SME Focus: This week�s subject, Kenny Webster, appears to be having no difficulty making a good profit from a garage business that he has grown into one of the UK�s leading independents, writes Mark Williamson.

Official figures published last week showing that the UK's biggest firms pay a fraction of the total tax bill made it painfully clear that small and medium-sized enterprises shoulder most of the burden.

However, the National Audit Office data showed that while big fish in areas such as manufacturing paid hardly any tax, the oil and gas groups and banks had big bills.

This might please those who claim that profiteering is rife in both sectors, but it will provide little comfort to drivers as they struggle to pay around £1 for a litre of petrol on many forecourts in Scotland.

Claims by oil and majors that there is no money to be made running garages only rub salt into the wounds.

However, the subject of this week's SME Focus, Kenny Webster, appears to be having no difficulty making a good profit from a garage business that he has grown into one of the UK's leading independents.

In a striking example of the lateral-thinking of the natural entrepreneur, he is now using the garages to help boost the fortunes of a survivor of a bygone age when fizzy drinks makers were common in Scotland.

Name:
Kenny Webster.

Age:
Forty-four.

What is your business called?
My latest business venture is Sangs (Banff) Ltd. This was a family-run soft drinks manufacturer which I bought over in a friendly takeover with business partner Andy Anderson in early July 2007. I have taken on the role of chief executive and Andy, the former sales manager Scotland of AG Barr, has become managing director.

Andy will concentrate solely on Sangs, while I also continue as managing director of Calanike Retailing, which I launched in 1998. Calanike is now the largest independent petrol retailer in Scotland and ranked 10th in the UK with 20 freehold petrol and retail sites and a turnover in excess of £57m. It is a valuable distribution partner for the Sangs business. Along with partner Paul Donnelly, I am also a director and 50% shareholder in Digital Solutions, an office equipment supplier set up in 2001 and growing steadily.

Where is it based? Sangs has a custom-built manufacturing unit in the port town of Macduff on the Moray Firth and a distribution depot in Aberdeen, which is also the base for the dispense installation and service section operated by Sangs.

What does it produce?
Apart from traditional carbonated soft drinks, Sangs currently produces Deveron Valley still and sparkling spring water range, the sugar-free MacB flavoured water range, the Justadash range of sugar-free concentrates, the Jet Pop range of children's drinks and the Fruit Twist range of juice drinks. The latest addition to the range, One Fruit, meets the criteria of a portion of fruit as recognised by the Five a Day campaign.

To whom does it sell?
The Sangs range is sold throughout the UK by independent retailers, big supermarket multiples, cash and carry operators, and delivered wholesale. Distributing throughout all my Calanike Retailing outlets helped boost distribution and we have increased turnover right from day one of our takeover.

What is its turnover?
£13.4m.

How many employees?
73.

When was it formed?
The lady behind the new venture in 1896 was a Miss Sangs, who produced hand-filled bottles of lemonade, tonic water and ginger beer in central Aberdeen. In 1913, an Elgin production unit was added. Coverage of the north-east of Scotland was consolidated in 1930, when a third production unit was established in Banff.

Why did you take the plunge?
Apart from a period of just six months when I was younger, I've always had my own businesses. I've never really wanted it any other way. I ran my own milk delivery van business in the early 1980s and used to buy fuel at my local petrol station in Darnley, Glasgow. When I found out the guy was giving up the franchise in 1984, I thought this is definitely for me. Being from the area, I saw first hand that it had great potential. I went on to work as a sole trader, developing various petrol stations around Glasgow and Lanarkshire until 1998 when I launched Calanike Retailing. Again I saw great potential in my first site at Cambuslang, which was knocked down and completely redeveloped. That one has grown to the 20 stations we operate today.

With Sangs, both Andy and I knew from the outset that we were buying over a solid, profitable performer, yet one that still had a lot of potential for growth, particularly within the west central belt of Scotland. We did the necessary research and also spent a great deal of time with the people behind this previously family owned business - the three Donald brothers, Robbie, John and James - and their employees. We wanted to know what we were getting in to. Sangs is also the perfect partner with Calanike, which has around 30,000 people visiting its forecourts every day. By supplying direct, we also cut out the middle man and that means increased margins for both Sangs and Calanike. Now with the right investment and marketing, we know we will increase our market share right across the board but especially within the healthy option drinks market. Before we took the plunge, I could see from the forecourt sales at Calanike that the sale of healthy drinks had increased by about 10% in the past couple of years, over a decrease of around 3% in what we call cabinet drinks - fizzy, sugary drinks such as colas. These are great statistics for the Sangs portfolio of healthier, sugar free drinks.

How did you raise your start-up funds?
The purchase price was £10.2m. Along with some personal investment and deferred payments to the Donald brothers, an £8.2m funding package was provided by the Allied Irish Bank (GB).

What was your biggest break?
Our biggest break was actually creating the opportunity to purchase Sangs. This was a business that had been run since 1971 by the Donald family, who were not about to consider an approach that could have broken up the company. By working closely with the three brothers and employees over a period of nearly four months, they were able to see our drive and commitment first-hand and, most importantly, that we shared their work ethos and aspirations for the business. The time spent with them meant we were able to obtain a thorough understanding of their people, products and systems.

What was your worst moment?
When Andy was in Australia and completely out of contact just at the point when I was renegotiating the purchase price for Sangs. As there is a great understanding and trust between us, he went off on his travels and left me to it. In a way, it was a much "worse moment" for him. At the end of the day, negotiations went very well to the point he returned to Scotland to face a nice surprise - I'd managed to secure a price reduction of £800,000.

What do you most enjoy about running the business?
For both of us that is the day-to-day decision-making and building a long-term strategy for growth. We have an exciting challenge ahead, as we step up our marketing efforts for what is already a strong product portfolio and get set to take Sangs onto the next level.

What do you least enjoy?
That long four-hour drive from Glasgow to Macduff is something of a challenge in itself, although it's great when you get there. Andy generally stays there during the week, splitting his time between Macduff and Aberdeen. I spend a little more time in the central belt because of my Kirkintilloch-based Calanike business, but at the same time continually driving business for Sangs. But there are absolutely no plans to relocate the business because of the distance. In 1996, a hydro-geological survey with a 200-foot water borehole at the Macduff site discovered what proved to be the original source of the famous "Lost Well of Tarlair". As we now use this infinite Lost Well of Tarlair spring water in all our MacB and Deveron Valley brands, we are not going anywhere!

What is your biggest bugbear?
Apart from that long four-hour drive, the inconsistencies that surround local authority guidelines in Scotland regarding the supply of soft drinks into educational establishments. Every local authority seems to interpret current guidelines differently, meaning much more red tape and therefore unnecessary work for suppliers such as ourselves.

What are your ambitions for the business?
As we get set to carry on the company's long tradition for innovation, our main aim is to develop and grow Sangs and double the turnover within the next five years.

What are your top fivepriorities?
Grow sales, increase profits, develop the marketing plan, implement the strategy going forward and conquer the central belt of Scotland market.

What single thing would most help?
Our plans include educating consumers on our range of healthy products, which should generate growth in itself.

What could Westminster and/or the Scottish Executive do that would help most?
The most helpful thing that the Scottish Executive could do is provide much clearer guidance on what is and is not allowed to be supplied into schools, colleges and other similar establishments. This is potentially a big market for us, particularly for our sugar-free soft drink ranges and water, but at present there are no consistent guidelines for local authorities to follow, resulting in many grey areas.

How do you relax?
While there has not been much time for relaxation having just launched full thrust into this new business venture, it is after all the start of the football season and time to enjoy all that will bring.