A ray of light for exports

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Nick Birchall has little sympathy for those who complain that the strong pound has impeded British companies' ability to compete in international markets. "You have to be aggressive. You just have to go out and do it," he says.

Nick Birchall has little sympathy for those who complain that the strong pound has impeded British companies' ability to compete in international markets. "You have to be aggressive. You just have to go out and do it," he says.

As managing director of PAV Data Systems, Mr Birchall is well used to meeting a challenge. The Lake District company claims to be the UK's leading manufacturer of infra-red communications systems, with 80 per cent of this year's £5m revenue set to come from overseas. Yet just over five years ago, when he and Mike Turner were trying to get the business going, they had to struggle to raise any funds.

To begin with, Mr Birchall was turned down for a bank loan. Exasperated, he told the manager that if he had asked for a similar sum to install double-glazing at his house, he would have been accepted . The manager agreed. So Mr Birchall changed his approach, and succeeded with a request for a few thousand pounds to carry out work on his home.

Together, he and Mr Turner eventually amassed about £40,000 through "begging, borrowing and stealing" as much as they could from wherever they could. This was just the start of the hard work. After setting the firm up in managed offices in Windermere, Mr Birchall clocked up 90,000 miles in a year and a half driving round Britain to drum up business.

The effort looks to have been worth while. The company has grown to the point where its 50 employees now take up 80 per cent of the building in which the founders originally rented a single room. There are offices in Kuala Lumpur, Malaysia and Dubai as well as successful operations in Africa, where the company has been working with global telecommunications business Motorola. Among clients are the Red Arrows and five Formula One racing teams, which use the tech- nology to transmit data on the performance of their cars from the pits to the engineers.

The technology is popular for its flexibility and cost- effectiveness. Not only does it give companies an alternative to dealing with the global telecoms giants, it enables them to link facilities without the expense and trouble of installing fibre-optic cables or setting up cellular systems.

Typically, PAV uses an optical wireless system to connect buildings, and so supplies what is often termed "the last mile" in sophisticated communications. Generally, the communication is between computers.

Early customers included BNFL and Nuclear Electric, which needed to supply data on such subjects as the weather to different parts of their facilities. But the system, which is claimed to be faster and more reliable than leased lines and microwave radio systems, can be used to transmit voice. And, as has been shown in southern Africa, it can be highly effective in enabling network coverage to be extended quickly and at comparatively low cost.

"Our obstacle at first was scepticism about optical wireless systems. Now, though, we have a group of high-profile clients recommending our solutions as the most efficient for last-mile connections," says Mr Birchall.

Although he played a big part in setting up the business, Mr Birchall takes no credit for coming up with the technology. That is down to Mr Turner, the technical director. Now in his 60s, he is an experienced innovator who as long ago as the early 1960s demonstrated an early version of home video.

After failing to interest financiers in his new idea, he was put in touch with Mr Birchall, who had built up a thriving electrical contracting firm until the recession of the early 1990s forced it out of business. Feeling that his sales and management skills complemented Mr Turner's technical expertise, he welcomed the opportunity. With Mr Birchall some 30 years Mr Turner's junior, the two also have a blend of experience and youthful energy.

Since "bootstrapping" its way into business by obtaining a variety of funds, PAV formalised things at the end of 1998 by swapping a 30 per cent stake for about £2.1m in funds from a private equity firm. In addition to providing the funds for the company to develop faster, the deal gave the fledgling operation the kudos to attract big customers.

But while Mr Birchall is happy to give up shares - on the grounds that it is better to have a small stake in something substantial than own something small outright - he is not considering a float. Apart from being costly and liable to distract management from running the business, the process looks too slow to him. He thinks PAV is better able to get its products into the world market by forming partnerships with larger companies.

He also fears losing the ability to make instant decisions and act on them: "As MD, I crack the whip and keep everybody jumping. You've got to be very aggressive."