The Entrepreneur: Andrew Alderson, Vanarama

The van leasing company founder discusses scaling to revenues of £30m, memories of having to lay off staff, and frustrations with Dragons' Den pitches

Founder: Andrew Alderson
Company: Vanarama
Website: www.vanarama.co.uk
Description in one line: Van leasing broker
Turnover: £22m
12 month target: £30m

Business growth

Describe your business model and what makes your business unique:

  • We are the UK’s largest van leasing supplier.
  • We were the first business in our sector to do TV and radio advertising and are now sponsors of the National League (formerly the Football Conference League).
  • Our stock position means we have much shorter order-to-delivery times than our competitors.

What is your greatest business achievement to date?

Our brand strategy. We started it in 2012 with the launch of our franchise network, followed by our first national TV campaign a year later, and then the football sponsorship deal in 2014; a total investment of £3m.

We have managed to do all this at the same time as increasing our net profit tenfold from £250,000 in 2012, to an anticipated £2.5m for 2015. As a result of the brand building exercise we now have over 150 people in the business.

What numbers do you look at every day in your business?

The first thing I look at is our previous day’s sales, followed by web traffic, and enquiry rate. Our process is really strong, so I know how many of those enquiries will convert, and what the profitability by sales will be which will give me a pretty good idea as to how the month will end up. I then look at the cashflow.

To what extent does your business trade internationally and what are your plans?

At the minute we don’t trade internationally at all but our model would transfer into other countries, so at some point I expect us to dip our toes in the water.

Describe your growth funding path:

I started the business with £50,000 which I managed to scrape together from savings, maxing out a couple of credit cards, and a bank loan. Over the years we’ve also used a couple of small EFG loans but in the main I have always left enough cash in the business to invest in growth.

One of our key differentiators is that we keep our own stock (something that most competitors will not do) so at any one time we would usually have between £1m and £2m worth of stock.

What technology has made the biggest difference to your business?

Our responsive website. Last month alone we had 5,500 enquiries. 70% of these came from a mobile device, and that proportion is only going to increase.

Alongside website developments we have also invested significantly in technology to make the entire quote to ordering and delivery process a breeze for busy customers. A customer can complete all paperwork on their mobile including ordering their vehicle. That said, we happily hold their hand and talk them through the process on the telephone, arrange their quote and post all paperwork.

Where would you like your business to be in three years?

This year we will sell leases on just under 7,500 vehicles. By 2018, I expect that to be around 15,000 with a turnover of just under £35m.

Growth challenges

What is the hardest thing you have ever done in business?

When the credit crunch hit in 2008, I had to lay off 12 staff in the space of six weeks. The leasing side of the business had only been going for just over a year, and we had grown quite quickly to a staff of 18.

I remember when the first bank went bust and there was a run on Northern Rock.  Our phones stopped ringing almost overnight. Thankfully, because I had a great non-executive director at the time who had encouraged me to create a risk matrix, we had a plan in place in case things went wrong.

Unfortunately that meant losing 12 people to save six, and it was horrible. I had grown men crying in my office. I had to lose people who had left a job to come and work for me only three months earlier, and others who had just taken out a big mortgage.

This wasn’t something that came easily and it is still very fresh in the memory.  It was a really tough time, but it was also the time that shaped our strategy for the business we are today.

What was your biggest business mistake?

Not trusting my instinct when I first started the leasing business. I had two ex-car-salesman working for me and they managed to convince me that they were the right people to run the business. In the end they proved to be everything that is wrong with the motor trade, and I realised that I was the best person to run the business. It nearly ruined us, but I have never made the same mistake since.

Piece of Red Tape that hampers growth most:

The control the EU has on business in the UK. Take the new rule on travelling time to work that came into force this month for instance; it will be expensive and difficult to manage and, as far as I can see, is totally unnecessary.

What is the most common serious mistake you see entrepreneurs make?

Not taking enough risk. You see a lot of businesses getting to a certain level and then stagnate. Unfortunately, if you stand still someone will invariably catch you up.

How will your market look in three years?

The commoditisation of vehicle ownership is already happening. 75% of all private vehicles purchased last year were bought by some sort of finance or leasing product. Because of this, regulation will play a much bigger part in our business.

The biggest change will be the role that the I.O.T (Internet of Things) will play in the connected vehicle and intelligent transportation.

What is the single most important piece of advice you would offer to a less experienced entrepreneur?

Know your numbers. There is nothing that frustrates me more than an otherwise good business person on Dragons’ Den failing because the entrepreneur doesn’t know his/her numbers.

Personal growth

Biggest luxury:

Downtime is my biggest luxury. I have just bought a villa in Majorca so I can enjoy more of it.

Executive education or learn it on the job?

Learn on the job!

What would make you a better leader?

Patience. I am notoriously impatient but, now I have a much bigger management team, I have had to learn to ‘tone it down a bit!’ and give people the space they need to get things done.

Business book:

The Edge, How the Best Get Better by Michael Heppell

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