M & A Rainmaker

I have friends and family in the car sales and parts industry and I guess if you had asked me to invest in this sector a few years ago I would probably have thought twice ( or more ! ) about doing so but I would have been  wrong 😉

In 2009 and 2010 both the U.S. and the U.K. had ” Car Scrappage ” schemes ( ” Cash for Clunkers” in the U.S. !! ) in an effort to boost new car sales in the face of the recession.

These appear to have boosted the existing trends and R.L. Polk & Co. of the U.S. says:

“As vehicles age and consumers continue to

hold onto them longer, there are significant opportunities for repair services and parts demand for the aftermarket as vehicles are falling out of warranty as they age,” said Mark Seng, vice president, sales and client services, aftermarket and commercial vehicle, at Polk. “The increased complexity of vehicle repairs also presents a business opportunity for service professionals as traditional do-it-yourself consumers are less likely to attempt complicated technical work on their vehicles.”

Dealers will have an opportunity to develop programs geared toward service loyalty marketing as they seek to hold onto a growing base of customers, according to Polk. “The trends we’re seeing suggest great motivation for dealers seeking to maintain a longer-term relationship with their customers,” said Lonnie Miller, vice president, marketing and industry analysis, at Polk. “Service-oriented loyalty programs can significantly contribute to improving business and overall loyalty among customers,” he continued.

Polk expects conditions facing the U.S. automotive industry today to remain through 2010 and expects trends for scrappage and vehicle ownership to continue for at least another year. This assessment is largely based on current industry dynamics, coupled with Polk’s annual forecast of a moderate increase in light vehicle sales to 11.5 million units this year. It also assumes a general upward trend for vehicle scrappage rates as high volumes of older vehicles continue to retire from the U.S. fleet. “

( I am assuming that the U.K. is following similar trends to the U.S. ).

People are holding on to their cars and vans ( light vehicles ) longer ( 2004 – 8.6 years, 2010 – 10.2 years ) but also the scrappage percentage is rising ( from approx 5 to 6 % between 2005 and 2010 ) .

” These trends are supported by a number of factors, including the economy, limited financing and leasing options available in the market, extended warranties offered by OEMs, and improved vehicle durability and quality of vehicles. They also provide opportunity for various business segments of the industry” says Polk.

Whilst the variations are considerable car parts come from one of two places and get fitted in one of two ways:

They are either ( originally ) from a manufacturer ( either the ” original ” or ” Genuine ” one or an ” Aftermarket” or what is called in the ICT industry a ” compatible ” one ) or they have been ” recycled ” i.e. they are from a crashed or scrapped vehicle.

The parts are fitted either by a garage/service provider or by an unqualified individual, likely to be the vehicle owner.

Certainly the comment made by Polk about vehicle complexity is valid. Some faults cannot be identified and resolved without hi-tech ( expensive ) equipment and skilled operators.

The ” route ” that the parts take between manufacture and fitting is varied. Broadly speaking, these days, there is an ” Internet route ” and a ” Physical route ” but there will often be a mixture of the two.

For example the vehicle owner might go to a garage, who buys from a “distributer ” , who buys ( mainly ) from the manufacturer.

or

The vehicle owner might do the work himself and obtain the part from an online website like eBay, a car parts provider/car breaker or a forum member.

These might be viewed to be the ” extremes ” but there are very many permutations for the garage/service provider route and for the self repairer route.

An individual could go to:

– The Internet ( eBay, online parts company, breaker or forum )

– A car breaker ( physically )

– A general car parts provider ( a physical outlet )

– A manufacturer’s dealer ( physical outlet )

A garage/service provider could go to:

– A car parts provider ( distributor )

– A manufacturer dealer

– The Internet ( as for an individual )

As a generalisation ” older ” people might tend towards the ” physical routes ” whilst younger people might be more inclined toward the ” Internet ” routes.

As younger, more Internet literate, people join dealers/service providers ( SP’s ) they will be more aware of the potential Internet based routes although they may be constrained by existing procedures from using these routes.

Certainly younger people, doing their own repair work, are very likely to use the Internet route.

Dealers/SP’s using the physical routes are likely to be marketed and sold to in a ” physical manner ” e.g. snailmail shots, telephone sales.

However, it is clear that the Internet channel is getting more and more popular, utilised and sophisticated.

A brief analysis via Google reveals the following:

A Google search on ” Car Parts U.K. ” gives 1st page results as follows:

Paid search ( Pay per Click / Google Adwords )

1. Euro Car Parts ( ECP, Genuine and Aftermarket parts online or physical sies )

2. 1st Choice spares ( New – Genuine and Aftermarket – and Recycled, online only ? )

3. CPR ( New and recycled, online ? )

4. Comline ( New, online )

5. Find a part ( New, online )

6. Express Car Parts ( New, online )

Organic ( Free ) Search

1. ECP

2. 247 ( New, online )

3. carparts-uk ( New, online )

4. carpartsdirect ( New,online )

5. 1st Choice

6. Breakeryard ( New,Recycled, online )

A Google search on ” LandRover Clutch parts ” gives 1st page results:

Paid Search

1. ECP

2. EH Douglas ( Servicing/Repairs )

3. jgs4x4 ( New – Genuine and Aftermarket )

4. Rimmer Bros.

Organic/Free Search

1. Brookwell.co.uk ( New – Gen. and Amarket )

2. Rimmer

3. FamousFour ( New and Used )

4. landroverspares.co.uk ( Buckley bros. ) ( New Gen. & Aftermarket )

5. eBay

N.B. ECP has presence across both searches, ( the only one ), paid and organic – very strong Internet presence. 1st Choice also appears in paid and organic search for car parts uk search.

