50 tvbma roundtable ... continued from previous page
around, to believe in moving around between all of our businesses locally, while attracting talent from outside, that would be extremely powerful.” He suggested the Thames Valley technology sector had the ability and the best chance of driving that self-help scenario.
Taylor welcomed the LEP assistance, but pointed out that local infrastructure mattered too. ‘When I was in my 20s, living in London, I liked to step out with my pals and go to a cool bar. We are based in Bracknell and we have waited for a much-wanted regeneration for 20 years. The town centre is currently a pile of rubble. It’s really poor, so it doesn’t matter what we do in terms of cultural values and reward, people will still want to go out for that nice meal or a drink and they will probably go somewhere else.”
The Thames Valley had been “left napping” in its local infrastructure development, he stated. “It’s been too easy – close to Heathrow, London, the M4, M3 corridors, with many European headquarter offices now established – and there hasn’t been the investment in the infrastructure and fun environment of the region.”
with the opportunity. We know we should be expanding on the sales and marketing side, but can we keep up with the scale of growth that might bring? Getting funding for that growth depends for us upon getting the right terms for our business. I really enjoy what I do every day at Drivenlower, and part of my fear about funding is not only a different culture, but am I still going to enjoy working at the business?”
Exit or succession management?
David Griffiths
Griffiths at FISCAL, now with a growing US operation based in North Carolina, had a similar experience: “We are three years into the US and I can now see the light at the end of the tunnel, but I used to be out there every month trying to drive the business.”
Finding suitable recruits in the US can be even more difficult, he warned, because US work culture was different and even varied between states.
Self-funded FISCAL has grown annually 50- 60% for the past five years, and with revenue approaching £4 million, has questions to answer: Do we really need to grow at that rate? Should we be acquiring or partnering? Should we seek additional funding?
Taylor had asked the same questions at Redwood Technologies. “Do we keep going, keep growing as we are, taking the cautious longer-term view similar to the German Mittelstadt model. Or will we miss our window of opportunity? Or do we join the ‘dark side’ of private investment funding? It can be very tempting to consider gathering up a stack of cash, or to sell your business and gain some tax relief, and to make the personal pressures and risks of growth go away.”
Simon Miles
Thomson and Sykes both highlighted that young people are not getting on the local property ladder as early as previous generations. Sykes mentioned that 80% of his staff are under 30, and Volume, as an aid to employment attraction and retention, did support staff attempts to get onto the property ladder. “You are millennial until you get a mortgage, and then priorities change.”
Managing the pressures of company growth
Sykes revealed that managing the risks of company growth were a headache at times. Being self-funded, mainly through bank- supported invoice financing, there was a need to keep cashflow healthy, yet Volume was now looking to set up in the US to support client activities. “We are in growth mode, but there is massive risk attached to that. It is going to be a big commitment for us to make that investment but it is crucial for our business. Our clients want to meet us over a coffee not over an email. It’s that risk v reward question.”
www.businessmag.co.uk
Morrin said Clarify was also at that US growth stage decision. “We recognise that we can carry on doing what we are doing here successfully, but many of the organisations we work with are headquarterd in the US so it makes sense for Clarify to have a base there. However the circumstances and environment need to be right for us as a business before we make this investment.”
Griffiths warned that the private equity funding route can fundamentally change the culture of a business.
Thomson pointed out that PE funding can also bring benefits, such as professionalising the business and taking the onus and pressure off an owner-manager.
Taylor noted that the PE funding decision was not always a monetary one. “Either you are going to cede control and de-risk your personal position, or you are going to maintain control.
If an investment deal doesn’t feel right, I suggest you walk away.”
Aldridge successfully started Drivenlower with director and angel investment. “But now we need the people and capacity to keep up
Alan Poole
Griffiths disagreed: “If you focus on exit, you change your mentality.”
Barnes: “Run the company the best way you can for the long term but leave the option available should someone walk in with a fantastic deal. The smart business owner always has that option. So keep open-minded.
THE BUSINESS MAGAZINE – THAMES VALLEY – JUNE 2015
“Is there an obsession about exiting from a company?” queried Murray.
Poole: “It is one extreme or the other. A lot of business owners are obsessed with a blinkered run to an exit in a certain time, but others have not considered it. Not enough are flexible, thinking in broad five to10 years terms about it.”
Griffiths: “Doesn’t it become divisive when you set up a business with the exit in mind? I understand about structuring the business correctly and getting a supportive management team but you can lose your focus on growing the business properly if it’s centred around an exit.”
Thomson: “It shouldn’t be called an exit. It’s all about viewing it as succession management. If you do that, is it then about cashing up, stepping back, or about making sure the business survives you?”
Taylor felt business owners in different sectors had to be careful about fixed-term exits. The future is unknown. “Companies can grow very quickly and die even faster,” he said exampling Blackberry’s and Nokia’s positions in the mobile phone market. His company Redwood was set up with a 3-5 year exit strategy… 23 years ago.
Thomson: “The strategy that takes you to an exit shouldn’t be any different to that which builds and grows a good business. If you get that right the exit will follow.”
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