The fifth Hot 100

by Real Business - Thursday, 30th August 2007

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Think of it as an exclusive club. Your average growth in sales over the past four years must exceed 50 per cent. You should have achieved that while being an independent business. And you have got to have potential star quality; after all, earlier members include companies that have gone on to become household names.

For a full breakdown of the Hot 100, you will have to get hold of a print copy of the March 2001 edition of Real Business. (To do that, got to "Subscribe to Real Business", or call 020 7828 0706). But in the meantime here's a tantalising taster of the top ten.

1. Charles Walsh, a former BP man, spotted the business model for Healthcare at Home in 1992 in the US and decided to transplant it to the UK. He set up the company a year later. But the business had a frustrating start: not one of the 120 British health authorities responded to the idea of private provision of care at home. Fortunately, insurance companies proved more interested. And caring for a woman with a form of leukaemia requiring intravenous treatment gave the company its first break. Referrals followed and the business began to grow.

Healthcare at Home treats up to 3,000 patients in their homes at any time; 80 per cent come through the NHS. Other income is generated from the pharmaceutical industry, which pays for the use of certain complex drugs. The company now has 16 offices in Britain and three in Ireland. Revenues for the year to October 1996 were around £650,000, but had reached £22m by 1999. They are now heading for £40m.

2. Medical Legal Support Services (See number 8)

3. Corpack Industries, is a Cheshire-based packaging company. Not, you might think, an obvious superstar. But the £10m acquisition of the UK corrugated packaging division from MY Holdings in March 1999 propels it up to third place in the Hot 100.

4. Oyster Partners, marks a special moment for the Hot 100, as an internet company enters the upper reaches of the ranking for the first time. The web consultancy sector has had a real battering over recent months, but, with a beefed-up management team (Alan Bell became CEO in November 2000) and an award-winning track record behind it, Oyster Partners looks here to stay.

5. Project telecom is the brainchild of the effervescent Tim Radford and Richard Cunningham who built the company (it develops telecoms projects for companies) from humble roots (it really was born in a barn, in Nottinghamshire) into a £110m fully quoted business. A new £3m call centre is due for completion this month and Radford sees plenty of growth ahead.

6. In 1995 Richard Latham set up Bluewave, an online creations company, by simply putting up a web site on the internet and inviting anyone wanting a similar site to e-mail or call. Lloyds of London became the first client. Then came the likes of Citibank, British Airways, GlaxoWellcome and Volkswagen. The firm now has operations in the US and Asia-Pacific and its own web site includes web-cams so surfers can watch Bluewave staff at work.

7. Genevac earns a seventh place ranking for the second year running, having come in at number 31 in 1999. This multi award-winning business, which develops solvent evaporation technology for pharmaceutical research labs, was sold recently to Sybron Laboratory Products Corp of Milwaukee, for £25m-plus. Genevac went bust in the eighties but, when MD Michael Cole developed a new machine for the pharmaceutical business, the business turned rapidly into profit. Genevac MD decided to sell the Ipswich-based business when he reached his seventies. It will now be run as a stand-alone business within Sybron, by Cole's son.

8.Medical Legal Support Services and Claims Incorporated formed two key parts of Claims Direct, the personal injury claims business that floated on the stockmarket in July 2000. Success has proved hard to maintain for Claims Direct and this January the company issued its second profits warning in three months, announcing a boardroom shake-up in which founder and executive chairman Tony Sullman stepped down to become a non-executive director.

9. Gravesend-based Alpha Plant was started by twin brothers Rawinder and Satwinder Binning, and other family members also now work in the business. The plant hire company has expanded into niche areas, such as Skidsteer hire, a highly popular vehicle in the US. The company borrows business techniques from India and the US, for example, employing female reps with photos on their business cards - potential customers remember them.

10. Barwood Developments, a property development business specialising in distribution sheds, has expanded its offerings to include a logistics consultancy advising retailers on distribution solutions. Has major developments across the Midlands and the south, including a recent prime seven-acre site just off the M40 at Banbury.

What it takes
As Alan Hansen might say, it takes skill, guts and determination to run a hyper-growth company. We asked five of our Hot 100 bosses about what's helped or hindered their success, how they've coped with the pace, and the key strategic role of a glass-fronted fridge.

We spoke to:

Charles Walsh, founder of Healthcare at Home, this year's number one.
Alan Bell, CEO of Oyster Partners, a London-based "interactive architect", which offers a range of professional internet services including business strategy, creative design and software development. Clients have included 10 Downing Street, the BBC and Unilever. Revenues increased from under £276,000 in 1996 to £4.1m in 1999.
Tim Radford, founder of Project Telecom, a mobile phone dealer which made an early move into pre-paid mobile phone services. Revenues grew from £9.3m in 1996 to £117m in 1999. The company floated on the London Stock Exchange in September 2000. (This flotation will exclude the company from our list next year.)
David Jenkinson, co founder of Restaurants at Work, which does bespoke catering. Need a butler for a corporate HQ? Or a full seven-day-a-week catering service? Jenkinson's your man. Sales increased from £536,000 in 1996 to £3.9m in 1999. But Jenkinson's sights are set much, much higher.
Doug Eaton, MD of P&M Products, manufacturer of creative colouring products. P&M was a finalist in the 2000 Real Business/CBI Growing Business Awards and recently won a Queen's Award for International Trade. The company has a subsidiary in the US and has seen revenues grow from £1.7m in 1996 to £9.7m in 1999.

