Bottom-line guarantee: The move from a successful start-up to an established company is one of the hardest tasks in business - and largely accounts for the high failure rate in small businesses

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The Independent Online
OFFERING a money-back guarantee has long been accepted by manufacturers as part of doing business. But this attitude has found little favour among the professions - despite the new service economy.

One management firm doing its bit to break the mould is Legal Protection Consultants. It has found plenty of work, even in the recession, by putting its money where its mouth is and only asking a fee if it achieves the profit improvements promised to the client at the outset.

In the three years Bryn Edwards has been running the firm, he claims it has never failed to live up to the guarantee that its fee will be covered at least three times by the first year's profits growth. Indeed, this ratio has often been wildly exceeded. The record is 87 to one, Mr Edwards said.

'I think I charged too little that time,' he added.

The firm also claims it puts in place a system that ensures the benefits continue long after the consultancy's employees have left. Mr Edwards believes this results from working alongside the client rather than writing reports that seldom get read.

While LPC has worked with some blue-chip companies, Mr Edwards thinks his firm's approach makes its services particularly attractive to the smaller company. Now 'hellish busy', he and his team of 25 based in Purley, Surrey, are working for a variety of clients scattered around the country, but mainly in the South-east. The firm - as its name would suggest - was originally a subsidiary of the Legal Protection Group, which was acquired by Sun Alliance, the insurance company, in 1988.

Mr Edwards originally joined the organisation to manage a business continuation insurance product, but when that ran into difficulty he reverted to consulting. He had previously worked for the Chester-based Doctus group, where he was involved in the privatisation of the utility company now known as Scottish Hydro, and prior to that had worked in the UK and overseas for two of the country's leading accountancy firms.

He feels this varied background stands him in good stead with managers of medium-sized businesses seeking advice. 'I tend to go in at the front end and, from experience, can identify capacity,' he said. This does not just mean knowing how to cut costs - since many companies have already done that in recent years. It also means 'finding ways of squeezing more into the pot'.

This is what happened with the record breaker, a financial services company where sales were growing strongly. However, this increase in turnover was not translating into greater profitability because every time it grew it took on more staff to deal with the additional work.

'We found more effective ways of dealing with the work. And this led to 100 per cent growth in profits over the next two years,' he said. After that the additional work could be handled by existing staff, who were working more efficiently.

A contrasting problem afflicted a small boatyard on the south coast. While its team of carpenters and other tradespeople were actively employed for much of the year, they were idle in the summer when the owners of boats moored in the vicinity were sailing them. Even cutting prices to uneconomic levels failed to attract custom at this time of the year.

Mr Edwards' solution was typically simple. If the work would not come to the yard, why not take the yard - or at least its expertise - to the work. There were several schools and colleges in the area that had the opposite problem; they could not have workers in during the winter when classes were on, but summers were free. Boatyard staff are now employed all year round, at realistic and profitable rates.

He said LPC can also help smaller companies get through their growing pains. The move from a successful start-up to an established company is one of the hardest tasks in business - and largely accounts for the high failure rate in small businesses. Moving from an established small business to a larger enterprise, with all the management requirements and other challenges, is also difficult.

Mr Edwards stressed that none of these situations can be dealt with just by consulting a book, and said he was prepared to spend hours listening to the owners of small businesses discuss their thoughts and plans. Older owner-managers and chief executives who feel isolated and want somebody to talk to seem to identify with him, he said. Some pay him just to go and chat with them at regular intervals. 'I'm like a mini-guru - someone to bounce ideas off,' he said.

Sometimes, however, all the talk is avoiding a key issue that the client will raise only after some prodding. He remembers the case of an electrical goods supplier who eventually admitted that the problem he wanted to discuss was his wife. Though perfectly happy with her at home, he did not want her interfering in the business.

To stop her wandering through the premises, Mr Edwards recommended she be given a small retail outlet on the site to run. When her venture failed, an outcome that was clear from the start, the businessman would be able to tell his wife that since there was no longer any role for her she should stay away.

'It takes an outsider to come up with something like that,' Mr Edwards said.

LPC is at 32-42 High Street, Purley CR8 2PP. Tel 081-763 2250.

(Photograph omitted)