Flying high in the growth league

Independent 100: Roger Trapp looks at the strategies of successful medium-size firms

The continuing advance of Caudwell Subsidiary Holdings, the mobile phones and office automation equipment distributor, puts it well ahead of rivals in the Middle Market 50. The annual growth rate of more than 75 per cent to sales of pounds 125.7m in 1995 was down to "utter single-minded dedication", said John Caudwell, the managing director, who founded the company with his brother in 1986.

But hard work and perseverance are also the trademarks of companies further down the listing compiled by the Independent on Sunday and Price Waterhouse, the accountants. "You have to keep doing what you do better each year," says Bradley Burgess, the managing director of runner-up CityFlyer Express, the Gatwick Airport-based airline that pioneered British Airways' move into franchise operations.

Philip Buckingham, the joint managing director of third-placed Business Systems Group (BSG), insists that success in the highly-competitive market for supplying computer systems depends upon opportunism underpinned by a professional service that meets customer needs.

The annual table, which accompanies the Independent 100 list of Britain's fastest-growing private companies, published last Sunday, recognises the achievements of already large companies that continue to expand rapidly. To qualify, companies must have sales of at least pounds 5m (rather than pounds 100,000 for the main listing) in the first year of the five-year period.

Nigel Crockford, PW partner responsible for the listing, said the growth in employees at the Middle Market companies was particularly impressive, with average staff rising by 103 to 541. Average sales had risen from pounds 54.3m in last year's list to pounds 65m, while average rates of growth had risen from 32.4 per cent to 35.3 per cent.

The companies in the list also represent a good spread of industries. There is the usual smattering of computer and, latterly, telecommunications companies, plus retailers, transport groups like CityFlyer Express and even a few manufacturers.

For example Kanta Enterprises, 86th in the Independent 100 and 23rd in the Middle Market, has extra reason for celebration because last month it became the latest Independent 100 company to win a Queen's Award for Export Achievement. The accolade goes to the company's Davis & Dann subsidiary, which exports and distributes personal care, healthcare, beauty and household products to about 16 countries. It has been especially successful in penetrating the former Soviet Union, with offices in Ukraine, Kazakhstan, Moscow, St Petersburg, Novosibirsk and Rostov.

Meanwhile Loot, publisher of the sales-and-wants newspaper that has had a steady presence in the list from the start, is in 34th place with an annual growth rate of just under 31 per cent taking it to sales of pounds 21m.

But, as two of the five companies that achieved annual sales growth of more than 50 per cent, CityFlyer and BSG have done especially well.

CityFlyer was set up in 1991 with backing from 3i and other City institutions in the wake of the collapse of Air Europe, which had been part of Harry Goodman's International Leisure Group. Mr Burgess, who was part of the previous operation, says it has grown quite significantly, particularly after running British Airways Express, BA's first franchise, since 1993.

While the BA connection has spurred growth (turnover this year is expected to be well above last year's pounds 49m) it has also brought challenges. Far from seeking a niche by operating an American-style no-frills service, CityFlyer has had to meet BA's exacting requirements in areas such as customer service. However, the company keeps a lid on costs through, for instance, eschewing fancy offices and utilising its aircraft more efficiently.

This has been done largely through the dedication of the company's workforce, now around 500. "A lot of the people in the start-up days had been through multiple bankruptcy in airlines, but they have worked very hard," says Mr Burgess. "When people reckon that running a company is the same as sailing single-handed around the world, they are wrong. It's a real team effort."

People are also critical to BSG, set up in 1987 by Mr Buckingham and partner Nick Gerard. The pair, who still own all of the company, set up after deciding they could do better on their own. Having started with four people, they had by the end of the last financial year acquired a 237-strong staff at their base in London's City Road. That expansion is continuing, with last year's turnover of pounds 45m expected to grow to about pounds 68m this year.

Hitherto, all growth has been financed out of cash flow and retained earnings. Mr Buckingham sees no reason for that to change in the near future. "We're not quite at the point yet where we have to look for other sources of finance," he says. Besides funding expansion into more areas of systems integration, the revenue growth has enabled the company to hire "better and better people", he adds.

This makes it better able to seize opportunities that lead to future success. "We're very much a customer-facing operation. BSG has developed all these activities, not out of Nick and Phil saying: 'That seems a nice idea', but out of a response to clients. We don't say: 'We can't do that'."

For further information, you can contact PW's web site: www.pw.com/uk/independent100.htm.