Four first moves

By PrintWeek Team, Friday 10 June 2011

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A quartet of print's most successful entrepreneurs talk about their first steps in the industry and how they achieved their success

Simon Biltcliffe, founder and managing director, Webmart
"After seeing an early version of what became the Kindle, I approached my then employers, BPC (now Polestar) with an idea to set up a new media division. They agreed to let me run with the idea in conjunction with my selling role and for a year I began to establish what were the foundation blocks of what has become Webmart. After a year’s work, BPC decided it wasn’t for them, but I had faith in the concept.

After 18 months of negotiating, we came to an arrangement whereby I remained on a retainer with the group for certain key accounts, but aside from that I had freedom to do what I wanted to do, which was to start building Webmart.

Webmart launched on Monday 1 April 1996. I had £10,000 of savings and I decided from the start that I would spend no more than this amount. I was determined to avoid bank loans as I didn’t want to be tied to them, so I designed the business plan around being self-funded from the start. It was only me to begin with, but I quickly realised that if I wanted a life I’d have to take on staff. I gradually added staff and, at the end of year one, rather surprisingly, I made a thumping great profit.

Reinvesting is so crucial. In 1998, we started developing our own software. We had the world’s first live instant pricing engine for print and since then we have developed the software further. This has been really important to the success of the business. Reinvesting is key to improving our service and to create our own technologies.

That said, a lot of businesses do fail from expanding too quickly or investing too heavily. It is dead simple for me, as I am self-funded: if I don’t have the money, or if I can’t afford to lose the money on it, then I don’t do it. That’s not to say everything we do is risk free, business is about managing risk, but we don’t go for growth at all costs.

I am a deeply ambitious person, but you have to manifest that in the right way. 47 people’s families depend on Webmart being successful, and I don’t take that lightly."

Words of wisdom  "Any good company is now looking for investment potential, so you don’t necessarily have to go it alone as I did. An enlightened management team will not think you are disloyal or disrespectful if you went to them with an idea, but you have to make sure you can trust them. Go for a 50:50 or a 60:40 deal in your favour if they like the idea and want to pursue it."


Nick Dixon, executive chairman, Lateral Group
"I started in August 1992, when myself and my business partner Rick Taylor took control of Colorgraphic using the investment of our business partners Michael Hunter and Max Harvey.

Colorgraphic was in administration at the time, but we saw potential in the business and wanted to turn it around. Then in 1996, we bought out Max Harvey using investment from a private equity firm. We then sold this business in 1999 to US corporation Big Flower.

Seven years ago, we then did a similar thing with Howitt as we had done with Colorgraphic. It was again a failing company, but this time Rick and I used our own money, again with the help of Michael Hunter. We grew the business using a mix of finance options, including invoice discounting, as well as asset-based lending.

The key to turning around a business is mainly hard work and building a good team. Clearly, you have to identify what was wrong with the business and then you have to have a clear idea about what you want to achieve. If you’re buying a failing business, you have to know that there is something within it that fits your vision of a company.

If we identify a company that fits our vision, then it doesn’t matter whether it is successful or failing, it is something we would look into. That said, turning a failing business around is extremely difficult. Something like 90% of businesses turnarounds fail. The main thing to do is really look at each business in relation to how it can help your existing businesses grow.

We do not have a pre-set preference to any type of funding. This gives us a lot of flexibility. We have tried many options and the key is to use the vehicle that best fits the situation. There is no right way or wrong way, you have to find the best fit for your business at that time."

Words of wisdom "My main advice to anyone looking to start a business or turn one around is that you have to be extremely focused, there are no days off. You also have to build a very good team around you, one you have incentivised to share in the opportunity."


Nick Jenkins, founder and owner of Moonpig.com
"I had been working abroad and I came back to the UK with the intention of starting a new business. At the time, the internet boom was starting and so I decided to do something online. I wanted a product that would be improved by buying online, so it had to be better than what was on offer on the high street. I came up with a number of different ideas, of which the best one was greetings cards.

