Investment for business growth: Marketing and new hires for companies after backing

Getting the right message out to the market, and finding the right people to do this with, is a crucial step for business success. Having investment firepower is helping Business Growth Fund portfolio companies to do this, we find out more.

How businesses use the capital secured through investments is often overlooked once the excitement of the deal dies away. GrowthBusiness assembled Cennox, GCI Com, and Springfield Healthcare Group from the Business Growth Fund’s (BGF) portfolio to discuss the subject at a roundtable.

Richard Bishop, head of investments at the Business Growth Fund:

‘Investing in marketing is critical, and getting high-quality individuals is pivotal for growth – but is also not cheap. In your business Michael, building revenues is a key part, so how do you go about selecting right message and finding the right hires to do this?’

Michael Phillips, managing director at

‘Marketing is a very important part of our business, and a key part of our funding and growth strategy is investment in marketing. Having the right individuals within our marketing team, and the right kind of leadership on our senior management team, is crucial. 

‘We’ve just hired the head of marketing from Churchill [car insurance], which is a cracking hire for us as it is someone coming from an acquisition driven environment and a setting which has high quality marketing but is also very numbers driven.

‘When you’ve got an external investor laying down large chunks of finance to buy advertising in quite short spaces of time, you need an individual who will inspire the board, and also somebody who isn’t going to be at the flowery end of marketing and who is going to be at the numbers end. At the end of the day, marketing is just a sales discipline.

‘So for us, the right people is key. What the BGF investment has allowed us to do is invest in systems involved with marketing. Tracking marketing is very hard, as when you spend some money on TV over here, and you get some traffic over there, how do you attribute that back to the TV advertising. Do you attribute it to search or email? So we’ve managed to get the right systems and platforms so that we can understand the effectiveness of that marketing activity.

>‘Players like Go Compare and Compare the Market have made those big investments and what you now see is customers actually go direct to them rather than going to Google and typing in expensive key words like “cheap car insurance”. They become a destination in their own right and so investment marketing for us is about becoming the destination, the end point where the customer comes to choose their home communications. 

‘It’s about building a consumer brand, and that takes time. There isn’t a clear linear relationship between response rate and profitability – you do kind of get the “S” curve phenomenon. But there are distinct rewards for being the brand of destination and there are clear examples in our space of companies which haven’t invested in brand and ultimately are left on the scrap heap.

‘If we invest in brand, we expect to see the conversion rates of our product increase as, ultimately, you are much more likely to convert with someone you trust. And trust is big issue for consumers.’

RB: ‘How important is it to be viewed as expert commentator?’

MP: ‘Being an expert was very important for us in our early days and pre-investment we did a lot of PR, such as commentary in the media. I think that the expert commentator side of things becomes less important as you invest in bigger above the line marketing.’

Clive Nation, chief executive of Cennox:

‘I think what is being identified as key in our business is having local people in particular countries. Traditionally, our business had been based on having English-based sales people who spoke languages servicing overseas sales enquiries.

‘What we’ve now been able to do, which has been very effective, is to employ local people in each country who not only speak the language, but know the culture. That kind of knowledge makes a big difference to acquiring new business. 

‘That development has been very important and we’ve done it in a number of European countries, which you would think English salespeople could do, but it is important to have locals. Even in the States, where we’ve recently taken on two American sales people there, they understand the idiosyncrasies of it and there is a huge opportunity for us there.’

More from our exclusive Business Growth Fund roundtable:

Wayne Martin, CEO of GCI Com

‘For GCI Com, if we look at our track record and performance over the last four years, we have had 400 per cent growth from 2008 to date mainly through acquisitions and some of through organic sales. The organic sales were mainly through word of mouth and reference. 

‘So the marketing strategy in our business, which I quite often joke about in hindsight, was stealth marketing. We were growing, and marketing at that time was not invested in from a GCI perspective.

‘The due diligence from the BGF, and gap analysis that was done, led the management team to understand how much better we could have performed if we had embraced marketing. So now we have a very nice polished website now and it’s great to get feedback from our clients on how cutting edge our marketing and website is. So we’ve definitely seen benefits from that area of our business.’

Hunter Ruthven, editor of GrowthBusiness:

‘On the hiring side, when you take on investment like this and are growing at a good pace, is it hard to work out what size of team you need?’

Graeme Lee, group CEO of Springfield Healthcare Group:

‘We actually felt we’d got to the size we could with the team we had and were creaking at the seams. Having taken on investment from the BGF, we’ve been able to expand our management team and our board is much stronger.

‘Now we have a full time FD, which we didn’t have before, and that’s freed up my operations director to be much more professional in being able to set up sales and push growth. I think it’s always a challenge for businesses that are growing, in that do you resource first, or do you get the business in first and then the people to service that.

‘It’s a constant battle and never and easy one. But when you are acquiring you are hoping to find the people in the business you are buying. If there isn’t that, there are a number of questions that need to be answered.’

Company profiles from our exclusive roundtable:

RB: ‘Good people are expensive, but if you are on a long-term growth strategy it is hard to imagine getting good people in too early, isn’t it?’

GL: ‘Yes that’s right, it is like everything in business, it’s all about getting the balance right. In the healthcare sector and domiciliary area there is not the quantity of quality managers out there that you would like to see, so we have to develop the management from our internal resource. 

‘However, in one of our acquisitions the manager herself is very competent and we see them as a very important platform to grow our branch and that area regionally and get significant organic growth, because of her quality of management.’

RB: ‘So she can bring something to the whole business?’

GL: ‘Totally, and she will add value to the other management. When you bring someone fresh in there is always the case of “who is the new person” and they benchmark themselves against each other. When you do find someone who can be in the upper echelon of your team, that is good influence on the rest of the team and it’s great to see if they can learn from the incoming manager.’

CN: ‘What wass identified by the BGF when they make their investment is that whilst we have a strong senior management, there was weakness just below that. Having taken that onboard, we have now been able to make some good hires. And you’re right, it does take some time but we now have a great operational director, which has relieved us as a management team greatly. 

‘Another aspect we’ve been able to build on relating to introducing new people involves those which we may not have thought of hiring, such as a business analyst to go through and interrogate our back-end systems and understand whether we do understand what we do. 

‘In terms of pricing and stocking we’ve hired a buyer which we’d always assumed that individuals would incorporate as part of their job, but by having a group buyer we can hone down and make sure we are closing the right kind of deals.’

RB: ‘Sometimes you find that the limiting factor on growth is the owner themselves, as when you grow quickly you have to let go or you become the bottleneck.’

GL: ‘I think for those of us who have taken BGF investment money, the decision-making process of investing in people and making those sort of more informed decisions earlier is easier. 

‘Before, there was the thought: I’ve got to get to that profit before I can invest. Now there’s been a shift of thinking, as with the BGF we have a very solid platform and we can build on it and invest in the areas we weren’t as strong as. Through the due diligence process it was nice to be able to share that with the BGF, rather than hide it. 

‘Certainly post-deal, to know that they are on board does allow you to think more mid-term and long-term rather than short-term reactive decisions. And that for a medium-sized company like us has really helped us.’

CN: ‘I think that’s a very valid point, but the thing that always gets missed is it is not just about new hires and attracting new people, it is the cost of loosing staff. One of the prohibative issues has always been in terms of changing staff arrangements, employees that you need to make redundant. 

‘While that is expensive these days, and can sometimes put you off from making the right decisions, with the investment it allows you to take those kind of calls.’

Hunter Ruthven

Hunter Ruthven

Hunter was the Editor for from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

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