Adopted Business 2006: Ocean Outdoor and Smileybaby.co.uk
Damian Cox and Graham Nicoll both sold their fledgling businesses to larger corporations. Now they're back with new ventures. So what will they do differently second time around?
Issue 41, July/August 2005
Around three years ago we profiled young entrepreneurs Damian Cox and Graham Nicoll. Both sold their fledgling businesses to larger corporations. And both are now back with new ventures. So what’s it like swapping life as your own boss for the role of an employee? And what will they do differently second time around? Ian Wallis caught up with them to find out.
Selling your business is tough enough. Working as the employee of your acquirer is often a bridge too far. Graham Nicoll and Damian Cox may be familiar to you. Respectively, as founders of Grazies, an independent corporate gym operator and outdoor advertising business EK Straas, Nicoll and Cox were among Growing Business’ first batch of adopted businesses. But despite their stated ambitious growth plans, both received offers too good to refuse and sold their companies to larger corporations. Nicoll’s Grazies was sold to multi-site gym operator Sona Health, while Cox and partner Ben Goor’s EK Straas found itself the target of advertising giant Clear Channel. They’ve now come full circle and, having served lock-in periods, both are establishing new ventures. It’s clear they found their respective experiences challenging. “My time at Clear Channel was fairly limited,” begins Cox. “When you’ve had the experience of creating your own business it’s difficult to work for other people. Your creative input is heavily reduced. Business deals are secondary – anyone can do that.” Nicoll shares the view: “Going from being the boss with complete autonomy and a huge amount of input to being part of a £14m plus turnover business was a very big culture shock. It was a considerably different set-up and a strong learning curve.”
Impatience is a virtue
Inevitably, with those kind of appraisals of working for your acquirer, something had to give. “I’m incredibly impatient and left in September last year as I decided that I’ve got to do it all over again,” says Cox. Nevertheless, it’s been a positive experience for both in many ways. Cox was able to assess the volatile industry he was in and believes he has identified a more robust and equally under-exploited niche. Giant outdoor advertising banners, often erected on scaffolding or other temporary sites, and costing up to £115,000 a pop to buy a month’s worth of space, would be difficult to rely on, particularly during a slump. Instead, he has opted for a more secure route. “We’re taking outdoor to the next level,” he says of new venture Ocean Outdoor. “We’ve got a niche portfolio with high-quality sites.” The major difference is offering clients quality and profile, without the standard, often prohibitive, high level of cost associated with this medium. The challenge is finding a sufficient number of appropriate sites. Unlike the early days of EK Straas, where Cox and Goor relied on the money they’d accumulated through careers in the industry, Ocean has started life with a stronger infrastructure. He already has four members of staff, including a full-time sales director and a town and country (MRTPI) planning manager. At launch in January Cox had already created 10 3 x 6m back-lit boards and two larger billboards in Central London. This portfolio virtually guaranteed income from the outset. “We’ve got to ensure each and every board is prestigious and of commercial value,” he says. “You can trip over your own shoelaces creating profile, not profit. I genuinely see an area that is undervalued in the UK. TV is becoming more diversified. This is the last format where you can guarantee an audience.”
He projects turnover will reach somewhere between £2m to £2.5m this year and £15m in three years, with significant profits, and also has the backing of a “well-known entrepreneur and angel investor”, who has invested around £1m so far but wishes to remain anonymous.
As well as being “clear-headed and calm”, something you feel will balance the dynamism of Cox, the angel has also drawn up a three-year strategic business plan. “It is a huge bonus to have such an experienced entrepreneur as part of the business. The long-term plan is to float the business on AIM, something our investor has a wealth of experience in doing.” Some things under Cox remain the same, however. “I’m like a spoilt child and won’t stop until I achieve my target,” he says of expectation levels. “If staff don’t achieve, they’re out. All the same rules that we had at EK Straas apply. For example, client entertainment is an integral part of our business. But ultimately it’s done to generate further revenue and staff are clear about that.” Nicoll too looks to be proving his entrepreneurial versatility. Now married and a father of one, he launched www.smileybaby.co.uk, a one-stop online shop for affluent parents of children up to the age of two, in February. It sells all the essentials, plus gifts, for that age group. Projected turnover for Smiley Baby in year one is likely to be £200,000 and within three years Nicoll expects to break the £1m barrier. Nicoll also has another site, Busy Little Ones, a directory-based website for local baby-related activities, such as yoga and swimming. “My wife goes to a huge number of baby activities and the marketing for them is prehistoric,” argues Nicoll. “There’s no online resource that caters for parents.” The second venture will grow county by county as the database builds and makes revenue from the nominal amounts charged to those advertising activities and classes as well as product manufacturers. Parents’ use of the search engine is free.
The mature approach
The move represents a maturing of Nicoll, who set up Grazies aged just 21. “There was a lot of trial and error, probably more error,” he admits. The position on Sona Health’s board following the sale improved a number of skills. “My financial skills are much better,” he says “I knew about P&Ls and cashflow, but not in as much detail. My management skills are more refined. I can use the intricacies of Excel, such as duplicating information across spreadsheets. And my understanding of venture capital is better as we went through the process of acquiring two or three other businesses.” Nicoll also learnt the art of diplomacy. Having managed a small team, instilling his passion and belief in them, he suddenly had to report and ‘manage’ upwards and to the side. His managing director was previously the MD of BUPA Wellness and the difference between Nicoll’s way of operating and that of a more corporate environment was stark. “I became renowned for being blunt and open to saying what I thought, but dealing with people on the same level was something I honed,” he says. Despite the positive learning curve, Nicoll didn’t enjoy feeling less a part of a close-knit team and adds that at times you feel more like a number, which clearly goes against the grain of the entrepreneur. After almost two years, in which he held the role of business development director for the group, pitching and winning new business, he proposed to leave. He had easily completed his 12-month tie-in and was then contracted to work a six-month notice period. He did receive overtures to stay, however, with the managing director proposing he took over an under-performing business within the group. After carrying out a strategic review he concluded the 32 part-time physiotherapy units were not commercially viable. “In essence I was doing myself out of a job and it was subsequently scaled right back.” In the end the clincher was the hour and a half trek from his home in Leamington to London and he stuck to his guns and left. That decision is looking better by the week.