Hunting for business growth

In the Year of the Tiger, ambitious businesses are leaving the recession behind them and seizing opportunities for expansion once again. GB finds out why aggressive growth strategies are back in fashion.

In the Year of the Tiger, ambitious businesses are leaving the recession behind them and seizing opportunities for expansion once again. GB finds out why aggressive growth strategies are back in fashion.

In the Year of the Tiger, ambitious businesses are leaving the recession behind them and seizing opportunities for expansion once again. GB finds out why aggressive growth strategies are back in fashion.

‘During the next three years we want to get revenue to £100 million,’ says Damian Milkins, the CEO of IT support company ControlCircle.

Turnover is expected to go from £10 million to £18 million this year. New offices will be opened in Silicon Valley and sales teams are being beefed up in New York, Frankfurt and Singapore. Acquisitions are on the cards too, courtesy of £6 million in backing from Scottish Equity Partners in February. ‘We’re a UK company that’s going head-to-head with US firms, which have historically been strong on innovation, and we’re winning,’ he says.

There’s no mention of inflation, budget cuts or the implosion of the euro denting ambitions. The company has a broad spread of customers from professional services firm KPMG and property group Rightmove, to gaming company Sega and gambling concern Betfair. For Milkins, this strength and depth in terms of sectors and geography gives the business the necessary armour plating it needs to protects itself against the global economy’s weapons of mass destruction.

Expansion finance

The thorny issue of finance for smaller companies looking to grow has always been a tricky one. Rasik Kotecha, the MD B2B call-handling business CallCare, had to endure rejections from every high street bank as he sought additional finance for his company. In the end, Kotecha met Al Jamal, a group of angel financiers based in Abu Dhabi, who agreed to provide the sum of £3.6 million for just over a third of a stake in the business.

‘It’s expansion capital,’ says Kotecha. ‘We are looking to acquire companies which are struggling in the economic crisis.’ The money has been used for operational investment too, such as the opening of a new office in Manchester, and over £500,000 has been spent on IT infrastructure to improve the servicing of calls. Going forward, the plan is to push turnover up to around £5 million over the next three years.

A common experience among CEOs is that by conducting a review and stripping out unnecessary costs and processes, a business can start to run more efficiently and even profitably. Paul Bennett is the chief executive officer of printing company Facia Graphics, which employs 60 people and has sales of £2.65 million.

Bennett notes the importance of undertaking a ‘full business audit’ a couple of years ago. ‘We looked at our systems and we found elements of duplication which happens as you grow over 15 or so years. We spoke to our suppliers to see if we were purchasing for the best possible price and also assessed operating costs, checking insurance cover, utility bills and banking facilities. Unfortunately, we did have to make six redundancies as well.’

In addition to this, ‘anyone who mentioned the word recession was swiftly kicked up the butt’. Bennett explains: ‘We thought that if we sailed our own ship and managed the business effectively, it didn’t matter what was going on outside.’

‘We’re going head-to-head with US firms and we’re winning’

The changes worked. ‘During the recessionary period we had the best period of new business in the company’s history. In one month we secured 40 new customers alone and we’re averaging 15 to 20 new customers a month,’ says Bennett, who notes that the review also allowed for an extra degree of flexibility on pricing. ‘We have gained market share but we have walked away on occasion. When we did lose work to the competition – not to be conceited – the work soon came back.’

Now the aim is to invest in marketing and branding to take more business away from competitors. ‘We’re looking to attack,’ states Bennett. ‘One of the guys that was laid off in the initial round of redundancies was in sales. Now he’s came back we’re out to win as much new business as can.’

Everything within the company is owned, there’s no overdraft or outstanding debt and Bennett sounds confident about growing revenue to £5 million over the next few years.

Leaner and meaner

Simon Walsh, co-founder of ShP Limited, a business that recycles old mobile phones and handheld devices, is also seeing the benefits of slimming back in certain areas. International expansion is the foundation of the company’s growth and contracts have been won with household names in the telco industry in Holland, Italy, Spain, Malta, the United Arab Emirates and Australia.

Boosted by environmental regulations on recycling, Walsh sees the only threat to the company coming from ‘every man and his dog’ wanting to operate in the same sector. At present, turnover is just under £9 million and this is expected to rise to £12 million this year. In five years time, Walsh says he’ll be disappointed if sales aren’t around the £25 million mark at least.

The bottom line is that a company can only make cutbacks for so long and, after two tough years, businesses are at the point where they have to start investing in order to progress in their chosen markets. Gerhan Talwatte, the CEO of Ascend, which provides investment analysis for the aviation industry, has opened new offices in the US and Hong Kong during the past 18 months and is intent on further growth.

‘Our focus in terms of global expansion is very much in Asia,’ he says. ‘We have a very aggressive business development plan in mainland China right now. We’re also going to invest in the US, where the business is probably a little under-represented at the moment. The US remains the richest country for aviation; there are more planes flying over American skies than anywhere else in the round.’

A second round of investment by private equity firm LDC of around £6 million will certainly help the ambitious agenda set by Talwatte and his management team. It brings the total amount invested by LDC to £12 million, as it backed the initial £10 million MBO from aviation claims company Airclaims in 2005. Apart from expansion, the new funds we be used to invest in IT and to make acquisitions. Unsurprisingly, Asia is where the stellar growth can be achieved.

Talwatte explains: ‘Most of the planes you see are not owned by the airlines but by investment banks and finance houses and that’s the core customer base for us. If I look at where the majority of orders for new aircraft are coming from, 70 to 80 per cent of it is from Asia. That’s the new market for aviation.’

Refusing to be drawn on an exact number, Talwatte says revenue is ‘in the double-digits’ and claims growth has been approximately 20 per cent per annum.

Unquestionably, the market is a tough one to crack but Talwatte is convinced the company, with its fresh bout of financial backing, can achieve its goals over the next few years.

Even keel
The danger for any company on such an upward trajectory is to put too much pressure on the business by growing too fast, too quickly.

ControlCircle’s Milkins appears to have his feet firmly on the ground, despite his attempts to reach for the stars. ‘We have talked with investors and discussed our plans and we think £100 million is an achievable figure and it will obviously be done through acquisitions as well.

‘But our organic growth over the next three years would’ve hit £69 million without funding. Also, we haven’t done a lot of PR or marketing. No one has quite heard of us yet – most of what we’ve done has come from word of mouth.’

Nick Britton

Nick Britton

Nick was the Managing Editor for when it was owned by Vitesse Media, before moving on to become Head of Investment Group and Editor at What Investment and thence to Head of Intermediary...

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