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Ally Scott: Hi, I'm Ally Scott, I'm the managing partner for EY's business in Scotland and I'm your presenter for the next instalment of our real insights chat shows. Now, we're driven to ask better questions at EY, so within this series we're interviewing business leaders, allowing them to share experiences and their own insights with us in their own words as they succeed in a challenging business world. Now, for this episode, we're delving into the world of family and owner-managed business and within this, we'll break our discussions into three core areas. First of all, cash flow, second, people and culture and thirdly, succession and exit. Now, we've assembled a really super selection of inspirational business leaders for this episode, with Ben at the start of his journey, Poonam, whose business has recently scaled to £56 million revenue, and Douglas and Iain, who are second generation within their £200 million revenue family enterprise. Anyway, that's enough from me, I’ll hand over to our guests to introduce themselves.

Ben Amanna: So my name's Ben Amanna, I'm the founder and CEO of Boxraw. We started about three and a half years ago and set out on a mission to be the reason why the world got into boxing.

Poonam Gupta: Hi, I'm Poonam Gupta, CEO and founder of PG Paper Company Ltd, a company that I started back in 2003. Currently present in 60 different markets with five offices around the world, we are a global paper trading company and going strong.

Iain Anderson: Hello, my name's Iain Anderson, I'm joint managing director of GAP Group. I'm involved in both sales and operations.

Douglas Anderson: Hi, I'm Douglas Anderson, Iain's brother. Joint managing director of GAP. I've been with the company since 1979, I've been mainly involved in the expansion of the depot network in our traditional area of plant and tools.

Ally Scott: Thanks all, that was really great to hear from you. Now, before we go into the specific topics, I'm interested in some more general questions around your business. So, starting with you, Poonam, you started up by yourself, after moving to the UK, how did that transpire?

Poonam Gupta: Well, I moved to the UK back in 2002 and when I moved here I started looking for a job and I couldn't find one. I was most often told that, you know, I was either over-qualified or I had no experience in the UK. I waited for a bit and then I realised that, you know, I'm not going to just sit around for somebody to offer me something, and I started researching about various industries and ideas and then everybody was talking about recycling at that time. And going deeper a little bit into the trade of how recycling, you know, happened and what was the future, it looked quite good from international perspective as well. Took me ten months of hard work and research when I got my first deal in 2003 in PG and that's how the company was born.

Ally Scott: And Ben, what inspired you to set up your own business in the way you did?

Ben Amanna: During university, I realised I didn't wanna work for anyone else. I didn't want someone to tell me what to do and I think that's one thing that really shocked me. I did economics and business and I thought that was going to teach me about business, and all they were teaching me to do was to work for somebody else. And it really just shocked me, I was like, 'Why don’t they teach me how to actually set up a business?' So, yeah, post-uni, got involved in the car sales business, was buying and repairing the cars, selling them, I was just chasing the cash, you know, and after a while it becomes, it gets to the point where the cash doesn't really make you happy. You know, you're just constantly buying the next material thing. And then multiple other businesses came in, mobile phone app, taxi companies, detailing, other import export companies, and the mobile phone app that I was working on, the co-founders gave up after five days and, sort of, instantaneously I realised I needed to do something else, whereby other people couldn't dictate my success in that place.

Ally Scott: Douglas, a question for you. How does being a family-owned and run business help you with stability and growth relative to say, a large listed company?

Douglas Anderson: The main difference I would say is that, taking a long-term view and stability. If you have a good family business, will take a twenty-year view at least, might take a thirty, forty-year view. Corporate can't do that. They don’t meet their targets or they, or short-term goals are very important to give a return to shareholders. Whereas, if you've got an owner-managed business, and we decide to invest in something that will lose money for two, three, four years, but eventually make a good return to the business, we can make that decision easier than a large listed company who are measured quarterly.

Ally Scott: Now that's really fascinating stuff, thanks guys, really appreciate the insights. Now, I'd like to move on to some of the specific topics and start with cash flow which is a key theme for business at any point in time, any time in its life cycle, even more relevant now. Poonam, starting with you, how has your business adapted to maintain its focus on cash while it's been growing at this particular point in time?

