Courage is a vital skill. It could transform UK manufacturing - Sunday Times

The UK is a great industrial nation held back by entrepreneurs’ fears about evolving their business. They need to be bold and broaden their customer base

Barely a week goes by without analysts celebrating yet another technology “unicorn” accelerating to a $1 billion valuation. Good luck to them, but I can’t help wondering why we don’t look a little closer to home for such success stories — sometimes, literally home.

I’m talking about the unloved M word — manufacturing — too often neglected when we consider business growth, especially the kinds of goods we’re surrounded by in our flats and houses.

According to Make UK, the lobby group for the manufacturing industry, we are now the world’s eighth-largest manufacturing nation, having leapfrogged France and just trailing Italy. Make UK believes that increasing the sector’s contribution to UK gross domestic product (GDP) from 10 to 15 per cent would add an extra £142 billion to the economy. We are a great manufacturing nation and should shout about the sector’s strengths in much the same way we do with tech firms.

I’m convinced that more of these businesses could transform their growth if only they could confront one of the biggest issues I encounter among business owners looking to make that step-change: their own fear.

They weren’t afraid to take a risk in the first place and they have shown immense bravery in following their dreams, but often they lack of courage in evolving their companies — in particular, selling to the end customer as well as their current customers, such as retailers.

In effect, they should cut out the middle man at times and move beyond business-to-business into business-to-consumer, keeping both running in tandem so that more of the value chain is owned. Too many manufacturers fear, though, that this will cannibalise their profits and that their current customers, who are selling to consumers, will turn their backs on a manufacturing partner who decides to do the same thing.

Fear has never been one of my character traits — not as a wide-eyed teenager when I started my first business, nor when I walked into the HomeServe boardroom to try and convince everyone to spend £74 millionon buying Checkatrade, even though it was only making an annual £1 million profit. I knew it was a sleeping giant and am thankful for their support. It’s clear that the company’s potential today justifies that valuation.

But the more I’ve watched and advised entrepreneurs, the more I have come to realise that courageous risk-taking isn’t necessarily the innate behaviour I once saw it as. It is, though, a skill that can be learnt — and the simplest way of learning it is to constantly look to evolve your business, changing aspects as you develop. It’s the opposite to reckless revolution, in which over-confidence gets the better of you; evolution is inspired by taking a brave, but incremental, approach to business growth.

Sometimes that comes from within, at others it’s encouraged by colleagues. And there are times when you need to look outside — to coaches and mentors who can provide the right guidance, nudging you in a precise direction at the optimum moment so that you take the right risk.

One business I’m involved in, Easy Bathrooms, started in 2014 by importing bathrooms from China and selling them to small retailers, which then sold them to homeowners. Gradually, the business evolved by opening low-cost showrooms on industrial parks. There are now 140 of these and the company continues to grow by supplying both sides, even expanding into offering an installation-inclusive price to customers for their new bathroom. As long as you are offering a great product range and service, there is no reason why all sectors of the market can’t be catered for.

It’s why I believe our great British manufacturing businesses — including in the home-improvement sector and whatever their size — should approach consumers directly, even if that means operating in part-competition with their current customers, which also supply to those same shoppers. Growing profit margins means they can plough money back into the business to improve manufacturing facilities. It’s a virtuous circle with courage at its centre.

Manufacturers are our sleeping giants— successful businesses that have wonderful products, led by inspirational entrepreneurs who are regarded as far less glamorous than tech wizards who, despite their immense promise, have sometimes yet to turn a profit.

It’s not just home improvement. My lunchtime sandwich from Marks & Spencer was made by Around Noon, which has five manufacturing sites across the UK and generated sales of almost £70 million last year by supplying hundreds of retailers. It’s a brilliant business, but could it supercharge growth by selling direct to consumers as well?

Likewise, almost 50 years ago, a group of Yorkshire pig farmers started a food business called Cranswick, which now supplies an enormous range to supermarkets across the country. It has just expanded into pet foods and is selling direct to consumers as well as retailers, gradually evolving its business model.

With a market cap of £1.6 billion and sales of £1.1 billion, Premier Foods is one of our great success stories, owning brands such as Sharwood’s, Mr Kipling and Bisto gravy. Even though it is still looking for acquisitions, potential bidders for the company are circling. Might also investing in a direct-to-consumer operation make it even more sought after?

Another example is Purdy & Figg, which makes natural cleaning sprays. It has recently opened a new manufacturing hub in Leicester and supplies direct to consumers — but it now also needs to look at supplying some retailers, to provide more exposure to its brand and range of cleaning products.

With lacklustre government support for manufacturing businesses, such boldness from private enterprise is essential. Nearly three million people work in the sector, accounting for almost half of all UK exports. By selling direct to consumers alongside B2B strategies, I’m convinced many of these could generate higher net profits.

Let’s not allow fear of losing customers to hold us back. It’s far more likely that taking calculated risks will win even more.

There are three traits that provide the bedrock for every business in which I have worked or invested: courage, persistence and integrity. Right now, we need a healthy dose of that first one. To push harder, take more risks and evolve. Otherwise, we might manufacture not growth but stagnation for ourselves.

Richard Harpin is founder and chairman of HomeServe and Growth Partner, and owner of Business Leader