Inaugural BGF Growth Climate Index reveals infrastructure is top priority for business leaders
BGF’s inaugural Growth Climate Index – a new indicator of business confidence based on the opinions of 350 Board Directors working across the UK’s fast growing small and mid-sized businesses, revealed that improved rail, roads and runways ranked first among the business issues that need to be prioritised by the new Government.
The Index polled BGF’s Talent Network, a proprietary network of Board Directors with wide ranging experience across the spectrum of UK and international business, from non-executives of high growth small and mid-sized companies, to FTSE 100.
25 per cent prioritised physical infrastructure, while 19 per cent highlighted the need to see simplified employment policies and an improvement in the quality of apprenticeships to make them more attractive to businesses and young people.
Over three quarters (78 per cent) believe that conditions for growth will continue to improve over the next quarter, following what was considered to be a strong start to the year. Businesses are keen to capitalise on this environment – 92 per cent of those polled said that the objectives of the entrepreneurs they work with are to pursue growth over the next quarter.
The business leaders highlighted sales and marketing, international expansion, and attracting investment as the three areas businesses need to focus on to achieve growth over the next quarter. Conversely, of the issues holding businesses back, twice as many respondents consider access to the right skills (69 per cent) rather than regulation and red tape (30 per cent) as a the biggest barrier to growth. Less than four per cent identified tax policy as a current constraint to growth.
Referendum jitters were consistent throughout the polling. Many respondents expressed a mixture of fatigue and anxiety over continued constitutional and political uncertainty, and cite the need for the UK’s position in Europe to be settled quickly and in a firm timeframe so as not to curtail business decision making.
An overwhelming majority (82 per cent) said that UK’s membership of the EU is good for British businesses, and emphasised the importance of the EU export market for companies wanting to scale-up their operations (88 per cent). A similar number (80 per cent) believe that another Scottish Independence referendum would be bad for British businesses.
The full report can be read here.
TWO’S COMPANY: BRIAN WILLIAMSON AND JAMES FAULDS OF JUMPSTART
In this article of the Two’s Company series, entrepreneur Brian Williamson, managing director of Jumpstart, describes his chairman, James Faulds, as both a set of reins and a set of spurs, showing just how much impact this role can have on a business.
Jumpstart is an innovative, fast-growing company but it could easily have been a victim of its own success. By bringing in an adviser, who has been there, done that, the young company was steered straight. James Faulds jokes that he is obsessed with the “F word” – focus, but that is frequently what growing companies need above all.
This is also an interesting insight into how to recruit a chairman to the company board – you don’t have to tiptoe around candidates, you can set some pretty tough rules to make sure that you end up with the right person.
In this case, it’s clear that Jumpstart – one of the UK’s leading R&D tax credit specialists – is much better off because of the relationship between management and mentor, and that both sides are learning valuable lessons as the business grows.
BRIAN WILLIAMSON – MD, JUMPSTART
I got involved with Jumpstart in 2010 when it was two people in an attic. I was fascinated by the business model and as time went on I got more involved. It was a company that secured refunds for SMEs, and my view of it was that even if this wasn’t the business I thought it was, getting such a significant amount of money back for so many people was a good enough motivation in itself.
At the beginning I spent six months working out exactly what the business could achieve and realised there was lots of opportunity for growth.
My job was to build a sales force, the challenge being that the business was started in the depths of a recession and there were very few funding options. I took over as MD in 2013 as there were four people at the top of the company and we needed someone to have the final say and make the final decisions.
In 2014 we were rocketing ahead as far as growth was concerned and we had a great reputation in our native Scotland, but we needed infrastructure through the UK. The investment would require “smart money” – someone who would bring skills, attributes and connections to the table. BGF was the investor that came out on top. Jim and I take our turns at being the reins and the spurs… the balance works really well
We recruited our chairman in the same rigorous way we recruit our employees. BGF said that we were “not really dealing with people who will fill in psychometric tests”; that said, we felt that anyone who refused wouldn’t really be a good fit for us. The traditional selection method would be just liking the cut of someone’s jib, but we didn’t necessarily need someone we liked; we needed someone who would bring something to the business.