Poonam Gupta: In last four months, you know, we saw how the businesses change, certain businesses were completely shut down, but e-commerce was taking off, you know. Food delivery, home food delivery was taking off. That meant requirement for more packaging grades, and that's where we changed our approach quite quickly. We started looking into packaging grades and, you know, to ensure that the business remained healthy and the cash flow remained healthy, we kind of, you know, moved from our traditional graphical grades very quickly into packaging industry. This time it wasn't going to be an easy swim, it was just like a deep dive. But we took that risk and, you know, it's come out, we've just closed yesterday one of our biggest deals in Japan in packaging grades, so you know, we've, kind of, moved with the times and adapted very quickly, again, which was required.

Ally Scott: Iain, turning to you, your business adopted a really sharp focus on cash recently, I'd like to ask you, did you introduce new systems and processes to help you with that?

Iain Anderson: Normally spend £4-5 million a month on capital expenditure, so we really pulled that back significantly to less than £500,000 a month. Things like overtime, where a lot of our equipment was either suspended and didn't have to work overtime, so that was trimmed back. I think above all, we were monitoring the cash collection daily, not weekly, not monthly but daily, making sure that our customers were paying us within their credit terms and to be fair, most of our customers are the, sort of, large construction companies, and they were very good at paying us on time and in some cases, they were paying us ahead of time.

Ally Scott: Ben, I see that Boxraw had really incredible results during lockdown, record results in fact. I'm wondering how you managed to achieve that on the back of what I know was a challenging cash position at the end of 2019.

Ben Amanna: Yes, so, I think pre-COVID, we were in, like, a sticky situation. We had orders which were placed, well, supposed to arrive, sort of, towards the end of last year during the Black Friday and Christmas rush, and they didn't make it. As a result, they sort of landed towards January time. And I think sort of, going right into COVID when we first found out about the lockdown we really had to refocus all of our goals. There was so much uncertainty. So, that in itself, and sort of, and whittling down twenty-six goals down to nine, it brought, it allowed everyone just to focus on, first of all, what mattered, but that was one of the best things that happened to us. So, with the sort of, economy doing this and advertising and CPAs hitting rock bottom, we just thought, sort of, you know, quadruple down on advertising spend and we really, sort of, yeah, we grew the company focus on the products we thought the market were gonna want. Did marketing that really resonated with the audience. You know we did in five months, four months or so, you know, the whole of 2019 revenue. We, as a team, we focused on what mattered, and I think that was the biggest, it was the best thing that happened to us. Even now, sort of, coming out of this initial phase of COVID whereby the offices are slowly opening back up, we're able to do a little bit more in terms of, you know, photo-shoots or launching products and so on.

Ally Scott: Really great insight there, thanks everyone for your contributions. Now, I'd like to talk a bit about people and culture and, you know, instilling a culture in a business, it is easy to say often, as we all know really difficult to do and achieve and, therefore, you know, a really fascinating discussion topic. Particularly, I think, for owner managed businesses. I’d like to start with you Iain, and ask you, how being a family business affects your culture and filters through to your people, your staff and your people, particularly the family members, obviously, within the business.

Iain Anderson: I think the staff that we have know that if they have an issue, that we're a very open business and they can pick up the phone to Douglas, myself or any of the board members or senior management team and speak to us. You know, everybody's got our mobile numbers and staff as well as customers, and I think they, they know that they can speak to us, that we've got a fairly clear vision on where we’re going. I don’t think we've done any bad acquisitions. Some of our competitors, the bigger Plcs, have made acquisitions that haven't quite worked out. So, I think the culture is one of openness, if anybody wants to know how well we're doing or how badly we're doing, we'll tell them. The work ethic of certainly the family members has been excellent, they put in a good shift. They're producing good numbers, and I think they're now earning the respect of people that operate either below them or beside them. So, I think it's so important that you keep things simple. Don’t try and overcomplicate running the business, cause it is quite a simple business and the previous owner I mentioned that we bought the six depots, he said, you know, 'If you get lots of small decisions every day, and if you get most of them right, you've got a fantastic business. But if you get most of them wrong, you've got a bad business.' So, that would be my wish to impart on the, not just on the third-generation family members. Be open, be honest, keep it simple and work hard. But above all, enjoy what you do, because, we spend a lot of time at work and we want to make it is as fun and pleasant and rewarding place to work.

