Starting off a series of video blogs with Exchange members sharing the most valuable business experience they ever learned.
In this post:
Peter Grant, Grant Management – “Convert clients into your sales team”
Anne-Marie Hamill, Escape Recruitment Services – “Don’t think you know it all”
Brian Williamson, Tiger Eye – “Never bet the ranch”
Murray Strachan, Strachan and Partners – “Focus, focus focus”
Scott Allison, Teamly – “Surround yourself with smart people”
Here is a great piece about Jim McColl, former Entrepreneurial Exchange Chairman and Entrepreneur of the Year, written by Louise Armitstead in The Telegraph of Friday 16 September 2011.
He may not look it a broad-shouldered, bullet-headed Glaswegian but Jim McColl is the coalition Government’s poster boy.
The son of a butcher and a school dinner lady, McColl has just sold ClydeUnion Pumps for £750m having bought it for £45m just four years ago.
While many businessmen have spent the years since 2007 wearing tin hats and squirrelling away spare cash under the mattress, McColl has taken on a dejected and rusty “old economy” company and transformed it.
Staff numbers have soared almost as fast as sales and rather than make way for yet another housing estate the pump factory was about to be sold to developers Glasgow has a shiny industry leader.
The billionaire Scot, who is already in process of his next multi-million-pound deal, seems part-machine himself. The only thing that appears to irritate him is other people moaning about the recession.
“More people could do it if they just dropped the negativity and did some proper analysis of their sectors. Just see if the recession is really going to impact you, because often there’s no reason why it should,” he said.
“A friend said to me recently, ‘It’s all right for you, you can dream but I have to live with reality’. What’s that? Reality is only someone else’s borders and limits. Just get on with it.”
He is undoubtedly no-nonsense but he has succumbed to a few gentler trappings of the super-rich. He has a collection of classic cars, has just returned from watching David Beckham playing for LA Galaxy and counts among his pals Brian Souter, the boss of Stagecoach, and Sir Tom Farmer, the founder of Kwikfit.
And he’s non-dom, based in Monaco. Like other tax exiles, he has no compunction in trying to influence Government policy to get behind British industry. “You can’t have an economy based on financial services and property,” he said.
McColl says that on a trade visit to China with David Cameron, he told the Prime Minister of the problems of getting trade finance. Within weeks of returning home, UKTI got in touch. “They said they’d been given three months by No 10 to get the fund up and running. It took them six months, but we were the first to use it for a £15m order from China. I find the Coalition is very serious about helping where it can.”
Now he’s got a taste for it, McColl is on to his next mission to get the Government to back an industrial investment bank.
“Whatever the banks say, credit is still very tight for SMEs. These companies need proper support and I think a dedicated industry bank that could specifically help small companies would be great. I’m happy to support the idea if I can.”
Brought up in the village of Carmunnock, near Glasgow, McColl went to the local primary school, where there were only seven people in his class, then on to Rutherglen Academy. He left at 16 ready to work.
“It was the time of severe industrial decline in Glasgow, engineering companies were closing down,” he said.
Even so, the young McColl set his sights on engineering, mostly because he had a passion for fast cars. “I loved Formula 1 and Jackie Stewart was the man of the moment I couldn’t wait to get my copy of MotorSport each month. Years later I was able to sponsor Jackie Stewart’s racing team Paul Stewart. But that was a long way away then.”
He joined Weir Group as an apprentice, it was “what everyone else was doing,” he said. Driven by dreams of owning his own car, McColl earned extra money at a local garage, fixing tyres and selling petrol. He completed four years as an apprentice at Weir Group and spent another two years there, but was quickly frustrated. He said: “I came to the realisation that I was going to do this for the rest of my life unless I got better qualified. I noticed the people getting paid the most understood the financial side of business.”
McColl launched himself into studying. Through a series of night schools, part-time courses and eventually full-time university courses, he clocked up an extraordinary raft of qualifications, from an ONC in mechanical engineering to a Masters in accounting and finance.
He said: “I guess I had a slight chip about leaving school so early. I was determined to be the smartest guy at the table.”
He was still working in engineering in Glasgow but by his late 20s his now-impressive CV caught the attention of headhunters looking for industry people with financial qualifications. He was hired by Coopers & Lybrand the forerunner of PricewaterhouseCoopers as a company doctor.