With James, we ended up with the best person, no doubt. The danger with building a business is that you believe your own story and you’re reluctant to do things differently to how you have previously done them. Jim came in as an entrepreneurial chairman who could really figure out where the commercial success of the business lay.
I’m in my 35th year of running businesses, so it isn’t a new thing for me. Jim and I have debates and he challenges me all the time, which is for the benefit of the business – he just wants to get the best out of me.
A pair of reins and a set of spurs is necessary in this environment, and if you have too much of one and not much of the other it is quite dangerous.
JAMES FAULDS – CHAIRMAN, JUMPSTART
I didn’t realise before I joined Jumpstart how great the R&D scheme is – and some companies don’t even realise it exists. The Government has also enhanced it in the last two budgets, and so it should if it wants to invest properly in making the UK a centre for business excellence.
Jumpstart has succeeded because of how well it has focused on one particular area, and embedded in the company are excellent systems, qualities and values. There’s also some really enthusiastic and talented people, which is always a critical point for me because, regardless of what industry they are in, people are crucial.
My first reaction to the recruitment process for the chairman’s role was to be a bit indignant. It wasn’t an easy ride. Once I got into it, rather perversely I enjoyed it – I think it appealed to my competitive nature. It also dawned on me that if they were putting me through this, then clearly they were working hard to filter all applicants through the company to those with a high level of talent and experience.
So I was impressed, ultimately. Most of the chief executives I have worked with have been a bit younger than me, and with Brian, it is different because he has a lot of business experience. With all these relationships, you have to win each other’s respect, and you realise that you’re aligned, that you have the same objective.
The relationship between Brian and me has been absolutely natural. When BGF introduced us it said one of his great qualities is that he is open to debate, to being challenged constructively.
I’m there to support and encourage him. They all tell you their market is different, but even in niche businesses such as Jumpstart, the core issues are usually the same: making sure your income outweighs your cost, that your people have the right mentality, to ensure quality. All of these things are crucial to all companies.
I joined the company back in March 2014. The vast majority of R&D claims are made in the south-east of England, so the priority was always to set up a sales base there and hire a financial director. Alot of time so far has been taken up building the team, but now we are ready to go in the South-East.
And that’s not all. We have a strong model that could work in around 40 other European countries. Brian teases me that I’m always on about the F word – focus. We have so much to go for in the UK that we need to stay focused. Once we have a foothold, there will be time to grow.
TWO’S COMPANY: RICHARD FREEDMAN AND TERESA ROBSON-CAPPS OF ACS CLOTHING
Richard Freedman, the chief executive of wedding and formal dress hire specialist ACS Clothing, is among this elite group of people. He was seeking someone with the track record to match his international ambitions. In ACS chairman Teresa Robson-Capps, Mr Freedman found quiet authority and experience. She may originally have come from a very different background, but she instinctively understood the unique company culture at ACS, which allowed her to slot straight into the business with relative ease. Such a dynamic is crucial for founder/ non-exec relationships. The result? A fascinating experience for Dr Robson-Capps and, for Mr Freedman, an adviser with all the corporate rigour, without compromising the company’s culture.
Richard Freedman CEO, ACS Clothing
My dad had a menswear shop in Glasgow that used to sell suits. I went to university in 1990, and back then life was quite difficult for menswear retailers. While at university I decided to set up a small hirewear department in my dad’s menswear store. There was no grand plan, it was really just intended to help stabilise the family business.
The hirewear business blossomed and we looked at how we could supply hirewear to other retailers. We soon began to get contracts with national retail chains such as Debenhams and Burtons, and so in 1997 we decided it was time to set up ACS.
Fast-forward 20 years and we have plans to expand into the US, the next big market for ACS.
The thing about a business such as ours is that it tends to require a reasonable amount of capital – of debt – to buy the hire pieces. Our plans for America are ambitious and we realised we would need to get some equity investment.
