by Rebecca Burn-Callander - Thursday, 30th August 2007

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To celebrate this milestone, we’re turning back the clock to 1997 to take a look at our first ever Hot 100, the iconic league table that has become a Real Business institution. The list ranked the fastest-growing businesses in the UK that year, showcasing the big names of the future – or so we thought. Catastrophe and disaster: the top five today

Topping the list was Nexus Media, a specialist publishing company, which had grown by a staggering 644 per cent over four years to 1997, mainly through acquisitions.

It sold to Highbury House Communications in 2000 for £40m, but only a couple of years later the company was in deep water: Highbury House went into liquidation in 2003 and Nexus went down with it.

At number two was M&N Contractors, a cable-laying company. The name is still listed with Companies House, although accounts have not been filed since 1999. If it’s still operating, it’s flying below the radar.

Next up was Signcorp International, a corporate sign maker. The company was still going strong in 1999, with big business from the likes of McDonald’s, Rover, Sainsbury’s and the Post Office.

It was acquired by Oldham Signs for £3.9m and floated on AIM in the August of that year, raising £1.5m. But two short months later the firm’s shares were suspended after several large signage contracts were delayed. The receivers arrived in March 2000 and number three bit the dust.

Firefox International was at four, but don’t get excited: this software developer had nothing to do with the browser we know and love, although it did resell Mozilla products in the nineties. Firefox listed on Nasdaq in 1995 with a market cap of $120m.

It quickly merged with US competitor FTP Software, only to change hands again in 1997 when FTP was bought by NetManage Inc, which is still trading.

So the top four failed to live up to expectations, but we’ve saved the best bust for last. Cabouchon, the pyramid-selling jewellery company run by the lovely (or so we thought) Petra Döring, went out with a bang only a year after it made number five in our Hot 100 (see panel, left).

With customers such as Claudia Schiffer and Diana, Princess of Wales, on its books and sales of £54.6m in 1997, its demise seemed to come out of nowhere.

Döring tried – and spectacularly failed – to resurrect her foundering empire by starting up a new company, Cabouchon Europe, despite being banned from being a director for three years.

Every cloud has a silver lining If these tales of doom and gloom have darkened your mood and struck fear into the hearts of all you entrepreneurs in the process of rapid expansion, don’t take to the hills quite yet – there have been some exceptions.

Take number 38 on our list, a little-known mobile phone retailer called
Carphone Warehouse. Ten years ago Charles Dunstone and friends were turning over £37.4m.

Today that figure is more than £3bn. The company now has a network of more than 1,400 stores in ten countries and has branched out of the mobile sector into residential telecoms and broadband.

Advanced Risc Machines (ARM) grew by 425 per cent in the four years to 1997 to make number 33 in our ranking. Its growth paid off: a decade later there’s at least one ARM microprocessor in 90 per cent of the mobile phones worldwide, not to mention digital cameras, portable music players and games consoles.

ARM’s chief executive, Warren East, is aiming for an even greater percentage in future. “I want to have an ARM chip in every single digital product in the world –preferably several chips,” he says.

The company’s turnover has increased from £10.4m to £247m, and ARM is still growing, albeit at a more sedate pace: 16 per cent from 2005 to 2006. It’s not all been about the sums either; ARM’s founder, Sir Robin Saxby, was knighted in 2002 for his services to the tech industry.

He retired from the position of chairman last year, but not before he dug out his crystal ball to predict what’s in store for the next ten years: “The next wave of electronics applications will be in the medical arena. 

We already have mobile phones that know where we are. In the future we could have mobile devices monitoring how we are, with body sensors talking to microprocessor-controlled devices about the status of conditions such as diabetes.”

Saxby is not the only member of our list to have been heaped with accolades. Three months after our Hot 100 was published the Guardian ran an article by Tony Blair on innovative products in the UK.

The newly annointed prime minister wrote that Bullfrog Productions – the computer games developer we’d put at number 34 –demonstrated “the breadth of British product design. 

These people are ambassadors for new Britain.” No wonder Bullfrog’s co-founder, Peter Molyneux, received an OBE for services to the computer games industry. The company was sold to Electronic Arts for £40m and Molyneux has since founded a second games venture, Lionhead Studios.

