Red tape saves small business? Eh?

by Rebecca Burn-Callander - Tuesday, 19th February 2008 - (1) comment

Angus Macdonald bought a failing waste recycling company in 2007 for the princely sum of £100,000. But what made him think he could turn the bankrupt firm around?

Specialist Waste Recycling (SWR) occupies a tiny corner of the market, collecting and recycling waste from motor dealerships around the country. There is virtually no competition because it’s typically been a completely unproductive niche.

“Motor dealers are amazingly uninterested in the environment,” says Macdonald. “They might sell hybrid cars out front, but they’re happy to virtually throw waste into the river out of the back door. It’s the least green industry.”

But Macdonald hasn’t lost his marbles, there’s a reason he’s taken on this baby – and enough of a reason to warrant 15 other private investors entrusting him with £4.5m of their cash to expand the company.

Here’s the skinny.

The government introduced the Landfill Tax Accelerator in 1999. The tax rate started
at £10 per tonne, increasing by £1 a year till 2004. However, new legislation has
seen this rate surge to a 33 per cent increase year on year – a steep increase for
big wasters.

The motor dealers are only interested in price,” says Macdonald. “But now it’s actually cheaper for them to use us than pay the landfill tax. We allow motor dealers and
bodyshops to save money, become green, and comply with legislation.” Bonza!

Capitalising on this nifty bit of red tape will see SWR bring in a £2m turnover this year, and Macdonald predicts that customer numbers will increase from 230 to 1,400 in four years time. Plus, with the recent cash injection, Macdonald plans to move the company from three depots to six, taking SWR to a predicted £13m turnover in four years.

“Without the government legislation, there would be no niche,” says Macdonald.

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