Way back in 1987 I started my first company with £300 and an old car. It wasn’t a great time to start. The economy was bad, and we were in a recession
We had a lot of snow that year. Most unusual. We rarely see any – a thin dusting at the most. This year it was disruptive. Roads ground to a halt and it lasted for about a fortnight. Times were tough and the banks were tighter than normal.
In October we had the great storm. Total chaos and disruption throughout the country. https://www.bbc.co.uk/news/uk-england-kent-41366241
And just 3 days later we had Black Monday – one of the biggest stock market crashes ever. https://www.cnbc.com/2017/10/16/cause-of-black-monday-in-1987-as-told-by-a-trader-who-lived-through-it.html
I was on holiday in Nassau, the Bahamas at the time. By then I had taken on an office junior, a part-time bookkeeper and a secretary. Business was good. I went from zero to £997,400 in 12 months – just shy of £1m in my first year and hit £1.4m in sales 4 months later. My gross profit was a touch over £247,000.
I was in the Labour Hire Business. We were specialist suppliers of Labour and Tradesman to the Construction Industry. In other words, a specialist recruitment company. We didn’t get involved in supplying permanent staff or any of the other stuff they do like secretarial temps, office staff etc.
We were short term specialist providers. It was fast, furious, demanding and very profitable. Late nights and weekend working were normal. Our client base was vast. Mostly blue chip. They were the big boys. And over the years we dealt with many of them.
Some of our clients included AMEC, Balfour Beatty, Bouygues Construction, Costain, Carillion, BAM, French Kier, Laing, Wilmot Dixon, Sir Robert McAlpine, Mears, Vinci, Bowmer & Kirkland and Wates to name just a few. All these companies regularly ordered labour from us and the reason was simple. We supplied good men on site and a offered a service second to none.
By our second year we had increased staff levels to 6 and I employed a full-time labour manager and 2 part-time telesales staff. The beauty about this business is you don’t really have to sell. It’s more of a keeping in touch game or keeping them warm. They either need labour or they don’t. And very often when they do call it’s because they have a problem. The trouble is so will you because your job is to supply them the next day or risk losing the contract.
Let’s say you get a call at 5pm for four carpenters, two labourers and a plasterer for a 7.30 am start the next day. It’s not a big order but you won’t be going home any time soon for your tea. The payoff is what it’s all about though. This is what keeps you in the office working late. I’d be looking at about £12.00 per hour coming in just from a little order like that. 45 hours a week was pretty normal, so we were looking at £540 pw and that was without Saturday or overtime working.
We had many contracts which were 12 hours a day – 7 days a week and had crews on 12-hour night shifts paying double time. And all this was started way back in 1987 with £300 and an old car. On average we had roughly 180 -200 men on hire every week. This was a very good business to be in if you played it right.
No idea what the games is like now though. Probably full of competitors and other agencies moving into the construction market so they can become all things to all people. It was a great business back then. Rules and regulations were much looser of course but the recruitment industry is, and always has been, highly competitive. You can make a lot of money in it. You just need to know how …
Over the next few years I added some new divisions to the business. We went into build cleaning, another very profitable game because you didn’t need to look for clients. You were already supplying them with labour and at the end of the contract the buildings needed to be cleaned prior to handover. To be honest this wasn’t me being entrepreneurial – I was actually asked by a couple of site agents if we could do it. The rest as they say is history.
The last business I added before exiting was supplying pipefitters and welders to the Dutch and German shipyards. I had some very good contacts in Holland and ended up doing a JV (joint venture) with a Dutch company. He negotiated the contracts and we supplied the labour.
It was very very, good until the yards were raided by immigration officials in Holland. We were OK as our operatives were working through a legitimate company structure. The problem was a Russian agency. They were also supplying but were using a fake BV (Dutch company) and using illegal workers.
Unfortunately, this put the wind up the ship yards and they didn’t want to continue the contracts. It was a real shame because we were making over £10 per hour per operative working 12-hour shifts. At one stage we had about 45 men on hire working 7 days a week. This was the closest I ever got to having an ATM machine in my office -:)
But let me tell you something else. This is going on right now. I’d put money on it. There are people just like me having a raving result supplying labour into all sorts of industries. It’s got nothing to do with how hard you work, your knowledge or your academic education. More of how you see things and what you need to do to make it happen. That’s all I’m going to say right now but it’s worth thinking about if you want to build a proper offline business.