What's been the toughest fast-growth issue for you in the last 12 months and how have you overcome it?
Walsh: "We are a very unusual business. Because we are so novel, the frustration we always have is in actually getting people to fully understand what we do and then decide to go ahead with us. Nevertheless, we have grown fast. In terms of managing that growth, last year we moved to larger head office premises in Burton-upon-Trent in the Midlands, a 30,000 sq ft facility that gives us lots of capacity to grow into. We now have around 200 staff and have been building the infrastructure to enable us to take on the next big project."
Bell: "The challenge has been the same across the whole of our industry - finding and retaining talented people. We've always attracted excellent people, but in an industry that went through a period of enormous growth, there was a serious skills shortage. In response we've created a well-run, profit-making business, which attracts good people. We've also provided professional career development and a challenging environment, and provided good financial rewards."
Radford: "People, people and more people - and not just any old people, but good people. In a fast-growing business it's interesting psychologically, because people who are good in the early stages of growth can become very insecure as the pace of growth gathers; and people who didn't shine in the early stages come into their own. So it's finding people who can harness and embrace the challenge of growth, which is a very unstabling factor. As the pace of growth gathered, it was only a matter of time before we floated because with a quote you have share options and that allows you to share the equity with your management team and the employees who make the business."
Jenkinson: "Finding IT systems to keep pace with the elements that growth produces. We have a huge mountain of paper to handle, but our business is quite specific and you can't go onto the high street and buy a new piece of software to handle it. We had to employ a software designer to come up with a solution to our admin needs. We are very impressed with it - it does exactly what it says on the tin. The single most successful part has been the invoice processing. One of our contracts might have 200 separate invoices in one trading month, so if you multiply that by all the contracts we have, you get an impression of the thousands of invoices we have to handle. Being able to track them right the way through to payment is important to our business."
Eaton: "Cash. Unless you are toddling along at three per cent growth a year, cash becomes the key item you always need to address. We handle it with careful planning and we have used invoice discounting since day one."

What are the three key ratios that you look at within your business? And why?
Walsh: "The business is still personal enough that we can have a feel for what's going on. We do look at performance ratios on a monthly basis, but really we are so focused on looking ahead of where we are. I know I am carrying more overhead than I need to run the current business, but I need that overhead to take it to the next stage, to run the business I am going to have. So I am not unduly obsessed with these things [ratios]."
Bell: "Customer and employee satisfaction - this is the real measure of how successful you are internally and externally; also PBT - this focuses on the overall optimal profitability of the business; and revenue - it's the primary indication of company growth and market share."
Radford: "Margin, cost and cash flow. If you have a handle on those, you won't go too far wrong. Between 1998 and 1999 our turnover went from £21m to £117m. The big danger with growth that fast is that it gets out of control and you run out of cash, so cash flow is absolutely key. It's also very easy to let the costs get out of control and waste all that margin."
Jenkinson: "We don't so much run around ratios all the time; we focus most on new business, on maintaining growth. In our marketplace the decision-making process can be very long-winded; we can talk to somebody for years before they elect to make a change. It's also fundamental that we manage the existing business we have got. Third, cash. We have no loans, debt or bank overdraft and that's only because we manage cash in a certain way.
Eaton: "Gross margin, revenue and overheads. We need to know if we are getting the right profit, hitting our sales targets and keeping our costs under control. We have daily sales reports so we can tell what's happening across the globe."

In which areas has technology had the most profound impact on you in the last 12 months to two years? And what aspect of technology will be most important to your business in future?
Walsh: "We are a high-tech company and positioned very much at the cutting edge of what's done in the home in terms of clinical treatment, involving the most sophisticated pharmaceutical products and devices available and the most highly trained nurses. We are now working on providing an internet service around our real business. The internet is one means of communicating with patients and monitoring progress - you can look at it as one dimension of the service you provide."
Bell: "Oyster's core business is built around the internet - the growth of the internet has fuelled and will continue to fuel our business. The next enabler for our business will be broadband, 3G and wireless - this will enable the internet user to move to a greater level of usage. We're already working on some ground-breaking wireless solutions for our clients."
Radford: "GSM networks have taken market penetration to around 60-70 per cent in the UK, so you could say this market is becoming saturated. But the point is that what you can do with the telephone today is very restricted - it's predominantly a voice tool. We see a big opportunity in delivering services over the phone, and the advent of third generation [capability] will enable us to do that - it allows us to squirt more data onto the screen. The 3G networks will allow video phones and mobile internet to really come into their own. That's a big opportunity."
Jenkinson: "We are a business that talks a lot - with existing and potential clients, with suppliers - and the biggest change we have noticed in this business in the last few years has been the damned voicemail process. Voicemail is a nightmare for us because it means we have to duplicate our effort. People can be spending days away from their desk and just leaving their phone on voicemail, so you are cut off from making contact. We find that disruptive and it has a profound effect, both emotionally and in reality.
"In terms of future technology in our business, we will be developing Executive Information Systems (EIS). At the moment we know the business intimately - we know what our accounts say within two days of the end of the month; we know all our key numbers. But we recognise that as we get bigger we have to get more sophisticated, so the EIS will make sure we keep in touch with the business."
Eaton: We have a web site and we do some business through it in the States, but mostly we use it to give information to people about our products."

