Insider Magazine’s Owner-Managed Business Round Table Featuring Sammy from AgencyUK

AUK News
AgencyUK Insider Magazine

Successful owner-managed businesses don’t get to the top on their own; they seek and use external advice. Insider brought together a group of ambitious business owners to discuss the main issues affecting them and who they turn to for help.

JAMES PHIPPS chief executive, Excalibur
ERNIE WARRENDER chief executive, 1st Office
PAT WOOD managing director, Truffle Shuffle
PAUL OLDHAM regional director – South West & South Wales, Business Growth Fund
SHARON OMER-KAYE partner, Baker Tilly
PAUL JAMESON chief executive, Outsource UK
JOHN WRIGHT director, StrideTreglown
AL KECK managing director, Toinfinity
SAMMY MANSOURPOUR managing director, The Agency
KATE REID partner, Baker Tilly

Q What are the main issues facing owner-managed businesses?

Paul Oldham:We talk to businesses that are growing quickly; they talk to us primarily because they want funding to help that growth. What becomes clear quickly is that most of the chief executives we meet don’t just want money, they want wider support. That might be people to join their board and bring in expertise, to just more strategic help. If you want to take your £10m business to £30m, that’s a journey you haven’t been on before. So you need people around you that have experience of that. We very rarely have a disagreement on the merits of having a non-executive director; it’s all about finding the right person.

Q How do you find the right person for the job?

James Phipps:In the last year we took on a chairman as well as a non-executive director, partly for balance at board level as previously it was just me and my finance director. We’re going through massive growth so we felt we needed the right advice and support. The chair is very experienced in the South West, having run the Business West organisation. The non-exec is an ex-commercial marketing director at Vodafone UK, who brings industry knowledge and insight. Ultimately, it was about bringing structure to our decision-making process.

Paul Jameson:Ten years ago I needed a sounding board so I went to our accountants at the time and asked if they knew anyone who would work as a consultant in a non-exec type of way. As that relationship evolved, we realised that he probably was a director, although he wasn’t listed as such on Companies House. We appointed him as non-exec chair last year. That’s been useful for us.

Q So where else do you seek advice?

Sammy Mansourpour:We’ve got a fairly well-defined strategy: to develop and build a saleable business. To get there, putting in place a very competent management team was our top priority. We achieved that early on and that’s where our advice comes from: a varied mix of people. We make sure they’re involved and take responsibility. There may be a time when we’ll bring on a non-exec, but it will have to be someone from our industry. The time to bring in a non-exec is when you’re gearing up for sale. Two years prior to that you should start to get in shape, work out what you need to do, earmark a potential purchaser.

Ernie Warrender: We’ve taken advice and almost took someone on as a non-exec but we backed off as I am terrified of debt. I am lucky to work in a tight-knit industry, and I have my own black book. I am able to recruit from it. We do seek advice from our accountants and work well with them.

John Wright:We have a board of 15 and none of us are trained business managers. A few years ago we realised we needed a proper business plan. Our consultant wasn’t brought in as a non-exec but essentially performed that function. He helped us tailor the plan, led the conversations, drew it out of us. We keep being asked about taking on a non-executive director, but with 15 of us, and a management board of six, we have enough people to talk to. We have a wide range of skills, some of us are entrepreneurial and some of us just enjoy being architects. We are now moving the business to an employee-owned company and we took external advice to do that.

Q What are some of the barriers to seeking external help?

Oldham: One of the concerns we hear is the fear of the business destabilising. But these things can be unwound. Part of the trick is to bring in a non-executive on the understanding that it’s only as long as they’re adding value. A non-exec might be right for two years and then it might be right for them to move on. Executive directors need to feel they are still in control. Most relationships work if you put enough effort in, but you can get it wrong and personalities don’t always work out.

Sharon Omer-Kaye: It never ceases to amaze me to see an owner that’s extremely good at running the business, but the lack of strategic plan is all too common. You might be good in a particular niche, but it’s important to recognise when you need to tap into skills that aren’t necessarily your strength. It’s one thing having a strategic plan and direction, it’s another thing to ensure it’s effectively communicated to your team.

Kate Reid: With the green shoots in the economy, I’ve seen an upsurge in interest in the last few months of more companies wanting to take more people on board. Questions are being asked and it’s no longer a case of batten down the hatches. It’s more about, let’s reshape, refocus and bring in new blood.

Al Keck: Our team is now at double-digit figures. We’re growing at 30 per cent year-on-year and I am pushing them to capacity. Until there’s enough new business, there’s the question of whether we can afford to bring someone in, so I work with a consultant to give me a sounding board. The senior management team is great at running the business operationally. But when you have to make tough strategic decisions that impact upon them, it’s hard to involve them.

Pat Wood: My business has survived 10 years, but we had about three quiet years during the recession. Last year my wife and fellow managing director and I realised we’d gotten used to enjoying the trappings of running our own business. Then we thought, what if it doesn’t make it through the next 10 years? So we decided we needed a vision for our exit plan and how we could make sure the business continues to make money. We made changes, from headcount to business processes to how, where and what we sell. We made these decisions without asking for advice. We used our gut feeling. Now we’re growing phenomenally again. Once we’ve pushed the business as far as we can, do I approach organisations like Business Growth Fund? Do I seek a non-executive director as I was advised to six years ago? Back then, maybe arrogantly, I thought there weren’t people out there with the relevant experience to advise me. In those days I wanted to know how to grow the business, now it’s about how the business can provide a living for the rest of our lives.

Q What can an external adviser bring to the business?

Jameson: A non-exec director has to elicit ideas from us, the business owners. We are the most valuable resource that our businesses have. I often question my role. The business is mine. I am the shareholder. I am also the CEO, so I run the board. I am also the manager of most of the work. The challenge is keeping the balance between corporate governance and shed-loads of work in my day job. Non-execs help to balance that. They question your choice of direction.

Warrender: When we reached £5m, I went to the board and told them we needed to act like a mini corporation. But I didn’t know how. I’m not equipped to run a company, it just grew and grew, mainly out of a fear of borrowing money. Every time it grew and I had enough money, I employed someone clever. Now it’s bigger and I need advice on the little things again, for example help with logistics. We are a mini corporation despite me.

Mansourpour: That’s where investment comes in. I had it drummed into me to get out of self-employment as quickly as possible, move away from being an owner-manager; get a management team to do the day-today; you then lead through the vision. I found, as time went on, I was no longer doing things I was particularly good at. I had started dealing more with HR and people management. But now we’ve got people in who are exceptional at those sorts of things.

Omer-Kaye: You have to be careful not to clog up your team by stifling them. You need to recognise what people are good at and not so good at. In yourself as well. You don’t need to do everything yourself. You need to have honest conversations with those around you, look at people’s skill sets and work out their strengths.

Phipps: When I took the business over, there was no structure to management. One of the reasons I’ve brought in a non-exec is to bring in strong operational people. Once you have the advice from a non-exec, you can’t walk back into the office to put the strategy in place if you don’t have the people good enough to do it. We have had some tough conversations, where some people haven’t been at the right level. But you need to take the emotion out.

Reid: Getting the right people on board is a challenge, but don’t be too set in your ways. New things can work.