I’m in property now. It’s more relaxed and I’m not a hungry young man anymore. The labour game is great if you’re in your 20’s or very early 30’s. If you’re much above 40 it will wear you out. That’s just my humble opinion of course which I’ve generalised by my experience and the hours I committed to building up the business. You need tons of energy to make it work.
Fortunately, I’ve got time on my hands to indulge in other ventures. I’m an investor now and particularly like the property business because it suits my life style and of course I’ve got a bit of experience in the construction industry as well!
Recently I’ve been taking a closer look at this internet business. The thing is I’ve long tolled with the idea of having a go at this internet stuff – ever since I was approached by an internet marketing specialist who told me I could have the number 1 spot on Google for my business.
At our meeting he started waffling on about keywords, traffic and SEO optimisation. In the end I politely asked him to shut up and explain in layman’s terms exactly what he was going to do for us. In a nutshell he was going to advertise on Google and Facebook, but I had to pay for it.
Now this is where it got interesting and my ears pricked up. This wasn’t cheap so I wanted to know more about him and his business. Apparently, he was a web site designer and had been in business for about two and half years. Now I don’t know anything about website design, but I do know their remit is to build pretty web sites. He admitted this and told me it was what his clients want and expect which is fair enough.
“What about sales and marketing” I asked? “That’s not your background is it?” “Well indirectly it is,”. He replied. He then went on to explain in detail the finer points of building a website. Apparently, there are lots of components they must build into it for marketing purposes. It’s not just for SEO optimisation. For your site to properly rank you need a blog, FB page, social media accounts, YouTube channel – the whole shebang.
To be honest I was starting to get bored. This young bloke was trying to sell me, and I didn’t like it. So, I took him back to my original question about his sales and marketing experience and asked him quite bluntly how many clients he had paying £1500 a month and what his turnover was.
He couldn’t give me an answer without checking first. I told him a rough estimation would be fine. He said he wanted to make sure and would come back to me with his proposal.
Trouble was I didn’t ask for a proposal. I wanted to know more about his business and how he ran it because as sure as God made little apples, I’m not having someone I don’t know marketing my business all over the internet and running up a large PPC bill on my account. I became very concerned when he explained this was going to take a good few months before I would see any real results and a return on my investment.
I then pointed out this wasn’t how I did business and if you are that sure you can do this you need to give me a 60-day trial where all I pay for are my advertising costs. He counter offered with a refund if it didn’t work which I accepted provided he also refunded my advertising costs and paid the estimated refund money plus 10% into an eschew account where he couldn’t touch it.
Unfortunately, he declined my offer as he always took payment upfront and would not reimburse my advertising costs. We shook hands and he left having wasted at least an hour and half of his time simply because he came at me all the wrong way and either greed or desperation got the better of him.
After he left, I sat down with a calculator and wen through some figures. He was a one-man band so there was no way he could possibly do all that work by himself. He was either farming it out to another agency or using one of those outsource sites in India or Asia. I did some research and sure enough my instincts were right. He was using outsourcers because the margins were too thin to farm out.
Within 24 hours I got some quotes back for the whole shebang. Average rate worked out about £700 per month. He was on to a good thing. A dozen clients paying £1500 a month would give a gross return of £9600 a month. Quite a comfortable income for most people and once you’ve got the client and they’re happy you’re all setup to run a nice little business.
Personally, I think aiming for £1500 a month when you’re just starting out is going to be difficult. Not impossible but why push it. I’m sure with a bit of traction you could grab a handful of little clients each paying £300 – £500 per month in your first six months of business and then rapidly build out into the four-figure client by the end of your 1st year.
Realistically to generate 2k a week in your pocket you need to work hard at this for 12 months. You can then take on staff and grow it from there. I don’t want to do that, but I do see this as a good opportunity for a live wire who is good at generating business.
I’m looking at another angle of internet marketing right now and are looking forward to telling you how I get along. I’ll try to post a weekly update on my blog and will only post if I think it’s relevant.
Thanks for taking your time to read this and I do hope I’ve given you some insight into my business experience. By the way on exit my turnover was £4.8m.