Keys to British business success
Tuesday 17 August 2010
Clogau Gold of Wales has been adaptable from the moment it started, two decades ago. Managing director Ben Roberts says it started by accident after his father, William, bought a gold mine in the Snowdonia National Park.
Having retired relatively young after selling a frozen food business, Roberts was looking for something to do and thought he could turn the mine into a tourist attraction. However, the location of the business within the national park meant that there was great resistance to the idea and he was forced to change his plans. His next idea was to reactivate the mine, with the intention of producing jewellery made out of Welsh gold. The fact that the mine had traditionally supplied the gold used in Royal Family wedding rings was seen as a selling point. Originally, the company sold a few novelty items through a few local outlets.
But several years ago the company decided to transfer its manufacturing overseas and concentrate on sales and marketing. “Suddenly, capacity was no longer an issue,” says Roberts. The result has been rapid growth – to the point where Clogau Gold products are stocked in 140 outlets in Wales and 500 around the rest of Britain and the business, which this year will have sales of about £7.5m and employ about 45 people, was last year shortlisted for a national award. Meanwhile, the jewellery – which uses an element of the very rare Welsh gold – is now more contemporary and has also been in contention for national awards.
The history of Morgan Motor Company goes back rather further, but it has survived through a similar willingness to be adaptable. The company – which is still based in Malvern Link, Worcestershire – began in 1910 after founder HFS Morgan had earlier been involved in the locomotive and bus businesses. The first vehicles were three-wheeled, single-seater runarounds. Then came the famous, wooden-framed four-wheelers in two-seat and four-seat versions, which retained their old-fashioned style long after the shape and fittings of other cars changed. However, the company – which remains a family business headed by Charles Morgan – has lately adapted to the times, producing more modern looking vehicles, such as the Aero, which retain the company’s commitment to handcrafting and to quality. It is also soon introducing an electric car with a range of 1,000 miles.
Morgan says the company has been able to use such government initiatives as the research and development tax credit scheme – which enables the cost of R&D to be defrayed against taxes on future profits – and the Knowledge Transfer Partnership - under which the Government has paid a percentage of the salaries of five graduate engineers – to assist with investment in design and engineering.
The company has a long tradition of obtaining engines and other components from other companies, enabling it to concentrate on its core skills of design and assembly. It is also a committed exporter, with 70 per cent of its cars going overseas, with continental Europe its biggest market.
Morgan says that the company produces about 850 cars a year, compared with 3,000 for Aston Martin and 5,000 for Bentley. But he stresses that the company will not be drawn into making more than it can sell. “It’s a bespoke product that we make for you,” he adds.
Both Clogau and Morgan are cited by HSBC Commercial Banking as examples of how British businesses have traditionally thrived through being innovative – not just in terms of the products they invent and develop but in how they operate.
Indeed, it says the report it has produced with trends researchers The Next Big Thing indicates that British businesses are once more poised to capitalise on and adapt the core qualities, such as enterprise, innovation and adaptability, that have historically driven the country’s business success. The Great British Business report finds that, as has happened following previous downturns, new business trends and ways of working are developing in post-recession Great Britain. It predicts that future success will be driven by thinking businesses, those that recapture the essence of British entrepreneurialism, and put innovation and adaptability at the heart of their company.
The report finds that the qualities current business leaders cite as central to historical British business success – including innovation (44 per cent), the ability to trade internationally (33 per cent), entrepreneurialism (33 per cent) and adaptability (26 per cent) – remain true today.
As the face of British business changes at an accelerated pace over the next five years, the report predicts that successful UK companies will adopt and adapt core strengths and make them relevant to today and tomorrow. Indeed, the 500 respondents questioned said that the two most important qualities for British companies in the future are going to be the ability to innovate (51 per cent) and adaptability (43 per cent). The report says: “Tomorrow’s successful business person will actually need many of the same qualities that have made British business great in the past.”
Noel Quinn, group general manager at HSBC Commercial Banking, says that the current environment is obviously challenging but that many businesses appear to be more positive than the general sentiment. Although the recent downturn has been more severe that those previously, there have been fewer corporate failures – largely because businesses have been in better shape than they were before the earlier recessions. Obviously, low interest rates have helped, but businesses had lower borrowings and there was good quality of management, he said.
In addition, the relative weakness of sterling was helping exports. On top of this, though, he saw a greater willingness to make the effort required to succeed in exporting, which fits in with the report’s findings about Britain’s success in trade.
He points to how he came across a company involved in the construction industry that saw its domestic turnover decline by 90 per cent. Exports already accounted for about 40 per cent of sales, but “it moved into markets that it probably would not have gone into” and was able to make up the complete shortfall in domestic turnover through exports. As a result, when the recovery comes it will receive a double boost.
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