Ally Scott: Turning to you Ben, I'd like to ask you, how important culture is to you and to what extent that has transferred from your passion and love for boxing, on the one hand, and also from your authenticity as a brand on the other hand.

Ben Amanna: Yeah, I think this stems from our overall vision. To be the reason why the world got into boxing. I think it would be very hard for anyone just to come in and, sort of, take over Boxraw, just because it comes from such a place of authenticity. Like, everything we do is predicated round the sport. The culture is that anyone can argue with anyone, you know. I get challenged all the time by even interns, they'll tell me that something's wrong. It's not about, sort of, having this hierarchy of, like, I'm the boss, you do what I say. And that's really what we try and promote here in the company. So, it's, the culture's incredibly important. I think that stems from, sort of, my beginnings in the sport of boxing and just, you know, I didn't, like, consciously realise when I started that I'm going to make it like a boxing gym, it's kinda just fell into that place.

Ally Scott: And Poonam, what would you say is essential to maintaining PG Paper's very special culture?

Poonam Gupta: We have something called PG Personality. It’s a term coined by, believe it or not, my own team. When we hire new people, obviously, they go through a training process which is being given to them internally by existing employees which helps to bring them into that culture that we already have in our company. To keep our good culture, well consistent culture, I'll say, what's important is to have that clear and concise communication with the team, you know. They should know what is expected of them, and we know what they expect from us. And that kind of, you know, then spreads across the team as well as the family as well.

Ally Scott: And thanks everyone again, some really interesting, thought-provoking points there. Now, I'd like to move onto succession and exit planning and, and clearly, often an area that family business, owner-managed businesses will ponder. And of course, there's no magic formula, and turning to you Poonam, on the same theme, in your case, you know, what consideration have you given to succession planning?

Poonam Gupta: Succession plan, we are aware that, you know, we need to have it in place. It is something that we've been, kind of, putting together since last two years. But you know, still a lot of work needs to go in to proper succession planning for our business because the next generations are coming up, we need to work out who does what. Part of succession planning is also to see how we diversify the business further to ensure that everybody who wants to be part of the business has a role to play. But this is where we are into our own learning phase, I'd say, at the moment. We are nowhere, you know, experts in talking about succession planning, but hopefully it is something we will have in place in next couple of years.

Ally Scott: Now, Douglas, in your case, of course, you already have the next generation working at GAP, you know, how important is it to make that transition smoothly and what's needed, what can you share around that?

Douglas Anderson: Well, it's probably the most important and usually the most difficult part of a family business continuing into the next generation is deciding who should be coming in, when they should be coming in, what background they've had, what training and coaching they've had, what their desire are. The last thing you want to do is coerce anybody, any family member to come into the business cause they'll hate it and they'll do a bad job. So, you've got to give them enough of a challenge through their initial years and see how they react to it. Similar to what I said before, they have to fit in with the culture of the company, which in this case, happens to be their family company. But that doesn’t, just because the next generation are part of the same bloodline, it does not mean to say they will have the same views on life and the same culture, and you've seen it time and time again with family businesses, you know, the damage that can be done by a member of the family that doesn’t have the right values. So, it's absolutely vital. So, you know, as Iain said, we've got four of the next generation in now, in various positions through the business and you know, two of them have been in the business for ten years and I would say even, you know, after ten years, we're maybe hard taskmasters, they're still not perfect, so but they're far enough along that road for us to be confident that we might be able to put our feet up someday, cause they hopefully will be able to take over.

Ally Scott: That was really superb, some real insights there that are relevant to so many, you know, whether start-up or long-term enduring family business, just as relevant to all of these segments. And that's it for this episode of Real Insights. I hope you've enjoyed it as much as I have. It's been fascinating, I think, to hear from so many business leaders in the different stages of their particular journey. So, thanks again to Ben, to Poonam, to Douglas and Iain for their time and insights shared with us here, and please subscribe on the link below for the next episode of Real Insights, and until then, thanks for joining us, see you next time.

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