Inspiration for entrepreneurs
As with many self-made men, Scott Fletcher set out on a business career with the aim of making lots of money but, that achieved, found other more satisfying goals.
Today, Associated Network Solutions (ANS), the IT company he founded in his native Manchester 14 years ago, is flourishing, recession notwithstanding, and at the age of 36 he feels as if he is just beginning.
Fletcher is so confident that when the economy dipped, he went on a recruitment drive and took on 15 more people. It was, he explains, an opportunity to pick and choose from a pool of well-qualified candidates.
Over the year ended in March, ANS's turnover was up 10% to £13.3 million, gross profit increased 16% to £3.9 million, and gross margins were up 1.6% to 29.5%.
Just as impressively, the company has cash in reserve and no debts, a significant factor in its ability to ride the recession and carry on growing. "We're not beholden to banks, so the credit crunch didn't affect us in terms of financing," says Fletcher.
He learned the importance of prudence at an early age. "I grew up in a working-class family,' he says. "We weren't poor but we weren't rich either. So, yes, when I started out, money was an important motivator."
His early exploits included car boot sales, a paper round, selling seafood in local pubs and a spell as a child actor, none of which was going to make him a fortune. But a flair for figures and an interest in computers were.
His first serious employment was in a software company in 1989 and, technically, he hasn't had another job since. When that firm downsized and was bought by a larger rival, Fletcher, having moved quickly from writing software to invoicing and cash-flow forecasting, was taken on in a senior position. He stayed there until, he says, it "over-expanded and over-traded" before going bust in 1996.
Aged 22, he saw the opportunity to use both the knowledge he had acquired and the customer loyalty he had built up over five years. "There were 20 or 30 customers who had solutions that only I knew how to support.
The day after the company went under, I rang them all up and suggested that instead of invoicing them annually in advance, I would invoice them monthly in arrears. That method addressed the only concern that the customers could have had – whether we were financially stable."
Within a week, Fletcher set up ANS and within two weeks he had secured some £100,000 worth of contracts. By 2000, ANS was providing e-solutions and security systems for computer networks to a growing number of clients.
With a turnover of around £2 million and employing 20 staff, he was keen to grow the firm – but the funding wasn't there.
He took on Paul Sweeney, who bought a quarter of the company, and by August 2000 he had floated ANS on the Ofex market (now Plus), raising £1.5 million on a valuation of £6 million. Sweeney is now the group's managing director.
"Our profitability at the time was a couple of hundred grand, so it was a cracking deal," says Fletcher. "It was during the tech boom of 1999 and 2000 and we got it away before the whole thing came tumbling down.
"We went for equity funding rather than debt at the time, and it's kept the flexibility to keep the business moving. We've always come back to a couple of million quid in the bank."
The money raised from the listing helped ANS fund acquisitions and provided the cash flow to deal with big orders from customers. And Fletcher counts the listing as one of his best deals because it's proving valuable 10 years later.
Reaping the rewards
Today, ANS's market capitalisation is almost £15 million and the group provides IT including data storage, networking, security and managed services to a variety of organisations in both the public and private sectors.
The company has partnership relationships with Cisco, VMWare, Citrix, Microsoft, Novell, Smart Identity, and Hitachi Data Systems, a level of accreditation which it claims is unrivalled in Europe.
All of which has made Fletcher a wealthy fellow. In 2005 he sold shares in the company to Nigel Wray, a multi-millionaire investor described as Britain's answer to Warren Buffett. The deal netted Fletcher £1 million, freeing him to concentrate on what really matters – namely building the business.
That is not to say that he forgoes the trappings of success. He has a beautiful home and enjoys his leisure time, which includes family holidays in Florida and two or three skiing trips a year. He has set up a trust fund for his children, but admits that possessions are not really his thing. "There is a limit to how many fast cars you can own," he says.
Fletcher is keen to build on his reputation as "one of the country's leading entrepreneurs". Last year, he was named Entrepreneur of the Year for the North West at the National Business Awards.
He was also named the Institute of Directors' Young Director of the Year and Plus Markets' Chairman of the Year.
He takes particular satisfaction in ANS being named the highest-ranked IT and communications company in the "best small companies to work for" competition. An employee survey revealed that 88% of staff found their work stimulating.
Additionally, 89% had confidence in the leadership of senior managers, with 90% believing their managers truly live the values of the organisation. It's that kind of accolade that Fletcher finds most rewarding.
As well as heading ANS, Fletcher is also chairman of Conduco, formerly known as SmartID, another Plus-listed IT company that raised £750,000 on flotation in September 2007. He has recently taken large stakes in two other IT businesses, Viapost and Godel Technologies.
Fletcher may be only 36 but he has long been aware that there is more to life than simply business success. His community involvement ranges from positions on the board of the community football club, FC United of Manchester, and Manchester Academy's board of governors, to making significant donations to Caudwell Children, the Prince's Trust and New East Manchester Enterprise.
So what is the best part of his day? "Waking up healthy with a wonderful wife, two lovely children and going to a job that I love doing. I've been very fortunate," comes the reply.
This article was originally published in Money Observer - Moneywise's sister publication - in September 2010
A catch-all phrase that can range from assessing the price of a property or vehicle before offering it for sale or the net worth of assets in an investment portfolio to the prices of shares on a stock exchange.
A way of valuing a company by the total value of its issued shares and calculated by multiplying the number of shares in issues by the market price. This means the market capitalisation fluctuates continually as the value of the shares change in the market. For example, HSBC has 17.82bn shares in issue at a price of 646.2p making a market capitalisation of £115.15bn.
Flotation involves a company selling a percentage of itself in the form of shares on a regulated exchange, such as the London Stock Exchange. Prior to flotation, the company is independently audited and valued and shares offered for sale at a price determined by the company’s value. After flotation, the shares are traded on the exchange for what the market deems they are worth. Shares are bought by other financial institutions and private investors.
“Arrears” tend to be associated with debt. If you fall behind and miss payments on any outstanding debt, the amount you failed to pay is an arrear – the amount accrued from the date on which the first missed payment was due.