RETAILERS across Scotland will have their fingers crossed that consumers throw caution to the wind this week and enjoy a belated spending spree.
RETAILERS across Scotland will have their fingers crossed that consumers throw caution to the wind this week and enjoy a belated spending spree.
Smaller firms in particular will be hoping to bring in as much cash as possible to tide them over what is likely to be a tough few months.
As ace bankers ponder why their high-flown schemes went so badly wrong in 2008, this week's SME Focus highlights a minnow that is sitting pretty thanks to its ability to exploit ideas that will seem unfashionable to many in our sophisticated age.
Name: Ernie Parkinson.
Age: I'm 59.
What is your business called? Thistle Products.
Where is it based? Dalbeattie, Dumfries & Galloway.
What does it produce, what services does it offer? We are Scotland's leading supplier of volume gifts and souvenirs, and are responsible for products such as the Jimmy hat, Wild and Hairy Haggis, shortbread and our latest success, the Instakilt kilt towel.
At our base in Dalbeattie we do everything except for manufacturing, which we outsource to a range of other companies.
We come up with the ideas, commission production, sell and distribute gifts, souvenirs and more recently speciality fine food to retailers UK-wide.
To whom does it sell? Our customers range from high street multiples to independent retailers and online direct to consumers around the world.
What is its turnover? Currently £1.8m.
How many employees? There are 15; 11 full-time and four part-time.
When was it formed? Thistle Products began in 1980 when local businessman Jim Boardman came up with the idea for the Wild and Hairy Haggis.
A few years ago Jim decided he wanted to retire and so myself, Paula Gibson and Steve Brown embarked upon a management buy-out in 2005.
Why did you take the plunge? We all knew the business very well and had been involved at a senior level for some time, and we felt the chance to build on the success of the business was too good an opportunity to miss.
The Scottish gift and souvenir market is a dynamic and challenging one, driven by good ideas, innovation and a strong sense of fun.
However, three years ago there was a sense that the market was saturated, with limited room for growth.
We knew that by taking Thistle Products forward we would need a focussed and canny approach to the development of the company.
Between the three of us we had a broad mix of skills and experience which would be essential in meeting the challenges of growing the company.
What were you doing before you took the plunge? The three people involved in the MBO were myself, our office manager Paula Gibson and our sales agent Steve Brown. I had a background in food sales and marketing, and knew there would be emerging opportunities within the speciality food market.
Paula knew the heart of Thistle Products having been involved in the company for many years, and she had a good handle on the financial and administration aspects, as well as a real flair for product development.
Steve had great connections with the retail trade and an understanding of what our customers were looking for, so together we realised we had a fantastic leadership team with exactly the skills we needed to make the business succeed.
How did you raise the start-up funding? Mainly through the bank and also some personal cash.
What was your biggest break? The introduction of the Instakilt, the beach towel that becomes a kilt, has given the company an enormous boost. The idea for the Instakilt came from a Scottish ex-pat living in Canada, James Buchanan, and he had been selling a version of the Instakilt direct to ex-pats at Canadian Highland games and clan gatherings. A good friend of his was one of our retail customers who suggested that he should approach us.
We thought it was great fun and a silly idea, right up our street, and we knew we could make it work.
We redesigned the product entirely, registered the design and copyright, sourced a manufacturer and it was ready for retail late summer 2007. The success of the product was overwhelming. In 2008 we launched new colours and a smaller size for children.
Our sales this year have been just as strong, and we have gone on to buy the complete rights for the product.
What was your worst moment? Looking at the bank statement three months after the management buy-out was a scary moment. We had taken the business over with no money in it during autumn, the end of our main sales season.
It was a real challenge keeping the momentum of the business strong without having good cash reserves, while moving into our winter off-season.
We had six tight months before cash started to flow again and we survived by being extremely prudent, chasing debtors and tightening our belts considerably.
What had been a very worrying time for us actually turned out to be highly beneficial for the company, as it forced us to examine our business processes to ensure we were as efficient as possible, and as a result of that our profitability radically improved.
What do you most enjoy about running the business? We all get a great buzz from developing new ideas that turn into successful product lines. Everyone at Thistle Products inputs into that process, contributing ideas and letting their imaginations run riot.
We make a lot of silly things, because ultimately we want our products to make people smile - so coming up with those silly ideas in the first place is great fun.
What do you least enjoy? Business planning can be a dry, arduous task but we see it as a necessary evil. We might not enjoy doing it but we understand the benefits thorough business planning brings.
Following the management buy-out we began working very closely with Scottish Enterprise, initially focusing on launching our new fine food range, Cairnsmhor, and later examining all aspects of the business.
It's been a very steep learning curve for us but a methodical approach to business planning and drawing on external expertise, such as the Scottish Enterprise advisers, have made a tremendous difference to the way we do business, and as a result business planning has had a big impact on our bottom line.
What is your biggest bugbear? We work with a number of large multiple retailers, and the lack of continuity within some of their buying teams can be very challenging, especially for an SME.
It can take around 12 to 18 months or longer to open a new multiple account, and during that time we can be dealing with two or three buyers who all have different interests and priorities, so that lack of continuity can be extremely frustrating.
What are your ambitions for the firm? To become the foremost souvenir and gift supplier within the UK.
What are your top priorities? Staff retention - we have a wealth of experience and knowledge within the current team and keeping them on board is vital. Maintaining high service levels to our established customer base; continuing to produce exciting new products; continuing the development of our speciality fine food range, which we see as a real growth opportunity; to break into new export markets.
What single thing would most help? A wealthy investor. We have made the company very secure within a very short space of time, and 2009 and much of 2010 product range is already designed, bought, paid for and waiting to hit the shelves. This has left us in a strong position during this economic downturn and we are optimistic that next year will again show improved business performance.
However, next year we are focussing on expansion into new markets, and financial backing to enable us to grow quickly would make an enormous difference to us.
What could the Westminster and/or Scottish governments do that would help? Reduce corporation tax. When you look at other countries and how so many are reducing their corporation tax burden, we just seem to be so backward thinking about the level of corporation tax we are expected to pay in this country.
If corporation tax was reduced, investment by small businesses in new products and services would grow significantly, meaning that our SMEs would be more successful and could create more employment.
What was the most valuable lesson that you learned? How to be a team player and the importance of good communication with everyone. Since the management buy-out each of the three directors has had very steep learning curves.
None of us were "business" people, our background was a knowledge of and love for this company, and so we have had to learn how to be business owners and business partners. We are now most definitely pulling in the same direction, we are in agreement of the future plans for the business and each of us has learned the importance of working as a team.
How do you relax? Going round the shops at the weekend looking for new ideas. The search for new ideas never stops.
