RINGING THE CHANGES

from Terry Houston's remarkable book, Great Scots in Business: the Next Generation

ONE man fated to be linked forever to the ``rags to riches'' genre is Richard Emanuel, founder and managing director of DX Communications, Scotland's largest retailer of mobile phones. And certainly the success of his company has been nothing short of meteoric.

From being a ``one man and his Girl Friday'' operation, which began life selling from a former Victorian school in Govan, Glasgow, DX Communications has streaked ahead of rivals. It is the fastest-growing company of its kind in the United Kingdom, opening branches across Scotland at the rate of virtually one a month.

One in four of all new mobile phones in Scotland is bought from a DX outlet or from its central support office. It currently has 18 High street outlets and employs a staff of more than 200. It is also developing internationally. It has become the largest mobile phone retailer in Holland, and is about to expand into Belgium and France.

In five short years the annual turn-over of the company has rocketed from #90,000 to an estimated #25m this year. Its mainland Europe expansion will probably add #10m to that total. Even with a business sector which, itself, is one of the fastest growing anywhere on earth, that is a phenomenal achievement. It is made all the more impressive by the youth of the man at the helm of the company. Richard Emanuel is just 28.

Brought up on the South Side of Glasgow, Richard was enveloped in a strongly educational family background. His English-born father was a chemistry lecturer at the University of Glasgow; his Canadian mother a further education teacher at the city's Langside College. Richard himself attended Hutcheson's Grammar School. As academics, his parents were both keen that he go on to university, but Richard had other ideas.

He enrolled at Langside College to study the leisure industry, then worked as a trainee manager for the Dave Greenhills's chain of health clubs. At the time nearly all the literature concerning the health and fitness industry came from the USA.

For the first time Richard was exposed to the almost evangelistic fervour of doing business the American way. Asked to name his business heroes, he lists among them Mark McCormack, John Harvey Jones, philanthropist Andrew Carnegie, Richard Branson and, most of all, Tom Farmer.

Though he moved to the larger Olympic health club chain, managing the biggest club, in Pollokshaws Road, Glasgow, he wanted to start his own business.

He analysed the situation, asking himself the following questions: What business sectors out there are fast moving? Where are there going to be a lot of opportunities and potential? The answer he came up with, from studying the business sections of newspapers, was the communications industry.

``The growth in the use of phones and faxes, and the deregulation of British Telecom all pointed in that direction,'' he says.

Yet even with the arrival of deregulation, no-one seriously expected anyone to challenge the supremacy of British Telecom. It was widely regarded as an unassailable business monopoly which had merely transferred from the public to the private sector. Mobile phones were looked upon as little more than expensive yuppie toys. It was to be at least three years before the public began to become truly aware of the extent of the information technology revolution going on under its nose.

Richard Emanuel had made the first in a series of exceptionally far-reaching business decisions which were to have an enormous impact upon his life and his company.

Cellex Communications, a Paisley company, now defunct, which sold cellular phones and fax machines took him on as a salesman. For more than a year Richard worked in Paisley, learning the business and saving to achieve another ambition, an extended visit to Canada with the possibility of emigrating.

Many of Richard's school holidays had been spent in the Vancouver area. He hero-worshipped his uncle, Glen Metcalfe. A colourful, larger-than-life character who epitomised the North American pioneering spirit, he had begun his working life at 15 down the silver mines of British Columbia; moved to Manitoba to build up from nothing a successful 4500 acre farm before selling up and moving back to Vancouver, where he built up an equally successful construction business.

He was a man of great energy, drive and self-belief, who bulldozed through obstacles, believing anyone could achieve whatever they wished, if they wanted it badly enough. Richard's intention was to work for his uncle, taking whatever type of job was available.

For three months, he did just that. He and his uncle got on famously and became very close. Everything was going to plan, save for one thing Richard hadn't bargained on; he was deeply and permanently homesick.

So Richard returned to Scotland. What the Canadian experience had done, however, was to fire him with a renewed ambition to make something of his life. ``There is no doubt that Canada was the catalyst for me,'' he says. ``Having worked with my uncle and having seen the way he operated, I was determined I was going to do something worthwhile.''

His sights were set firmly on starting his own business. In November, 1990, he formed DX Communications. The origins of the company name lay in the motivational business literature he so much admired - the D stood for determination, the X for expectation to achieve. On January 14, 1991, DX opened for its first day of business.

Having spent more cash than he intended in Canada, Richard's funds were limited. He had #1,300 in savings. To augment that capital, he went to his own local Bank of Scotland and arranged a #3000 business overdraft facility. For premises he took a small unit in Govan Work Space.

There he was joined in the new venture by Rae MacDonald, one of the women from his old firm, who had told him she wanted to come to work for him. Rae, who is still with the company today, handled the office administration and manned the company's solitary phone while Richard went out knocking company doors and drumming up customers.

