was currently making a significant investment in Germany to develop its commercial banking operations.
Wilkinson mentioned HSBC’s Global Connections competition, which successfully enables businesses to meet like-minded businesses on well publicised, thought provoking international exchanges. “It’s currently open to innovative local domestic businesses which show future proofed growth strategies or internationally focused ones which have shown evolution out of outstanding global implementation.” (Nominations expiry date: December 8).
Jones felt CH&Co currently needed to concentrate on its existing market. “We control about 2.5% of the UK catering market so plainly there is plenty of work still to be done.”
How can Thames Valley business conditions be improved?
Tatham suggested another lane on the M4 would be very helpful. “It is a key artery, and although some improvements have been made, we need more, particularly on its elevated section.”
He also agreed with Murray that the Thames Valley would benefit from having its own Tech City similar to London. “Having that start-up capability and vibrancy, for instance like San Jose has got in the Bay Area of America, would be an outstanding addition to our region. From our UK technology perspective I think it is absolutely vital this sort of thing happens, and hence I’m delighted to see Tech City in London.”
Bloxham, who is the president of the Thames Valley Chamber of Commerce and involved with the Thames Valley Berkshire LEP, discussed the expansion of Heathrow as the UK’s hub airport. “Heathrow, with its access to international markets, is one of the key factors that drives the success of our region, and we need to assure its future.”
Bob Alsop: Director, corporate finance, Grant Thornton
David Bloxham: Managing director, GCS
Sue Dowling: Employment partner, Blandy & Blandy
Neil Grundon: Deputy chairman, Grundon Waste Management
Tim Jones: Chairman, CH&Co
Andrew Stanley: Chief executive, Golfbreaks
Jon Stradling: Head of corporate banking, Thames Valley, HSBC Bank Plc
Alex Tatham: Sales and marketing director, Westcoast
John Wilkinson: Area commercial director, Thames Valley & North Hampshire HSBC Bank Plc
David Murray: Managing editor and publisher of The Business Magazine, chaired the discussion