roundtable: supporting growth


CTC Aviation does provide a substantial failure protection package for its cadet pilots. “It was a risk we had to take in 2010, but it has worked out well for us so far. We have a robust selection process in place and that combined with our failure protection package provides substantial reassurance to trainees joining our programme”.


David Murray highlighted that the demand for commercial jet pilots was expected to double by 2030, so the opportunity for CTC Aviation was obvious.


Steele: “Every three months we have seen 1,000 candidates wanting to train as pilots. They won’t all pass selection, of course, but of those that do, the number that can’t get funding is unfortunate – the industry is missing out on these talented individuals. There is a global requirement for a further 450,000 pilots to join the industry over the next 15-20 years. The inability of people to be able to pay for their training isn’t going to help the situation and we are very keen to find more funding solutions to ensure those with talent are enabled.”


More drivers would be a growth driver


Steve Luckett revealed that the company’s biggest hurdle currently is labour, finding the right people to do the job – predominantly drivers. “You would not believe there is a recession on. People are just not coming forward. Driving is not the highest paid job in the world (between £20- 30,000 a year) but we do train people at our own cost. We are constantly struggling to keep up with the demand for drivers and support staff. There is some staff churn, so we need to keep bringing people in. However, we are growing and have taken on 60-75 staff since January.”


Frettingham commended Lucketts: “That’s promising growth, and remember you have also brought 60 new jobs to the region, and helped boost the UK economy.”


Get good advice, be ready to grasp opportunities


Coach and leisure operator Luckett said his company had grown organically through its profits and also asset-based financing. The company owns south-coast property, but has to fund new coaches at around £250,000 per vehicle. It has put 24 new vehicles on the road this year, following an HSBC loan secured by a new National Express contract.


Lucketts, with bank support, has recently bought Coliseum Coaches, a Southampton company run by brothers seeking to exit the business. “I think they were fed up with legislation, red-tape bureaucracy and, dare I say it, funding problems within the industry.


“We are growing. We have gone through a deep recession but our business seems to be quite resilient. People still want to go on holiday and schools still have their trips.”


Luckett agreed that his company growth model was similar to CTC Aviation, with upfront money


THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – MAY 2013


coming in through customer deposits. “We can move forward in small stages by ourselves and borrow if necessary for the big opportunities.”


But, as a family-run business Lucketts preferred to control its own destiny, he added, so had never considered giving equity to gain funding.


“We like the freedom to respond quickly if we see an opportunity. The thought of having someone on the board who might go against our judgment would be a big step to get over. It might happen one day, of course, as we get bigger and more opportunities come our way, particularly as the industry contracts. Small coach operators are falling off the face of the earth at present.”


Frettingham asked if Lucketts worked to a five-year plan. Luckett pointed out that he had been advised to stabilise in 2005, but business opportunities had been such that the company has since doubled in size. “Sometimes things are too good to miss, although we do also turn things down. We work with HSBC, but have a gut feel for what we are doing, and it seems to work for us.”


Rothery pointed out HSBC was able to advise Lucketts because the company worked closely with the bank, and both now had a very close understanding of the business and its potential.


Austin: “The majority of businesses in our BGF portfolio have less than £25m turnover and very different objectives. We simply try to help people as they see fit, while trying to give them advice and support. We don’t want to destroy their entrepreneurial spirit.”


Lengthened payment terms causing cashflow concerns


Lord raised the problem of the enforced extension of payment terms by larger companies, putting cash pressures on small companies in the supply chain. He mentioned how in some sectors the traditional payment within 30 days, had been forced out to 60, if not 90 days.


Forder confirmed this unwelcome practice. “We’ve had letters from one group pushing out our terms to 75 days, and another to 90 days. There’s a whole trend of these major household name retailers tying down small businesses, but mercifully the Federation of Small Businesses is taking up the fight, and it’s even been mentioned in the House of Commons.”


Steele pointed out that if companies were contracted to pay within a set period then morally those terms should be adhered to.


Forder explained that much of his business was on a purchase order basis, and “… for some of your main business partners you just can’t afford to tell them to take a hike.”


Rothery said extension of payment was now more noticeable in several sectors, and HSBC was certainly trying to assist customers faced with such issues.


Lord queried why multi-billion pound companies were choosing to squeeze their suppliers.


Murray wondered if they were just taking Gary Rothery


advantage of the economic situation and the drive for companies to be lean and cost-efficient. Others on the Roundtable suggested it could be to satisfy equity partners, assist expansion plans, or simply to make their year-end figures look better to investors.


McKenzie said many of his project partners were large companies. “In the last two months, under the auspices of the government’s drive to assist the construction industry, one major blue- chip has extended their payment terms to 120


Continued overleaf www.businessmag.co.uk Mark Frettingham


35


William Crook


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