In the beginning, it was a hand to mouth existence. As a new trader, it was difficult for Richard to obtain credit facilities from manufacturers. Most insisted on DX Communications paying Cash On Delivery for equipment.

However there was a plus side. The prices of cellular phones, at that time, had yet to tumble to their present levels. They cost in the region of #300 to #400, so there was a reasonable mark-up on every sale.

Even so, money was extremely tight. There were to be more than a few months when Richard had to forego any salary because the business couldn't afford to pay him.

In its first year of trading, DX Communications achieved a turn-over of #90,000. Reading the industry's trends, Richard realised that as mobile phones dropped in price, they were becoming less of a business tool and more of a people product. The general public was buying them in greater numbers for a host of different reasons. And having got into the habit of using them, they became an indispensable part of their lifestyles.

From these facts flowed certain business imperatives. Chief among them was establishing a proper retail outlet. But the company was still too small to make that jump. It didn't have any after-sales service back-up of its own and was reliant upon manufacturers for repairs and technical support.

Richard decided to attempt to acquire that extra capacity in one fell swoop by proposing a merger between his own company and that of John Whyte, who ran his own communications company from a nearby commercial unit. Their combined strengths, he believed, stood to achieve a great deal more than operating independently.

The two men already knew each other. Twenty years Richard's senior, John was an electrical engineer to trade, who had set up his own company to advise on and install communications systems for firms.

A deal was finalised in September, 1992. Under it, John's company became part of DX Communications, in return for him becoming a director and gaining a shareholding in the company. It was an inspired move.

``John brought a lot of strengths to the business,'' says Richard. ``He was very good at organisation and the infra-structures of companies. Because of his background he was also much better than me on technical matters. He had strength in depth on the technical side, while I was strong on the sales side. We were a very good fit.''

Over the next few months, they worked towards their first joint company goal, transferring DX Communications to Pollokshaws Road, where it would have, for the first time, a retail shop. Richard made another quantum leap - by setting out to ``head-hunt'' Chris Gorman, then a corporate business manager with Securicor.

``Bringing Chris on board was a key factor in DX's growth and development,'' says Richard. ``Chris is a sales and marketing whizzkid; a real dynamo. In fact, it was the addition of both John and Chris that was the real catalyst in DX's growth.''

By the end of 1993, UK mobile phone tariffs were radically altered. In addition to the normal #25 monthly business tariff, a #15 per month price band, aimed at less frequent users, was introduced, setting the stage for explosive growth within the general public. Almost alone among small but developing companies, DX Communications had a heavyweight, experienced management team in place ready to meet that challenge head-on. The company was expanding, virtually in all directions.

Its turn-over having risen by 100% in its second year to #180,000, in its third year the company began opening new retail outlets across the country, ploughing back into the business every penny of profit it made. During 1993 and 1994, DX mobile phone centres started arriving on the high streets of Scotland with such regularity that it was as if they were being run off an assembly line.

It was a slick, practised operation geared to drive company turn-over first to #800,000 in its third year, then #4m in 1994. The year 1995 saw that figure treble to #12m; and DX is now well on course to more than double that figure in 1996.

In 1994, DX bought over Westwood Communications, Clydebank, which was about to cease trading. Today its 14-strong staff form the hub of a dedicated technical support division for company operations.

The third major plank in expansion was yet anther move, at the end of 1993, this time to establish a central support office combining all key functions in 5000 sq ft of office space within a commercial complex in Durham Street, Kinning Park.

In 1994, as the phenomenal rate of expansion continued, more business coups were achieve. The one Richard takes most pride in is the company being awarded Britain's very first mobile phones ``Oscar''. In March of that year, in competition against more than 2000 British companies, DX Communications was voted Best UK Dealer of the Year by Cellnet, in the country's first mobile phone industry awards. The company was also named Best Scottish Retailer.

By the year 2000, if current trends continue, there will be 800,000 Scots using mobile phones, compared to a mere 55,000 in 1993.

In the past two years, while consolidating its internal operational systems, the company has still managed to surprise its rivals. It was widely expected, in the next stage of its growth, to begin battling its way into the more mature and fairly crowded English market. Instead, DX Communications jumped the Channel and target Holland.

The move arose out of a joint venture suggested by Tom Farmer, the founder of Kwik-Fit, the international tyre and exhaust fitting group which had a substantial chain of 130 depots in the country.

Overnight, DX sprang into the Dutch market as the country's biggest mobile phone retailer. It also intends to provide Holland with its own technical service back-up. ``It was too good an opportunity to miss,'' says Richard. ``That's why we moved with such speed. Besides, Holland is only 20 minutes further away than London by plane.''