We were worried about private equity – having built up our business over nearly 20 years, we were nervous about someone else coming in and what their interests would be. When I learnt about the ethos of BGF, I thought that this would be the perfect way for us to really push the business into the US.
Having agreed the investment with BGF, the next step was to bring a non-executive chairman on board. It was vital that we got the right person.
We had a lot of CVs and conducted interviews and I thought: there are a lot of really great people out there, but how do we know what they will be like? Despite interviews, you only really know whether someone is right on that first day, when they actually come to work.
I thought the best way to find the right chairman was to contrive a mock board, a mock first day, and to discuss some of the real issues the company faced. Teresa’s background in retail and banking, and her understanding of payments and direct consumer services, were all relevant to us.
As well as the hirewear side, we have a software business – we sell software for bridal retailers to make it easier to manage their stores, and we wanted someone who would be on top of the technology as well as the business.
We’re a young, entrepreneurial, dynamic company. Aside from my father, our eldest board member is 44, and we don’t have much formality or hierarchy. Teresa’s experience in retail has been invaluable as we continue to explore new products and markets. She has all the corporate rigour, without compromising the company’s culture. I get very passionate and excited about new things, especially with our development in the States – where we now have a 240,000sq ft premises. At every board meeting, after being in the US, I come back with new and exciting ideas. It is very good having Teresa’s quiet authority and experience to complement that – it just works.
Teresa Robson-Capps Chairman, ACS Clothing
I got involved with ACS in February 2014, after the business had gone through a round of funding with BGF. I was approached two ways, once through a consultancy firm I was working with and also through BGF, who proposed me to chair the board. Then I went through a process of selection.
It was fascinating because Richard is a very creative individual, and he brought that to the whole selection process. We had an initial set of meetings and then I was brought back and we went through a mock board.
I also walked round the warehouse and met a lot of people. From my perspective I got to see a fantastic culture, and culture is very important to me. You could tell that the people had accountability for their own section and really knew the process, so it wasn’t just about fitting in with Richard, the family and BGF, it was also about how I fitted in with the overall culture of the business.
I have got a retail background but I think I was also brought in because of my digital experience, and ACS wanted to introduce the new digital platform. I also have an overall ability to understand the operational side of things.
It is fascinating working with Richard. He has fantastic capabilities and works in an entrepreneurial way but with control. We both respect each other’s abilities and what each other brings to the party to actually deliver strategies.
I don’t really think that I am a mentor to Richard; in a mentoring situation, it means you’re having to provide almost a kind of coaching.
I think with Richard, he is so sharp and business-oriented, you just have to mention something, and he will take it on board and you will see that reflected in the business moving forward.
There’s a difference between being a sounding board and a coach. Richard is quite capable of determining and ascertaining exactly what he needs for his business and moving on.
ACS is now expanding into the US and I think the business has many opportunities. We will be developing in the UK as well. Seeing our big new warehouse in Glasgow, with all the groomswear hanging in it, is very exciting. But it is about making sure that ACS delivers what we have planned.
When we had our strategy away day a year ago and we were bringing everyone up to the same level of understanding about the US opportunity and the strategy, we were just talking about it.
Then you go through the year and you see that what we were talking about developing we have actually developed. It made me think: “We’ve come a long way, in a short period of time, and this is really going to happen.”
TWO’S COMPANY: JON WRIGHT AND PETER BODDY OF XERCISE4LESS
Here, we hear from Xercise4Less founder, Jon Wright, and his chairman, former Fitness First boss Peter Boddy. Xercise4Less is a true challenger brand, one which has forced many of the more traditional gym chains to make significant changes to their business models to compete. The budget club concept addresses a consumer need while bringing innovation to the market – truly the sweet spot for any business.
JON WRIGHT – FOUNDER AND CEO, XERCISE4LESS
I used to play rugby for Harlequins, but when I was 22 I was injured, and so had to come out of the sport. The first job I was offered was selling gym memberships, and I’ve stayed in the industry ever since.
