I was working in Morgan Grenfell's corporate finance department when I came up with the idea of trying to buy Price's Patent Candle Company. It had a great brand name and quality products but was going nowhere fast. I bought the company at the beginning of 1991 with the intention of recruiting a hot- shot managing director with lots of manufacturing experience to run it. The idea was that I would stay in the background as a non-executive chairman, doing serious corporate deals in the City. Alas, events rather forced my hand.
Morgan Grenfell took a rather dim view of my direct foray into the world of corporate acquisition and proceeded to fire me - because I informed them of the deal after rather than before the event. I felt aggrieved but could see the potential conflict of interest.
I had nowhere to go but into the business I had just acquired. On my first morning I arrived at this large empty desk in a large and equally empty office and wondered what on earth I was supposed to do. The business was unprofitable and losing market share, and I didn't know where to begin.
In many ways my first big mistake led to my second. When we bought Price's, two other businesses came as part of the package. One was Candleflair, a Christmas decorations company. I allowed myself to be persuaded by the Candleflair management that the business could be viable if they could have control over product buying, sales and distribution. They had over 20 years of experience in the industry and told me they could make it profitable.
I didn't like the products but was encouraged by the old adage that you don't make money by over-estimating people's taste. How wrong I was. The recession was hitting hard, the products made little impact and the sales force couldn't move them. It became a huge drain on cash flow and eventually I had to close the business. The episode cost us about pounds 250,000.
What I should have done, and very nearly did, was gradually run the business down and realise the value of the stock with no further investment. The Christmas decorations market has little going for it. It is seasonal and has low entry costs, making it terminally competitive for a marginal player such as our little subsidiary.
I learned that you have to focus on your core business and not try to spread limited resources too far. I also learned that you have to have faith in the people and the product and have a firm understanding of the market and the competition.
Since then we have stayed focused. Sales are up by more than 30 per cent to nearly pounds 7m and profits have more than doubled. We have reinvested the profits in people, technology and machinery that will vastly improve productivity and performance.
Having been prematurely pushed out of the City, I am thrilled to have proved that I can run a manufacturing business and make it work. The experience in the City was invaluable, and I miss the excitement of the dealmaking process, but it is just as much fun winning a new customer as any corporate deal.
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