Parragon shows it can read its sector

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Paul Anderson and Guy Parr, his partner, were both 28 when they gave up steady jobs with the retailer WH Smith to start their own company. By Mr Anderson's own admission they thought it would be something of a lark. But they quickly learnt that "we didn't know anything about business".

Eight years later they have clearly picked up something because their business, Parragon Book Service, is a multi-million-pound enterprise employing hundreds of people. Between 1990 and the end of 1994 its sales grew at the rate of 88 per cent a year, to take it to a turnover of pounds 21.4m and second place in our annual listing of the fastest-growing private companies. Since then it has continued expanding, so that by the end of last year it had a turnover of pounds 45m and employed about 300 people. This year sales are expected to hit about pounds 62m.

Like many companies that have featured in this league table Parragon has exploited a little-known market niche.

In this case the opportunity was selling promotional books covering such interests as gardening, cookery and children into supermarkets "better than it was being done".

Mr Anderson attributes this success to three factors: promoting Parragon Books as high-quality, low-price products; building relationships with suppliers and customers; and its staff.

The last group is perhaps the most significant. Six of the eight people in at the beginning are still there and they have been supplemented by managers brought in, especially over the past three and a half years, for their skills in areas such as finance, publishing and sales.

"We learnt really early on that we're not great at everything. But what we are good at is letting other people get on with it," says Mr Anderson.

It is essentially just an extension of the relationship between the two original partners; while Mr Anderson deals with operations, Mr Parr concentrates on the creative side.

Although the Bristol company has done well, Mr Anderson sees plenty of opportunities for expansion. It has, for example, begun publishing its own books, with the result that it has a chance of far greater earnings. It is also looking to get its books into high-street stores, such as John Menzies and WH Smith. Finally, at the same time as preparing a brand- building television advertising campaign, it is now looking to devote serious time and energy to exporting.

"We were very naive," Mr Anderson says of the company's early days. "But that naivety pulled us through. We didn't realise the trouble we were in."