Matthew Riley: Daisy Communications
Matthew Riley's most recent prize was a business masterclass from retail magnate Sir Philip Green
There’s definitely something about Daisy. The communications company, which repackages services for the small business market, has enjoyed phenomenal success since its inception in 2001.
Its founder, 34-year-old Matthew Riley, has yet to sacrifice any of his equity in the business, despite completing 16 acquisitions. He’s just made a £2.15m profit on a £33m turnover, he’s looking at revenues of £63m next year, and he’s now being mentored by one of the UK’s most successful businessmen, who is helping Daisy blossom in the £4bn telecoms market.
Riley has been receiving much recognition for his efforts of late. After joining the Growing Business Young Guns ranks in 2007, he was crowned Entrepreneur of the Year by Ernst & Young before finally being named as the overall winner of the inaugural Bank of Scotland Entrepreneur Challenge.
Having already won the Challenge’s North England and North Wales regional heat and bagging £5m interest-free funding and free banking for three years, Riley was in the running for the national prize: four days of hands on, priceless mentoring from Sir Philip Green.
Armed with the 20-minute presentation on his growth plans for Daisy that he’d been asked to prepare on the final day, he was surprised when the Arcadia front man stopped him in his tracks. “He just started grilling us on the numbers!” Riley recalls. “He wanted to know that we knew everything back to front, inside out.”
However, Riley rose to the challenge, and left the room feeling elated at having been able to tick all of Green’s boxes. “He understands business; whether things can or can’t be done,” Riley says. “When you’re answering the questions and you’ve got the right answers, you’ve got a good business.”
Riley believes he clinched the prize due to the cultural alignment between Daisy and Arcadia, fending off a number of sterling finalists, including well-known brand Tyrrells Crisps. “Arcadia has got exactly the same mantra, a real can-do attitude within the business,” says Riley. “You’d be surprised – even though its turnover is something like £2.5bn, Sir Philip runs the business with a flat management structure, with people who get things done, rather than sit in ivory towers. I think he saw a lot of his business ethos within us, and I honestly think that’s why we won it.”
Funnily enough, when Riley became a Young Gun last year he said that mentoring is not used enough in this country to support growing businesses. So has he found the experience as valuable as he thought it would be?
“It’s out of this world,” he reveals. “It’s invaluable. You can not put a price on it, because you’re learning from someone who’s got no axe to grind, who just gives you impartial advice, and has got so much experience of these things.”
Riley is keen to stress the value of receiving genuine advice from someone who is not only extremely successful in business, but has no hidden agenda. “Because you know they’re not a threat, you’re more inclined to listen to them, and also because it’s not paid advice,” he adds. “It’s not like a consultant who’s obviously got their own interests, you just get genuine advice. I honestly think it’s brilliant, and I’m hoping that it’s going to last for a very long time and that we’ll build up a really good friendship.”
In particular, Green has helped Riley to think about what he needs from new recruits in a fast-growing company, and has let him sit in on meetings and witness how he does things at Arcadia. For instance, instead of having a giant board of people, there’s just a select few who run the business and get it moving, Riley reveals. “They’ll make a decision on the day and implement it almost immediately,” he says. “For a corporation that size, it’s pretty much unheard of. Any of the corporates that I deal with certainly don’t act like that, so it’s really refreshing.”
Another area Green has already helped with significantly is management information – what he looks at to enable him to run his business on a daily basis, and what Riley should be looking at – as well as how to build a good rapport with the bank and long-term relationships with people in business. “I think that’s where he’s really helping to point me in the right direction,” says Riley.
Although the prize was just four full days of mentoring, the pair have already had several informal meetings, and Riley believes the relationship will endure. “I think what it’s proved with Sir Philip is that it’s not just a gimmick and not only a one-year thing. I’d like to think that if I ever needed him in the future, I’d be able to pick up the phone and he’d be only too willing to help. That’s the sort of character that he is.”
Understandably so, there’s a lot to get excited about when it comes to Daisy, and scope for a mutually rewarding relationship.
The elements of Daisy’s ethos that so impressed Green were putting customers first, getting things done and, like Arcadia’s, being highly entrepreneurial. “We’ve not changed in our outlook from when we started,” says Riley. “We want Daisy to be a fun place, our people to really enjoy coming to work for us and to give customers a fantastic experience every time we speak to them.”
Drawing on his 15 years’ experience in the telecoms industry, Riley has built a business that excels in areas other service providers often fall down on. “We keep it simple,” he says. Customers receive one bill for all their services, and Daisy’s business-focused call centre means they do not find themselves transferred between departments or having to go through 15 menus before finally reaching an operator.
