‘UNCERTAINTY is the new certainty’ is a throwaway trope you regularly hear in business circles. It’s an easy one liner that won’t be universally accepted by all, but there is no doubt that it holds currency.
With so many headwinds hitting business owners, 9amBusiness likes to gather a select group of leaders from high-growth companies every month for an hour-long roundtable discussion, where we dissect the challenges and opportunities facing them.
For our latest event, our partner was UK top 50 law firm Birketts, with the event held at its office in the EQ Building in Bristol. Damocles Merry, a Partner in the Corporate Team joined for the discussion.
Labour costs rising
Griff Holland, once of Friska fame and now the founder of two new businesses, opened the discussion by saying that the cost of goods and labour is a key challenge for his hospitality business Double Puc, which has three sites across Bristol offering sit in and external catering.
He said: “The reality is that we are struggling to balance labour costs which means that you have to look at other ways of cutting outgoings in your business such as ingredients, but you need to do this without compromising on quality.”
It was a challenge – particularly acute in hospitality which Griff says has been in a permanent state of existential crisis for the last few years – that inspired his second business Percy Labs.
He explained: “Percy Labs is a procurement platform which matches operators and suppliers in the hospitality sector, with the aim of driving efficiency and reducing costs. As an operator you will have long-term relationships with suppliers and every day brings a new fire to fight so you don’t always have the time to focus on looking at if you can reduce costs.
“Percy Labs changes this by crunching the numbers for operators and then putting the requirement out to all the suppliers on the platform. The mood music is low in the sector, so we see this as an opportunity to save people money without dumbing down on what they offer.”
Necessity is the mother of invention – another well-worn business trope – and Griff’s innovation is certainly one to watch for this sector.
Huge growth
Nick Rogers, the founder of Exacta Technology, shared his plans to continue to grow the business. Last month 9amBusiness.co.uk reported that Exacta had experienced its best quarter of trading; and has plans to hit £100 revenues in the next five years.
Nick said: “Last year was a standout one for us and we achieved a turnover of £22m which is our best year, but every December 31 I challenge myself about how we are going to do this again or better. Well, we’re on track for £40m turnover this year and the best part of the journey to this level of growth is that I have been able to step back and build an amazing team that supports the running of the business day to day.”
On the challenges his business is facing, like Griff he mentioned rising costs.
“One example of rising costs is a 16-gig ram stack that cost us $76 twelve months ago and is now $900 and it keeps going up. These soaring prices have played a part in our early growth this year as people look to lock in prices. Will it continue – let’s see,” Nick explained.
Impact of turbulent Middle East
Government policy and Covid inspired inflation aside, some sector related issues have meant that some companies are looking intently at overseas markets.
Caroline Sparks, the co-founder of Turtle Tots – a franchise swimming business for children – said that due to pools being closed in the UK at a frequently fast rate she has ventured into Dubai and has plans to also expand further to Saudi Arabia.
“Growth is harder in the UK, but that is because of some conditions that are unique to our company – namely swimming pools closing all over the country. So, our focus is abroad and in the Middle East as our franchisees hire pools from hotels and leisure centres. This has been disrupted somewhat in the short-term, but we are still operating in Dubai and our plans remain solid,” she explained.
Buoyant recruitment sector
Another business moving fast and with ambition is Oculus Legal, a legal recruitment business. Ross Bennet, one of the co-founders, started the company two years ago and is already on course to hit big numbers.
“When we set up, we took investment straight away and the plan is to exit within five years. Darren Ryemill is one of our investors and he has experience of a previous exit with Opus Talent Solutions. The legal sector is resilient, and we work on high margins. We’re on track to turnover £5m this year and we plan to expand into the United States by the end of the year,” Ross explained.
Mark Burland, the founder and CEO of First Class Comms, echoed Ross’s ambition for his own company and said: “We have a clear plan for the business now which is about looking at how we can potentially leverage debt funding to acquire other regional telecoms companies and embark on a buy and build strategy, with a view to potentially exit down the line. But we need to achieve at least £1m EBITDA in our sector to be attractive to buyers.
“One of the drivers for me is wanting to eventually have a calmer pace of life, where I’m not always answering emails. I have also brought on a new member in the team who is a very senior appointment. It’s brilliant to be able to bounce ideas around with him and to have a clear plan,” Mark added.
AI
Artificial intelligence is also bringing out fundamental change to businesses and is unlike any technology or business revolution that has come before.
Mike Tyers, the CEO of Knectd, said: “We are living out a video game or watching a film from when we were younger. AI is going to replace a lot of jobs, but it is also a great leveller because it is giving everybody access to tools that can create speed and agility in a business. Systems that previously took years to be built, now take weeks and months.”
Duncan Ter-Veen Hockey, Head of Technology at Cooper Associates – a wealth management and mortgage adviser did add a note of caution: “you still need a person to conduct AI and with wealth advice for example, we’re finding that people still want to talk to an adviser and I think this will still play a big role going forward.”
Griff added: “Percy Labs brings insight to hospitality leaders around costs, and it couldn’t have been built without AI, but the value is only unlocked when the supplier and the operator do the deal and this requires human interaction and people will also play a role in the process to get to this point.”
Keeping on the AI theme, Nick Tippet, a Corporate Finance Partner at PKF Francis Clark, said: “We employ over 1,000 people and because of AI we are facing huge change, but people are still important and, in the future, will be required to deliver the higher tier accountancy and advice work. You will research using AI, but when it comes to a decision being rubber stamped, most people will want to have human interaction. Our customers aren’t saying don’t come and see me and when it comes to wealth, health and family it isn’t always an option to just rely on AI.”
Conclusion
Despite the challenges, businesses in the South West are growing. Entrepreneurs are ambitious and tend to find a way to succeed, whatever the climate.
Reflecting on the discussion, Damocles said: “It’s inspiring to see businesses in the South West continuing to innovate and compete. The market in the region is certainly resilient, and businesses have been through so much that they have adjusted to uncertainty being the new operating procedure. As a result, businesses that are doing well now are a lot more attractive.”
Nick concludes: “There is a huge amount going on globally at a macro level and a lot of questions we need to answer as economies but at a micro level businesses are growing and we’ve seen more transactions – business sales and mergers – in the last five years, than we’ve ever seen before. Despite what’s going on there is energy in the market and deals to be done. ”