What one characteristic do you always look for when recruiting?
Walsh: "Over and above the required level of skill or experience, I look for someone who has the right sort of attitude and commitment to the cause. There is a certain amount of missionary zeal about our organisation, because we all believe so strongly that people should have the option of being treated at home if possible. We are all committed to that as an idea and want to recruit people who are similarly committed."
Bell: "Candidates have to have a good attitude. It doesn't matter how smart someone is if they're not willing to use their skills in a positive way."
Jenkinson: "A good positive, can-do attitude. Ours is a complicated delivery system that relies a lot on people. We expect people to deliver what they promise in any job role. We give people the authority that goes with responsibility and we expect a lot."
Eaton: "Four years ago we had 22 staff; now we have over 90. We look for team players and people who appreciate what we are trying to achieve. We also look for people who can move into the next job, because in a growing business you want people you can promote from within into new roles."

You can't stop where you are. What's the next big step for your business?
Walsh: "We are inventing everything we do. We have 16 centres around the country and the mix of business in each could be different. Our aim is to raise awareness of what we do and establish what we do on a broader footing."
Bell: "Oyster will continue to stay profitable, grow shareholder value, and then all options are open - staying private or going for an IPO."
Radford: "Ongoing growth. We think we have the right team in place and the right platform to grow this business rapidly."
Jenkinson: "We haven't finished the high growth stage of our business. If we have 40 clients, our largest competitor probably has 8,000. We are still a tiny company in a sea of very large companies, but we are getting bigger."
Eaton: "We believe there's a big opportunity for us to become a global player and for our brand Color Workshop to become a major brand in this world of creative colouring products. We have a strong image, a striking look, and we offer value-for-money products."

How do you see the wider economic climate and its potential impact on your company's growth? Walsh: "Healthcare is noted for being pretty well immune to economic downturns because people carry on getting treated. Someone may decide not to buy a car if they are uncertain about the economy, but they will still get treated for cancer."
Bell: "The world leaders are talking us into recession. If that's the case, then the internet will be used to accelerate cost-cutting; companies will reinforce their business around interactive technology to remove people costs and make processes simpler while expanding access to the user/customer using the internet."
Jenkinson: "There seems to be a higher frequency of companies that are merged, demerged, acquired or sold. We may have developed a strong relationship with a high-street name and then someone buys them out and doesn't want our service for some reason. In the past when that's happened we have managed to persuade the new owner to maintain the relationship, but that won't always be the case. So mergers and acquisitions are not always good news for us."
Eaton: "The first thing I do every morning is get the FT and see what the exchange rates are. The weak euro has impacted on our distributors in Europe. But the American dollar movement going up against the pound has helped us in the States, so it's swings and roundabouts. We look at it in a global way."

What was your wisest investment of 2000?
Walsh: "Our move to Burton-upon-Trent. It's shifted the centre of operations out of London and provided a key plank for building the future. It's brought all sorts of benefits: it makes better sense for the distribution side of the business and has had a significant impact on staffing - it's hard to get and retain admin staff of the right calibre in London, but in the Midlands we have been able to find people of relatively greater experience who will probably make their careers with the company."
Bell: "Hiring an exceptional management team, including a chief financial officer and chief people officer."
Jenkinson: "Our most enjoyable investment was getting an office fridge. Being mostly renegades from the hotel trade, good food and wine is part of our culture so having a fridge is important. It's glass-fronted - so you can see when you're out of wine."

It's tough running a fast growing business - how do you personally cope with the pace?
Walsh: "My problem is that the pace isn't fast enough! I have never even thought it was difficult. But then, I don't have to physically manage the new business coming in."
Bell: "Scenario-planning complete with strategic focus allows you to dictate the pace; probability analysis enables predictive thinking. The key is controlling the pace within the boundaries of the company's capabilities."
Radford: "It is stressful and lonely. You need a good set of people you can trust. I am lucky that my finance director has been with me for 11 years and on the back of that relationship we have built a solid management team. That takes away a lot of the daily stress because when you have a team of people who are as committed and passionate about your business as you are, they can help you build it."
Jenkinson: "Back to the fridge. The wine tends to get opened under stress - and it certainly gets fizzy when we have good news. But really it's about success. Success allows everyone to feel part of something positive, and that's an enjoyable process. It doesn't seem like hard work when things are working well."
Eaton: "I play in a rock band - the Elderly Brothers. We perform fifties and sixties rock-and-roll and are very tongue in cheek. It's great fun and it takes your mind off the euro and the dollar."

The Hot 100 Club: membership rules