“One of the things Sir Philip was really impressed with is the fact that we aim to answer every phone call in three rings,” says Riley. “Compare that to most other telecoms companies! He said: ‘I’d deal with you on that basis.’ And it’s good to know that the sort of things that we mapped out, the cornerstones of the business that we set up, seem to be the right ones.”
It’s not just service levels that make Daisy an attractive prospect for small businesses. Through efficiencies in processes, Daisy is able to undercut BT’s prices by around 40%. In particular, Riley was able to use his impressive entrepreneurial track record (Daisy is his fourth successful business) and his comprehensive business plan to convince his bank to sponsor him to be a direct debitor. “Without that, the business plan would just not have worked,” he says.
All of Daisy’s 30,000 customers are on direct debit, vastly reducing overheads. “Making collections via cheque for a large number of customers requires a lot of staff,” says Riley. “That’s why companies like BT have such big overheads. As all our customers are on direct debit, we don’t need to chase money.”
What’s most impressive about Daisy is its phenomenal growth story. Riley ran at a loss for three years by continually reinvesting in the business to accelerate expansion. The customer base was established quickly through adopting an indirect sales model by approaching stationery suppliers who were small businesses themselves to sell Daisy’s products to their customers in return for a residual commission.
Growth has also been propelled by acquiring companies in the fragmented reseller market, all funded by bank debt. The first acquisition of 2008, Cardiff-based telecoms reseller Economy Calls, saw Daisy boost its customer base by 25%, with more than 5,700 business end users transferred over, and worth an estimated £3.6m in annual revenue. This was funded by the £5m interest-free loan from Bank of Scotland, and Riley has borrowed a further £12m from the bank. “Winning the Bank of Scotland Entrepreneur Challenge and getting the £5m interest-free really set us up,” he says. “It gave us a vital boost, especially with the current credit crunch situation. And it’s the contacts as well. Dealing with the senior people within Bank of Scotland helps move everything along.”
Daisy has yet to take on any staff through acquisitions, preferring to recruit more people in Lancashire if needed. Although in some cases, the whole company is bought, most of the time it is just the customer base that is being purchased. This has been done intentionally, allowing Daisy to keep one base in Nelson and making it easier to maintain the company culture and customer service levels.
“Since last year, we’ve had absolutely phenomenal growth once again,” Riley says. “In the last six weeks we’ve completed four acquisitions, making it 16 in total, and we’re currently working on another three that will all be completed by the end of June. Then I’m having a break! I’ve promised myself a holiday.”
What’s most exciting about Daisy is that there is still massive growth potential. The company won The Sunday Times Tech Track 100 in 2006 and was ranked 28th in Deloitte’s Fast 50 last year thanks to 8,021% growth, which shows no signs of abating. And there’s still room for more. BT currently holds a 67% share of the £4bn telecoms market. Compare that to Daisy’s slice of less than 1%, and the capacity for growth is clear. “The real challenge is how we get significant market share and become the real alternative to BT within the small to medium-sized (SME) market,” says Riley. “That’s what Philip and I have been talking about recently. But I think that’s what excites him, because it’s such a big market, and BT has got such a strong hold on it. It’s really important that we start to give it a run for its money and give SMEs a choice.”
Riley will continue his strategy of consolidating the telecoms reseller market through acquisitions, and envisages the number of players will have halved from 1,000 to about 500 in the next two years. Organically, he’s still running at double-digit annual growth and aims to raise Daisy to the point where it’s achieving £50m profit over the next two years.
You get the feeling that Green will be keeping a watchful eye on this student. “He loves solving problems,” says Riley. “And he loves trying to put people together. I’d say he’s pretty much addicted to doing deals.” Sounds familiar.
1. Use your time wisely – set realistic timescales.
2. Surround yourself with a management team of people you can trust to do a job.
3. Don’t create an unnecessary hierarchy. A flat level management model means you will get results from all staff, who feel valued.
4. Don’t linger on decision making – resolve outstanding actions as soon as possible.
5. Act on your instinct – if you don’t think it feels right then it generally isn’t.
6. Make sure your figures stack up – ensure your ideas make good financial sense.
7. Keep abreast of changes across the whole of your business, maintaining a top level view.
8. Stay agile and alert – stay on top of changes and adapt to them.
9. Execute a plan and ensure it is delivered to the standards you originally envisaged.
10. Concentrate on the finer details as these usually are the first to draw scrutiny.