Quite clearly some ” physical ” based companies have some work to do in terms of Internet presence.

The trends for people keeping their cars longer will undoubtedly lead to continuing demand for spare parts – new and recycled. It appears that supply for both new ( original and aftermarket  ) and recycled will also continue. New and recycled prices may trend down with competition and manufacturing efficiencies ( more research required ).

In 2009 we sold 5i Limited to what became 365iT plc ( formerly Impera plc ) which is run by Peter MacLean, who helped build Guardian iT into a £110m business.

I originally invested in 5i Limited in around 2002 when finance would have been virtually impossible to raise for a Hi-tech start-up of this nature.

The original investment period was 3-5 years but I gave 5i’s management until 2009 to produce a return on my investment.

So, post the sale of 5i Limited to 365iT, what has happened ?? What does the future look like ??

365iT is pursuing a buy and build strategy – looking for suitable, complementary hi-tech companies to add  to it’s portfolio. It has raised funds from e.g. LMS Capital, the South East Growth Fund and Sussex Place Ventures.

It bought  7 Global from LMS Capital and also acquired Fox I.T. last year.

I will be posting a series of blogs on the post sale performance and my recommendations to other companies that are considering becoming part of 365iT.

A new Cisco based Hosted Telephony service is available, via selected Cisco partners, in Liverpool, U.K.
Cisco Hosted Telephony ( otherwise known as Hosted Voip, Voice, Phones or  Hosted Unified Communications is particularly suitable for small and medium sized businesses and those with many small offices ( or small numbers of telephony users in each office ).

A representative from Cisco Systems comments:

“We are seeing an increasing demand for managed and hosted solutions in the voice space and this is especially the case for smaller businesses with less than 20 employees. FutureLine have a refreshingly new approach by addressing the key fundamentals of quality, security and ease of use and deployment. This is all underpinned by partnering with Cisco who fully understand how to manage different media provided by the various consumption models.”

Andy Brocklehurst
RSM Cisco Small Business UK

For more information please contact Clare at Futureline

http://www.futureline.net.uk/contact.html

for the chance to win an ipad go to

http://info.futureline.net.uk/win-an-ipad/

Written by Guy Rigby, Head of Entrepreneurship at Smith & Williamson

http://www.smith.williamson.co.uk/entrepreneurs

Family and friends are a great source of funding for start ups and early stage businesses, but raising money from external investors or business angels is challenging.

Here are ten of the key issues that investors will be considering when they meet you or read your business plan.

1. First impressions

First impressions are critical. Most investors will decide not to proceed within the first 30 seconds of any discussion, or within a minute or two of picking up your business plan. Think about your approach, test in on your friends and practise it to perfection. Don’t fall at the first fence.

2. Demonstrable need

Where is the pain and what exactly is the need for your particular product or service? Most businesses offer ‘me too’ opportunities which are not obviously exciting to an investor. Make sure it’s clear how and why yours is different. Is it better, faster, cheaper or is there some other reason why you will succeed when many others fail?

3. Existing Revenues

Raising money for a business with pre-existing revenues is far easier as demand for your product or service has already been partially proven. The fact that you have already established the beginnings of a customer base will carry huge weight in any discussions.

4. Strategy

You may have a great idea, and you may have existing revenues, but what is the future for your business? Do you have a vision? If so, is it realistic or just “pie in the sky”? We have all seen those hockey stick shaped graphs showing an embarrassment of riches only a year or two down the track. Don’t be tempted to over-promise and under-deliver. It’s normally transparent from the start.

5. Business plan

The credibility of your proposal will be reflected in the quality of your business plan. A poorly presented, badly researched plan will kill your proposal before it has a chance. An idea may be good enough to gain the backing of family and friends, but it won’t cut the mustard with any serious investors.

6. Business model

Your business model will determine how and where you make your profits and how you will build long term value in your business. A model that requires huge revenues to deliver small profits is inherently unattractive, whereas a business in a niche market with high barriers to entry will be of interest to potential investors.

7. You

Are you credible in the eyes of the investor? What is your track record and what experience do you have of your business? Most successful entrepreneurs “stick to the knitting”, creating businesses based on their passion (ie something they know and understand), personal knowledge or experience. If this is limited, get the support of a mentor or partner. This will demonstrate maturity in the eyes of your investor.