Xercise4Less was born out of another, less successful, company. I had another health club in 2006, which was based on the traditional model. We were dealt some pretty bum cards and it was a struggle. I wasn’t some visionary who came up with the idea of budget clubs and then succeeded – it came out of things not working at first and then trying something different.I saw the idea of a budget club in Hounslow in 2008. Once we got halfway through 2009, I realised that this wasn’t just a good business model, it was a great business model. We converted our Castleford site into the new budget model and that was immediately successful. When you’re struggling for a couple of years and all of a sudden it starts to work and you’re not paying salaries with your credit card, you feel relief.
We quickly expanded, but there were also frustrations because banks wouldn’t lend me any money, so I couldn’t progress as far as I wanted with opening new sites. Looking back, it was good because we spent those first three years really forming the model, experimenting a lot and learning a lot.
In August 2013 we had eight sites open but wanted to expand further. A few people were interested in investing but I was put off by private equity. Someone told me about Business Growth Fund and I quickly realised it was very different.
We let 17.5pc of the business go: 82.5pc of something very big is better than 100pc of something small. I must have met about five potential chairmen before I saw Peter. It was all new to me, but I was quite clear that I needed a person who would fit in with Xercise4Less’s culture. As soon as I met Peter I knew he was right – he’s energetic and we got on straight away. Peter is a good sounding board and that’s useful because a lot of situations I’m coming across I haven’t been in before.
Being a chief executive and founder, it can get a bit lonely sometimes. It is good to hear from Peter that “I’ve been there before”, and to understand his thoughts on situations.
Our plans for the future are ambitious: we want to have 100 clubs open by 2016, and we plan to expand into Europe, too. But we have a clear business strategy, and we are used to fast growth and change – this is just the sort of environment we like.
PETER BODDY – CHAIRMAN, XERCISE4LESS
Before I met Jon, I was really interested by what he was doing with his business. It was disruptive, new and fresh – and in the leisure sector that’s interesting. Then I was introduced to Jon through BGF. He’s very driven, very committed and I got on with him and liked his approach.
With a young, new business, everything’s possible. When I’m at the table with Jon and his senior team, everything’s “can do, will do, am doing”. There are new ideas flying around all the time. The business is growing very quickly and what Xercise4Less is doing in terms of size, its equipment, its approach to the customer and harnessing social media is all very exciting.
Jon is an excellent manager and a great leader. I thought I could help him because I’d managed a much larger chain, Fitness First, and although I wasn’t the owner in the same way Jon is, I had been on the inside of a big group and could provide insight when needed.
Jon is the driving force behind this business and I see myself as someone who he can talk to. A key role for me is liaising between Jon and BGF. I have to make sure that both parties understand what the other is thinking and between us we have all got the same goal. BGF is an excellent partner; it is a minority investor that behaves extremely well. The people there are very clear and they are very supportive, so it’s not really a big deal. I have learned from the experience.
Jon’s approaching business issues with a fresh set of eyes, and I’m taking a lot of what I’m learning with Jon over to other businesses where I am chairman. Equally, I’m bringing ideas from other businesses to Jon’s table. That’s a big part of my role, too, and it is great to be able to cross-fertilise good ideas.
We’re just about to break through 200,000 members, and the company has gone from scratching around for money to having people offer to lend money and being keen to be involved. I recently picked up a report on the health and fitness business in the UK and Jon’s business is recognised as one of the challenger brands, which is incredibly exciting.
There are so many things that have happened that I have taken enormous delight to be involved in. I can certainly see our achieving Jon’s aim of opening 100 clubs by 2016.
There will certainly be ups and downs, because no business doesn’t have those. There will be competitors, incorrect decisions – all these things are part of business – but I see no reason why we can’t succeed and take the business forward.
BGF EXECUTIVE SUMMARY – AN EVENING WITH TIM COBBOLD
In the latest of our BGF Executive Summary series, Tim Cobbold – CEO of UBM, and former CEO of both De La Rue and Chloride – shared with an audience of portfolio CEOs, Chairmen and other BGF friends, his experiences of taking some of the UK’s largest businesses through varied and challenging times, and the lessons about leadership that he has learnt along the way.