On the subject of trade sales, it’s not a bad option for many of these rapid growers. Sure, running your own business for 20 years keeps you busy, but when it comes to getting cash in the bank, it’s all about the exit.

Take Octel Communications, the telecoms company at number 28, which boasted a client base including Coca-Cola, General Electric and Hewlett-Packard. When it was sold to Lucent Technologies for £920m in July 1997, its shareholders received £15 a share. Nice.  Cityflyer Express (number 98) was a low-cost regional airline. By 1999 it had the second-largest number of carriers at Gatwick after BA.

The company was bought for £75m – a figure that stirred up quite a controversy. Cityflyer snubbed Sir Richard Branson’s significantly larger offer in favour of a deal with BA, with which it had had a long-standing relationship.

Virgin took the matter to the Competition Commission, but Cityflyer denied it had ever received the rival bid. “We can only assume that BA has some kind of secret, anti-competitive pre-emption right in their franchise agreement with Cityflyer, and that we were being used as a stalking-horse,” Branson said. 

But for some, running a company is a labour of love.  Paul Theakston, founder and MD of the Black Sheep Brewery, has been in beer for 43 years (see page 32). “I’ll never sell this brewery,” he says.

“My eldest son is already in the business and I hope that another of my sons will come back to it. When I retire, the company will keep going forward with the next generation.”

There’s also Ron Saunders, the founder of the eponymous car dealership (number 31), still very much at the helm. His business hasn’t changed much either.  In 1997, turnover was £5.6m; the company’s filed abbreviated accounts for 2006 with Companies House, so we can deduce it’s around the same figure or less.

Glen Monks, MD of Techies, has been with his firm for 15 years. The PC manufacturer, which was number 14, has seen a steep downturn in fortunes. “If you want a sob story, I’m your man,” says Monks. “Dell and the internet really affected our business. We’ve gone backwards. Turnover now is £1.2m – down £1.7m from ten years ago.”

The Travel Professionals’ MD, Martin Randerson, hasn’t gone anywhere either. Ten years on, his firm (number eight) is still soldiering on, but shake-ups in the travel market have affected the business.

After the magnificent 137 per cent year-on-year growth it achieved in the mid-nineties, its sales have plateaued and turnover is up only £2.7m to £9.4m.  “Sales crashed to around £5m after 9/11.

We ditched all the middle management and diversified into property to stay afloat,” says Randerson . “We’ve a couple of hotels in the UK already and we’re looking to open a few in Spain. This is where the future of the company lies.”

The fact that 70 per cent of the fast-growth business listed in the 1997 ranking have had the luxury of longevity, or a successful sale, is remarkable. Steve Websdale, executive director of financial consultancy Venture Finance, says that our companies have defied statistics.

“The average life-expectancy of a start-up is three to four years,” he says. “Factor in fast growth and the company is even more vulnerable. Businesses that grow beyond their means typically run out of working capital, which can lead to a spectacular demise.”

In 1997 there weren’t many options for a company that was running out of cash. Information about possible solutions such as invoice financing, factoring, and loan guarantees is far better publicised these days. 

Accountants are clued in on the latest government schemes, and corporate boutiques that specialise in cash-flow crises have sprung up. Websdale believes this is the result of the “rescue culture” that developed after the last recession.

“The Bank of England was horrified at the insolvency rate among small businesses. It began spreading the message that more support was required for these companies,” he says. “That’s why there are now so many products aimed at the high-growers.”

The 2007 Hot 100 is published next month and there’s a whole new crop of companies vying for the top spot, although one is a veteran of the original list.  Number 27 to be precise.

Back then, this company had a turnover of £8.8m. That figure has increased sevenfold to £61.2m in 2007. Congratulations, Lancsville Construction, with 289 per cent growth over the past four years, you’re back on the list!

Tags: bullfrog productions, petra dring, cabouchon, ron saunders, paul theakston, sir richard branson, netmanage, charles dunstone, mn contractors, black sheep brewery, cityflyer, hot 100, supersonic businesses, aim, venture finance, octel, signcorp, lancsville construction, oldham signs, techies, the travel professionals, sir robin saxby, nexus media, firefox, carphone warehouse, martin randerson, ftp software, great entrepreneurs, glen monks, arm,