8. Financials

Businesses go bust because they run out of cash, so be sure to demonstrate a good understanding of your financials. Margins and overheads will be part of the discussion, as well as working capital and cash flow. Remember that small businesses are normally cash constrained and prone to overtrading, so the investor will need to understand how you will manage this.

9. Pricing

Don’t be tempted to overvalue your business. We are a long way from the heady dotcom days when investors were persuaded to part with large amounts of cash based on little more than an idea. Nothing will put an investor off more quickly than an excessive or unsupportable valuation. The more you need, the more you will have to give away, so be realistic, cut your cloth and take in as little external funding as possible.

10. Exit

It’s very easy for an investor to put money into your business, but how will he get it back? A vague idea that you would like to buy his shares back at some future date is unlikely to be attractive. Taking in external funds means that you need to “begin at the end” in terms of thinking about exit, having a clear strategy and plan. This may change as the business grows, but you need that stake in the ground.

These are just some of the issues an investor will be thinking about, often subconsciously, in the short time that he focuses on your business. If you’ve thought it all out beforehand and you can tick all the boxes, you will have a strong chance of success.

Good luck!

Working together as a team is often key to the success of a particular task, had you ever thought what part our own ‘persona’ plays in the overall team success.
Our persona represents our public image. The word is, obviously, related to the words person and personality and comes from a latin word for mask.

So the persona is the mask you put on before you show yourself to the outside world. Although it begins as an archetype, by the time we are finished realising it, it is the part of us most distant from the collective unconscious

At its best, it is just the “good impression” we all wish to present as we fill the roles society requires of us. But, of course , it can also be the “false impression” we use to manipulate people’s opinions and behaviours, and, at its worst, it can be mistaken, even by ourselves, for our true nature: Sometimes we believe we really are what we pretend to be !

That’s food for thought……..

Richard Spooner – Sales Coach

Yesterday I was at my pub,  The Glan yr Afon Inn in North Wales, for the review of our sales over the Christmas and New Year period.

I was online using the BT OpenZone connection that we have in the pub when I heard the manager Ian guiding in some visitors ( if you follow your Satnav rigidly to CH8 8HE you just end up going up and down the A55 forever ! ). A couple eventually arrived with a young black labrador ( who was equally welcomed in ) and explained that they were travelling from Holyhead to London had been delayed between Holywell and Holyhead ( it looked as though there was an accident or something ) and had phoned thier son and asked him to find them a place to eat using the Internet somewhere near Holywell. He had found The Glan.

This was not a surprise as we come up on many different, relevant Internet searches eg

http://www.google.co.uk/search?hl=en&q=pubs+in+ch8&btnG=Search&meta=&aq=f&oq=

http://www.google.co.uk/search?hl=en&q=pubs+near+holywell&btnG=Search&meta=&aq=f&oq=

http://www.google.co.uk/search?hl=en&q=restaurants+near+holywell&btnG=Search&meta=&aq=f&oq=

and we do so via Google maps and various other natural listings e.g. via our website itself ( which has been SEO’d to some extent ) and pub directories and social networks.

Also we now have about 40 reviews online some of which are fantastic like this one 

The Glan Yr Afon Inn, Holywell‎  By Young couple – 11 Aug 2009 Positive: Wonderful reception when we finally arrived (not until midnight!!), friendly and helpful staff. Lovely location and peaceful. One of the best places that we have stayed. …‎ www.booking.com/hotel/gb/the-glan-yr-afon-inn.en.html?…

so in many ways we expect to be found by people searching the .net but there is still great satisfaction in doing so.

When people register to stay with us we ask then how they heard of us so we know that we get a lot of people from the Internet.

The Booking.com website is a particularly useful source of customers for us

http://www.booking.com/hotel/gb/the-glan-yr-afon-inn.en.html?aid=307415;tab=4

and we registered with this booking site after a global review of what websites came up when people tried to find eg bed and breakfast in Holywell from a foreign country like the USA.

We do use more traditional forms of marketing like advertising ( in local papers and magazines ) and we have particular success with postcards that we give away in the pub and are sent to people all over the world. We put up posters regarding events that we hold.

We also have a database of customers that we have collected over the years and we use this to send email and snailmail shots out. Here’s our latest newsletter which we send out by mail, post and have available in the pub:

http://www.glanyrafoninn.co.uk/Mailshot/Glan-xmas09.html

We also have video’s on the Internet

http://www.youtube.com/watch?v=t1YGFgQHsno

an online historical society

http://www.ecademy.com/module.php?mod=club&c=5300

a blogsite

http://glanyrafoninn.wordpress.com/

a Twitter page ( with 494 followers )

http://twitter.com/GlanYrAfon

and a Facebook page ( with 152 members ) 

http://www.facebook.com/chris.windley?ref=name#/group.php?gid=25701627254&ref=ts

The historical society page, blogsite, Twitter page and Facebook page all need regularly updating with fresh news and pictures.

All of this is certainly great for sales and surely makes us one of the most connected pubs in North Wales, the North West and the U.K. !!