Piers Carey, CEO of IT reseller Teneo, is on an upward trajectory with a new management team
We’ve been on a good growth path for the last five years, although the recession hit us slightly in 2009 and we dropped into single-digit growth. When we conducted a management buy-out (MBO) in 2005 we had sales of £2 million; last month we hit the £13 million mark.
The growth of the company has been funded through our own savings and a £300,000 credit line from the bank. When we did the MBO the business was only just breaking even, so it wasn’t as if the venture capitalists were queuing up to invest in us.
We had to put a business plan together to get funding, which really helped us to think about our growth strategy. We had aspirations to open an office in the US, so we recruited a sales director and a marketing director to help us look beyond the immediate.
The other strategy was to adopt a clear sales methodology. We split our market into different sectors, so we now have one sales executive covering architectural firms, and that person has become familiar with the issues facing our customers in that sector. We also track exactly where our agents are in terms of closing deals, which is important because if you don’t know where your sales are coming from, that’s going to affect your cost base.
I think there has been a degree of luck in our growth story, but we’ve also executed our plans well.
Andy Ward, CEO of technology company Blue Source, says international expansion has helped the business take off
We have offices in Dallas and consultants and sales representatives on the east coast of the US. We’ve been in North America for nearly three years as the opportunity is immense out there and we moved at the right time. We had a partner who had pulled out of that market and was happy to pass the business on to us, so we instantly made sales.
The tipping point was around 2005 or 2006 as we were growing at an average of 67 per cent for three consecutive years. It’s slowed down a bit since then, but last year we were still on the Sunday Times Tech Track 100 list and we’ve been nominated again this year.
There have been merger opportunities but we’ve been happy to expand the company organically; it feels like there’s more control doing it that way and we’ve been satisfied with our growth rates.
We’re opening an office in Singapore, which will allow us to cover the world on a 24/7 basis, supporting Europe in the day and Asia at night. We don’t have any plans to move into new markets beyond Singapore at the moment because we want to get it right there first. Our strategy is to deal with one market at a time. By building a good foundation in each location, we’ve been able to create revenue streams for next year. Around 98 per cent of our contracts are for longer than 12 months.
Nigel Brown, CEO of telecoms company Microlease, believes a management buy-out has given the company a new lease of life
We’ve just completed our three-year growth plan. We did a management buy-out in 2006 and had to put together a business plan in order to get investment from the private equity firm, which took 60 per cent of the ownership and invested around £10 million. Since the MBO, our turnover has nearly doubled to £30 million.
In 2008 we received an additional £8 million from our investors for working capital. We were also able to get further bank funding through asset finance and increased our credit lines by £12 million. Those funds were used to make an acquisition in Belgium, which has helped us expand.
We have offices in North America and have recently opened another in Hong Kong. We’ve started selling in Italy and would also like to increase our presence in Latin America. Part of our success in those markets has been down to strong partnerships with major manufacturers. Acquisitions have helped, but our main focus has been on organic expansion.
At the moment we are reinvesting everything to fund growth. It wouldn’t have been possible without private equity and banking capital, both of which have been very important. Right now there’s no need for extra funding, but that might change if we find a new acquisition target.
Len Daniels, MD of manufacturing company Incorez, had to get tough with his business
We were growing, but the recession knocked us back last year and sales were down 13 per cent. But having implemented a range of measures, we are back to and above 2008 levels and 20 per cent up from last year.
We’ve achieved this by identifying new clients and undergoing money-saving exercises. A lot of effort has gone into conducting market surveys, particularly in Europe and North America, which has enabled us to identify which customers could be important to us, and where future revenue could come from.
In terms of cost savings, we haven’t had to make anyone redundant but we have streamlined processes in the factory. For example, in our industry we use a lot of waste solvents, which cost us around £10,000 per year. People used to use them as and when they needed to and threw the rest away; now we distil what’s left for future use. We’ve also installed lighting systems in the factories that only come on when an operator enters the area, that’s saved us around £50,000 a year.
As we were looking at expanding the business, we wanted to tighten up our operations. Now everything’s smarter, cleaner and more efficient. It’s so important to get all those things right when you are looking to grow.
Chris Tanner, founder of cloud computing specialist Brightpearl, says VC investment was his best option for growth
I launched the company in 2007. Two years later, turnover was £250,000 and now it’s increased to £350,000. Since securing venture capital backing a couple of months ago of £1 million, we’ve been able to expand from five members of staff to 18.
That expansion wouldn’t have been possible without the VC backing. Before hiring more employees, we were in a situation where we had around 500 leads to work through a month but no sales team to chase them.
We did look into getting bank loans, but the banks were not prepared to lend to us as they thought we were too high-risk, and I’m not sure they really understood the concept of cloud computing. We considered using angels but we knew we needed a significant sum and they didn’t have the same connections as the venture capitalists.
In the future, we will be looking for a second round of investment of around £5 million. For us, external funding is crucial. The whole cloud industry is exploding, so it’s important to get in now.
See also: Business scaling strategy – How to manage growth