Tim has earned a reputation as one of the UK’s most successful CEOs. During his tenure at Chloride, it became the UK’s largest supplier of secure power systems to hospitals and other public buildings and facilities, before being sold to Emerson Electric for $1.5bn. Tim subsequently moved to De La Rue taking on multiple challenges, including the fall-out from production problems at its UK paper mill and a hostile takeover attempt from French rival Oberthur. Over three years, he successfully led the restoration of the Group’s reputation and delivered a significant turnaround in financial performance and prospects.
Tim’s thoughts on leadership:
There are no rights and wrongs in leadership. Everything is personal – reflecting your own personality, but also more critically the culture and personality of the people and organisation that you lead.
We can’t all be Churchill. In fact, in peacetime not even Winston Churchill was always that “Churchillian”. Your leadership style should reflect your personality and the context in which you are operating.
We can all learn to become better leaders.
The importance of self-awareness, good communication and always taking time to understand people should be your guiding principles. With these three principles at the front of your mind you will be armed to tackle the challenges every leader will face:
1. Big Picture & Eye for Detail
A leader must be able to see the big picture, to set the context for their company and for everything that it does. But showing a willingness to get immersed in real detail as and when it is required can sometimes demonstrate leadership better than any grand strategy.
2. Flexibility & Consistency
People appreciate consistency and strong leadership. But know when leadership becomes dogmatic or inflexible. A good leader listens to others: actively canvass other opinions and prove that you are prepared to change your mind when needed.
3. Confidence & Uncertainty
It is important to project confidence. If you don’t believe in yourself or your leadership, neither will the people that you are leading. But it is not a sign of weakness to express uncertainty or to ask for help in some situations. Indeed, at the right moment your willingness to admit uncertainty can create stronger relationships and ultimately result in better decisions.
4. Directing & Taking Direction
You may lead from the front, but a boat is steered from the rear. A leader must provide overall direction for the company, setting the strategic course. But delegating to others and allowing them to lead in your place when it is appropriate can introduce new energy and ideas, as well as developing the skills of your senior team. Reflected glory often shines much brighter.
5. Demanding & Giving
Conventional wisdom says that a leader must demand action, but how much more powerful is it when your people are self-motivated to act. Create a culture where action is encouraged and rewarded and where people set high expectations for themselves.
6. Strength & Humility
People like strength. Look for opportunities to show that you are willing to make decisions, and to accept the consequences, and that you are willing to protect and defend your team. But don’t let your strength as a leader obscure your identity as a real person with a life beyond business. Show a human side in the way that you deal with people and that you recognise your own fallibility.
7. Learning & Teaching
Learning is a two way process. Never stop wanting to learn, and don’t underestimate the power of asking your team to share the benefits of their own experience. It will earn you respect as well as developing new skills and knowledge. Likewise take the time to teach, coach and mentor people within your organisation.
8. Sending & Receiving
A good communicator thinks about their audience, and that process starts with listening. Always make sure you are prepared for the hardest questions, and think through the answers before they are even asked. Don’t be afraid to use a range of communication methods to get your messages across – words, phraseology, body language, facial expression – to help you connect with each individual.
BGF’s Executive Summary series will resume again in 2015. If you would like to receive information about forthcoming speakers, please get in touch via the BGF website.
Talent Network Manager
Victoria’s role as Talent Network Manager is to cultivate BGF’s relationships with a range of experienced senior business leaders in order to offer BGF investee companies unique access to a pool of expert and inspirational talent.
As a resident of the city, Victoria is based in BGF’s Leeds office but works across BGF’s seven national offices, with a particular focus on building BGF’s regional network across the north which includes Manchester, Leeds, the North East, Northern Ireland and Scotland. Victoria was formerly with Directorbank, where she gained thirteen years’ experience managing the firm’s relationships with senior executives and non-executives across a range of sectors and geographies but with a particular focus on healthcare. During her time at Directorbank, Victoria placed Executive and Non–Executive board directors on a permanent and interim basis for a diverse client base including VC funds; privately owned enterprises; mid-market private equity firms and mid-cap public companies.