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CENTRAL SOUTH MID MARKET COMMERCIAL
ADAPTABLE Looking to tomorrow
Now in the second year of its Central South Mid-Market focus, BDO has sought within this phase to recognise the ‘companies of tomorrow’ – those fast, consistently growing businesses between £5-10 million turnover that are likely to break through the £10m threshold in the next 12 months. How are such companies tackling the challenges of making this ‘step change’ and preparing for their next phase of growth?
“Companies with £10m-plus turnover often get more attention in terms of third-party offers of support. Similarly, customers and suppliers take comfort in dealing with double-digit turnover companies.
“However, companies fast approaching this threshold can feel like they are in the wilderness, despite their needs being just as great,” notes tax director James Tetley.
“It is a mistake for companies to overlook the need to begin planning and preparing early – whether this means getting the business structure right, considering efficient tax planning,
incentivising new management, aligning goals with the founders, or instilling companywide disciplines that will attract next-stage investment.”
Our case studies reveal two very different businesses:
• Oceanair Marine, which started from the front room and garage of founder Andy FitzGerald in 1990, now dominates the global luxury market design and manufacture of marine blinds and soft furnishings.
• The Waltet Group, founded in 1996 by Mark Howard and Dan Newbold, which has carved
CASE STUDY: OCEANAIR MARINE
Owner Andy FitzGerald founded Oceanair in classic entrepreneurial style – from his home, having seen a market gap that he was confident his abilities could fill. Always passionate about boats he’d just left a marine company, had no ties, but had an idea about a blackout and fly-screen blind for yacht hatches. “Everyone said I was mad, but I knew I was onto something. It was time to do it for myself. The first years were torrid, I didn’t make a profit till 2000.”
Affordable pre-recession funding enabled him to buy the firm’s current Selsey site and upscale. Then, in 2009, “our industry collapsed within three months, orders fell by 80%”. Oceanair realised it had to change radically to survive.
“When you expand a business you can easily run out of cash, but when you shrink one the cash comes in, if you make the right decisions. From that moment on we have never borrowed money.” Instead profits have been astutely re-invested, not least in building an innovative product range and strong talented workforce.
With the marine leisure market facing austerity headwinds, Oceanair changed course towards the buoyant prestige luxury sector. “The market never comes back the same, so we grew a new one supplying the world’s largest superyachts”.
FitzGerald restructured Oceanair to enhance its technical abilities, market awareness, quality
www.businessmag.co.uk
Turnover: £11m Staff: 187
Structure: UK (HQ admin, sales, R&D, production), USA (sales, production), plus Far East manufacturing. Trading internationally from ‘Day One’, the company has an international distributor network and sells in 35 countries, plus three Queen’s Awards for Enterprise
an enviable niche in the aggregate and waste removal, and recycling industry.
Interestingly, since BDO’s analysis of top performers, both companies have decisively broken through the £10m turnover mid-market threshold. Unsurprisingly, entrepreneurial spirit plus decisiveness and agility in reacting to market forces or new opportunities is apparent in both companies.
“This is something we see in many businesses of this size, and is a key differentiator for them when competing against bigger corporates,” added audit partner David I’Anson.
The difficulty comes as these businesses continue to grow, yet need to acknowledge and prepare for the next phase of growth. “One of the challenges is how to drive a more corporate focus, build a core management team and instigate quite often significant structural changes into a business whose very reason for success to date has been its lean structure”.
CHALLENGES BULLISH
BDO tax director James Tetley (left) presents Oceanair’s Mid Market Company of Tomorrow award to Andy FitzGerald
focus – so achieving higher customer service and product standards. Oceanair’s credo is now ‘Elegance : Engineered.’
“Ultimately that change has laid the standards for our current strategy of further diversification into luxury residential and commercial premises and recreational vehicles.”
Dynamic response to customer requirements means accuracy and flexibility are now Oceanair norms. “Managing change is a given for businesses nowadays.
“We are mainly a B2B trading organisation, frequently working with project-teams, on multi-million pound superyachts and houses. We are an eclectic mix of small bespoke orders and major projectwork.” Save in America, Oceanair
manufactures nothing for stock – a valuable financial efficiency.
When starting, FitzGerald feared his blinds might be copied. He kept a low-profile, instead slowly adding products, building contacts, reputation and trust with suppliers and customers. That targeted brand-building is now paying off. “Within our sector we are absolutely 100% known.
“If the worldwide marine market is picking up, which it seems to be, we will get market growth by just continuing to do what we are doing.
“Recently, I’ve realised the strength of our Oceanair name. We are not dependent on any single product, customer or country. We’re a one-stop shop with a huge range of bespoke
Continued ... THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – MARCH 2016
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