Name:
Neil Mitchinson.
Age:
43.
What is your business called?
Edinburgh Asset Finance.
Where is it based?
Edinburgh.
What services does it offer?
It provides discreet loans, secured by assets such as watches, pictures, jewellery and cars. We store these assets securely in our own warehouse until the loan, plus a modest element of interest, has been paid. We sell unredeemed items, but these represent less than five per cent of the assets we take in.
People are often surprised to learn that we return money to them if we are obliged to sell off an unredeemed item. We lend around 60 per cent of the asset’s re-saleable value, so there’s usually a surplus after we have deducted our loan and interest.
Our operation is regulated by the Financial Conduct Authority, which reviews our business annually.
To whom does it sell?
We sell money predominantly to commercially savvy business people who may have experienced a financial bump in the road, but also to any individuals who own an asset worth more than £1,000 or so and who have a short-term cash flow requirement. We don’t operate in the micro-loans market; it’s not what we are about.
What is the turnover?
£500,000.
How many employees?
Six core staff and a team of specialist asset valuation contractors.
When was it formed?
In 2013.
Why did you take the plunge?
I spotted a gap in the market. When I was building up my previous enterprise, an online furniture business, I found that cash flow within the business was extremely tight at certain times as we had to pay up-front to buy stock before we could sell it. If I was having this problem, I supposed, then so might many other business owners.
My father, a very successful self-employed man who has built up 14 or 15 businesses, always told me to seek opportunities wherever they arose, not to focus in one particular sector or another.
The cash flow issue gave me the idea of developing an asset-backed lending operation, so when I sold the furniture business the funds were used to set up EAF. The gap in the market is, I think, the result of a fundamental change in the banking sector. People still need to raise cash for a variety of reasons, but what was previously the source of most lending, the high street banks, seem to have withdrawn to a significant degree from this activity.
What were you doing before you took the plunge?
I graduated in marketing and human resources management from the University of Stirling then had jobs with Aggreko and Walker’s Crisps, where my role was to visit around 180 corner shops and sell the product. I enjoyed it. It was a brilliant training in how to get on with a wide range of people. I started my first business, a sign installation company, in 1999 when I was 24. Since then I have started and been involved in a number of very diverse businesses including a storage company, a Harris Tweed furnishings manufacturer and a publishing house.
What was your biggest break?
Lending on assets is a highly regulated activity and it took us over six months to obtain the necessary licensing. Once that was in place it took a further two months before we did our first loan - which felt very exciting when it happened. Within the first year we made our first six-figure loan. It was a really big deal at the time but now it’s quite a regular occurrence. Another break was opening an office in Aberdeen just as the oil market started to slow down in 2015.
What do you most enjoy about running the business?
I get a lot of satisfaction from assisting business owners and like building relationships with our customers, a great many of whom give us repeat business. As any self-employed person will tell you, there’s a lot of enjoyment in working for yourself and not having someone telling you what to do.
What are your ambitions for the business?
To quadruple its size over the next four years. We’ve doubled it year on year so far, so I think that’s a reasonable ambition. We have the capacity both financially and in our storage facilities. I have considered expanding into England, but I think that for the time being there is lots of scope to grow here in Scotland.
What could the Westminster and/or Scottish governments do that would help?
I don’t know that there is much I would want to see them do other than ensuring a stable economic climate. We already have a good environment in which to grow our business. The regulatory regime under which we operate used to be the responsibility of the Office of Fair Trading (OFT) and was, in my view, quite lax. The Financial Conduct Authority is more stringent, which is all to the good.
I am grateful also to the Scottish Government for the business rates relief it gives under the Small Business Bonus scheme.
What was the most valuable lesson that you learned?
Don’t be greedy. Retain as many resources within your business as you can – keep a cushion and never rip-out all the profit. Sounds easy but it’s not really; there are always lots of financial pressures on business owners. You can only do your best. It’s also a good idea to hold assets that retain their value. You never know when you might need them to secure a loan.
How do you relax?
I love spending time with my family and weekends are our time. I like to exercise and get to the gym two or three mornings a week. I also play hockey at a reasonable level and represented the Scotland Masters’ hockey team earlier this year at the World Cup in Barcelona.
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