I was quite lucky in that I had money of my own to set the website up, so it isn’t really a rags to riches tale. I took part in an MBO of a business in Russia and through that made a bit of money. This gave me the funds to start Moonpig.com in 2000.
I used angel investors to generate additional funding after the initial set-up. There are plenty of these private investors out there looking to invest in small start-ups. For a start-up, you are much better going to a private investor than you are a Venture Capitalist (VC) fund.

There are obviously all sorts of problems with taking on money from outside investors. You will have to accept that those investors, at some point, will want a return. If you promise a return on their money by selling the business in three years’ time, you cannot then turn to them after three years and say you want to keep it forever. It doesn’t suit everyone as a result.

The benefit of angel investors is that you can’t afford to be slack. If you have worked on something for a long time and you are enjoying success, there is of course a temptation to take the foot off the pedal and take it easy. You can’t do that in this situation.

At Moonpig.com we don’t have any pressure to sell. We regularly pay a dividend out to investors, so they are getting a better return on shares than they would anywhere else.

We’re now going to offer personalised gifts and we are also expanding into the US and Australia. You have to be more cautious when looking outside the UK, though, as other countries can work very differently."

Words of wisdom "A return for investors does not necessarily mean growth. If your peak gives investors a decent return then you will probably be left to get on with it, but remember most investors at some point will want to get out."


Simon Ward, chief executive of Inspired Thinking Group
"SP Digital was the first print-related business venture I embarked upon. We set up the company – a large-format digital business – in 1999 using the personal money of four investors, including myself. My business plan looked to grow the business over a three-year period.

After the first year, we made a profit of £1m. At this point, the owners of SP Group, from which SP Digital was completely independent, were looking to retire and so it made sense for us to buy the rest of the SP Group. To do this, we needed to raise some cash and so we turned to a VC fund, Natwest Equity Partners, which took 40% of the business in return for a cash injection. This enabled us to pay £18m for SP Group. We then sold it to St Ives in 2004 for £40m.

My next solo project was to set up Intelligent Thinking Group (ITG) in 2009. ITG is a start-up BPO business, which again was initially funded through personal wealth of the investors, namely myself and Mark Lockley. Eight months ago, though, we agreed a purchase of Total Marketing Solutions for £3m, and to facilitate that purchase we sold 22.5% of the company to VC fund Isis Equity Partners. We now have annualised sales of £30m, so we’ve come a long way in a short time.

There are always doubts when you put your own money into a business. That doubt is good, though, it drives you to succeed. As for additional funding, it’s not necessarily that my set plan is to avoid banks, but I don’t like debts and borrowing money and so VC funds make sense to me. The benefit of VCs is also that they force you to have an element of corporate approach to the way you work. You need structured board meetings, you need corporate governance, you need to follow the rules the latter sets down. In a massive company like St Ives, these rules could choke you, but in a small business it can give some much-needed discipline.

VCs can also bring expertise. The reason I chose Isis Equity partners was for the expertise they brought in technology matters. They are very technology-led people, so they bring a lot to the party in terms of their knowledge of the industry."

Words of wisdom "My experience of VCs has always been very positive, but then we have always performed. If my business was losing money, they would certainly want to get involved and that is where some people have an issue with this way of doing things."


FAMOUS FIRST STARTS
• Richard Branson began Virgin with a mail order record business and subsequently a record shop on Oxford Street. The company has since grown to be one of the UK’s most successful ever businesses and has dabbled in everything from condoms to space travel.
• Natalie Massenet the founder of luxury clothing online retailer Net-A-Porter was a fashion journalist before deciding to launch an online retail company using private investment. She sold her remaining stake in the company in 2010 for £50m, which valued the company at £350m.  
• James Dyson Five years and 5,127 prototypes resulted in a hoover with no bag and no loss of suction. Manufacturers spurned it, except for a Japanese company. The profits from this Japanese licence for the machine gave him the profits to set up his own manufacturing company and a household revolution was started. He is now said to be worth £920m.
• Alan Sugar started out selling electronics equipment out the back of a van, which grew into the multimillion-pound business that is  Amstrad.

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