The latest set of financial figures from Tunbridge Wells-based Adept Telecom prove again that its CEO Ian Fishwick has succeeded in his strategy, posting a 31 per cent sales increase and 34 per cent hike in EBITDA.
Fishwick has been a Managing Director or CEO of telecoms businesses for over a quarter of a century and March 2016 marked the 25th consecutive year of increased EBITDA generated by companies under his leadership. Fishwick's growth plan is founded on a simple common sense strategy that in practice can only achieve its purpose and hasten Adept towards the realisation of its goals. Not surprisingly, sticking to a policy of 'back to basics' remains a potent force in Fishwick's thinking. "Cash is King," he stated. "You only go bust if you run out of money."
Recognising the primacy of cash may not be an ultimate guarantor of long-term prosperity but according to Fishwick the thought should always be at the forefront of a business owner's mind whether expanding or contracting. "In 2008 when the financial markets crashed the City believed that small companies were the most likely to go bust, and that those most at risk had borrowed money," he said. "That was a gross over-simplification. I told the team to pay back our debt as fast as possible and within three years we were in a different position. The major thing to remember is that Cash is King."
These basic business principles imposed by Fishwick have propelled Adept a long distance away from its commercial beginnings in Fishwick's spare bedroom back in 2003. Today, Adept is a public company and Fishwick is also Commercial Director of Innopsis, the trade association for network service suppliers to the public sector. He is also a man who has grown accustomed to achieving his purpose and offers important pointers to those starting out with similar aspirations.
Top tips
"My advice to young entrepreneurs is to resist giving away too much equity stake in your business," said Fishwick. "Be wary of building your own bespoke platforms as integration issues will make it difficult to buy your business. And always be mindful that ten very good people will always be better than 100 not so good staff. Some people get a kick out of being the boss of a large number of employees. I've been there and got that T-shirt, and it's not the answer."
Fishwick managed 1,250 staff and circa 400,000 customers when running Telewest London and South East in the late 1990s. This job followed a stint at Marconi Secure Systems between 1990-95, after Fishwick 'fell' into the comms industry by accident. "I had qualified as an accountant and saw a job advert for Plessey (which later became Marconi) in Liverpool," he explained. "Plessey wanted someone to transition the business from paper accounts to computerised finance systems. I then became the Managing Director.
"In 1995 I went into cable. These were truly exciting years building the networks and launching services like Sky Movies, Sky Sport and Digital TV as well as doing telecoms and Internet at the same time. I ran Telewest North West and then Telewest London and South East. When we moved from four regional heads to one UK boss I didn't get the big job and had to leave."
At this juncture in Fishwick's career a US company called World Access asked him to manage its seven UK acquisitions. "I inherited £250 million sales with over 1,000 people but the company was losing £20 million a year," said Fishwick. "After 16 months we had merged the seven businesses and were profitable, making £1.6 million. But the US parent went into Chapter 11 bankruptcy and I was forced to break the organisation up and sell it. We improved the profitability by £21.6 million in just over a year, but it still went wrong. That's when I'd had enough of large companies and set up Adept in 2003."
Adept Telecom has since grown to employ 90 staff based across three sites with sales of £33 million and EBITDA of £7 million. Acquisitions have been a running theme and an important growth factor in terms of scale and capabilities, with the purchase of Fleet-based Centrix in 2012 being particularly significant, adding £10 million revenues and placing Adept in the UC space. "We started out selling simple products to small businesses but larger organisations now account for over 65 per cent of sales revenue," said Fishwick.
"We have transitioned rapidly and mainly sell complex integrated solutions to bigger clients. We are now strong in Avaya products with a specialism in both Aura and IP Office. We may consider other manufacturers such as Cisco and Mitel. We are also keeping an eye on data companies as telecoms and IT is increasingly converging. UC is our biggest opportunity, where we provide everything from the connectivity to the desk phones, smartphones and tablets, all integrated with contact management systems."
Adept's current go-to-market strategy builds on 11 years spent acquiring connectivity businesses and integrating their customer bases. "We did that 19 times," said Fishwick. "When we started out the orthodox thinking was that you couldn't make money from small firms as the support costs were too high. Our view was that if we automated our processes early this would enable us to make lots of money, and we did.
"The priority remains the same, to continue our unbroken track record of increasing EBITDA every year and to ensure that it turns into cash. We will use strong cash flows to increase our dividends and also identify selective acquisitions. As we move into more complex solution selling there is inevitably an investment needed in more expensive, highly trained specialists in every area from pre-sale through to installation and support. We are increasingly strong in the public sector but it has taken us six years of hard work and re-training people. Selling to this sector is very different to approaching a commercial customer."
Technologies such as UC have become the default mode of industry discussion, but Fishwick has a helicopter view of the bigger picture and does not hold back from pricking the comms industry's tendency to talk up the market with ballooning hype. "Not every customer wants fancy technology for road warriors," he stated. "Some are just hairdressers who use broadband for a PDQ machine once every half hour.
"That said, there is no shortage of revenue in our sector, up to several billions of pounds. However, there is too much cost supporting that revenue. We have massive duplication across the industry because there are so many small companies, often with technically focused business leaders who believe they can do everything. But it's blatantly not possible for a small company to be all things to all men and be profitable. We are not here to discuss technology, we are here to make money."•