He said: “My job was to go into struggling companies, mostly industrial ones, and become a temporary chief executive. It was a good use of all my qualifications and experience.”
But within two years, McColl recognised the difference between the amount of money he was earning for his employer and his own paycheck. He decided to do the same thing, by himself.
The first company he bought was a small engineering firm called Clyde Blowers for £3m. It was the smallest of eight competitors in its markets. Within a few years, through a series of acquisitions, it became the biggest.
The next step was setting up a private equity-style investment fund with several companies going through his books at the same time. Clyde Blowers Capital was formed in partnership with SCF, a US private equity firm.
McColl did several deals before 2007 when he heard that Weir Pumps was struggling and being sold to a Swiss firm. “Obviously I knew the company well,” he said: “I was immediately asked, is this your head or your heart making the decision?”
He insists it was his head. “I just looked at it and thought, this is a great company with a fantastic heritage and one-time leading products, why isn’t it doing better? It hadn’t maintained the product side but that’s easy to fix if you hire the right people.”
A key change has been to plant offices and factories around the world rather than trying to ship all the orders from Glasgow.
ClydeUnion now has eight manufacturing sites and 25 service centres around the world. He also overhauled the structure and hired aggressively.
At the beginning of 2009, the company was pitching for £50m of business a month; by the end of the year this figure had grown to £250m per month and conversion rate stayed the same.
“It’s all about understanding your company and where it fits into its market,” he says. “If you take the time to do the proper analysis, everything is easy.”
Vision and communication were two of the key themes that came out of the recent Evening with Jim McColl in Glasgow.
Board members Peter Grant of Grant Management and Scott Allison of Teamly took time after the event to share their thoughts on Jim McColl’s story, and to tell us what they are going to change in their business as a result of having heard him speak.
Scotland’s richest man, entrepreneur Jim McColl, has revealed how he added value to a £48m company and turned it into a £750m company.
Speaking at “An Evening With …” he shared his experiences and words of wisdom with a packed room of Exchange members at 29 Glasgow.
So many people wanted to hear Jim speak but couldn’t, so we’ve taken the highlights of his talk and posted them here.
Jim McColl on his £750m deal:
“I was keen to buy Weir because it had fabulous heritage and great portfolio of products but hadn’t been updated for years.”
“At the start of 2009 we hired more than 200 engineers, on an average salary of £35k, knowing there would be a lag before we actually got the business.”
“At the start of 2009 we were bidding for £50m of business a month, and at the end of 2009 we were bidding for £250m a month.”
“We created a compelling vision, and we shared it with everyone in the company – ‘£1bm by 2011 – Yes we can’. And we did. And then some.”
“Weir planned to grow the business from £68m turnover to £90m and £4.2m profit to £5.5m. In the same period, we grew the business to £413m turnover and £60m profit.
“I told the management team I didn’t want to read in a business plan about a banking crisis or an economic downturn.”
“Buying Weir was more than a financial decision, it was an emotional one as well.”
On the £750m valuation:
“You can’t factor a highly motivated workforce into a spreadsheet.”
On doom and gloom in the market:
“Try and avoid being drawn in by the global psyche”
Answers from the Q&A
On tax, the government and banks:
“ I want to minimise what I pay in tax so I can maximise what I invest back into the economy.”
“I guarantee I create more economic wealth in a year than the treasury does in a lifetime.”
“I’d like to see more powers for the Scottish government.”
“The government should set up an industrial bank to support SMEs with competitive lending.”
On being rich:
“People make the mistake of thinking if you are rich, you are smart.”
On advice for entrepreneurs of the future”
“Young entrepreneurs should look east, to Hong Kong, Singapore, and to India, that’s where all the growth and excitement is coming from. That’s where I would go.”
On going international:
“Analyse the market, be focused and create a compelling vision for people working with you.”
The are some great podcasts out there and when we find something that we think might be of interest we’ll share it here.
This first one worth a listen to is a special edition of Freakonomics Radio “The Church of Scionology” a typically quirky look at the subject of family businesses and succession. Mixing interviews with a number of US family businesses (including one with Peter Buffett, son of the legendary Warren Buffett) with perspectives from academics and other experts, Freakonomics Radio always cuts to the chase – what do the numbers say? Do family firms perform better than non family firms?
We hope you enjoy this podcast and if you have any favourites of your own please share them with us.
