Episode Transcript
Joanna: Hello and welcome to our Be Inspired series. In our series, we speak to CEOs, founders and senior leaders of companies on London listed markets and ask them to share their journey with us. I'm Jo Trup. I look after Spark Live at the London Stock Exchange, and I'm here with Mark Smithson, CEO of Mark's Electricals, which IPO'd in November, 2021. And we are standing here today at your eight acre, 200,000 square foot HQ in Leicester.
Mark: Spot on Joe. Yeah, you are welcome. Yeah, thank you. Sunny Leicester, nice to meet you.
Joanna: How are you?
Mark: Yeah, great. Thank you.
Joanna: You IPO'd the business in November, 2021, and you started in 1987 selling secondhand cookers out of your father's garage.
Mark: Spot on. Yeah. So on February 2nd 1987, I used to go out. I sold my car, bought an old van. I used to go out after work, buy these old cookers, clean them up. I had a caustic soda tank. I used to do it in the garage at the side of my dad's house, and I'd sell them in the paper. I was trying to be a surveyor at the time. I packed my job in. And it was a bit of a big step to go and open the shop up. I was opening the shop up and someone actually bought something off me the first day. I was terrified when opened the shop up, but that was a long, long time ago obviously. Now I'm 56. It's been a fascinating journey. Great fun. And now here we are listed on the London Stock Exchange.
Joanna: And how did you find the IPO process?
Mark: Well, it was really daunting. I mean, it goes back initially, I decided, oh, I could build the business on my own. I was slightly misguided thinking I could do it totally on my own. But I didn't want any partners. I got the bank on my case all the time on a daily basis, which was rather a nightmare. You see that horse running down the beach and that was not the case. I thought it was the bank manager chasing me down the beach. I then managed, I sold some shops, about two and a half years ago, and it gave me quite a bit of extra cash and I put that into the business. I'd never really taken lots out, but I put this, it was nearly a million pounds in cash, into the business.
I got some credit notes that wrote to us as well. The accountant advised me at the time to take the money and run all those. I thought, you know what? No, I believe in this business. I built it up. I started off when I was 21 years old and I'm going to push and drive it. So I'm going to reinvest that money back into more stock, which I'm so glad I did do. Having that extra cash in the business, it showed me that I could actually push, well, not necessarily follow your dream, but push the business to the levels I knew I could get to. And I was always short of stock. I never had quite the right lines in stock. And our business is all built about next day, delivery free, next day delivery seven days away. So you need some of that product in stock.
If you've not got it in stock, you know, you can't really take the order or you do if someone's got a specific request for a certain product. But ours is all about have it in stock and deliver it tomorrow on our own fleet of vehicles, and I've always done that. I've never had enough money to invest in all the right skews, do the right stock, whereas now we have. So we went from having, say, three and a half million in stock to almost 17 million. Order it before six, you get it tomorrow and that's seven days away. And that's the real USP and having everyone under one roof on this site, Leicester HQ, it makes a massive difference. So you can probably see, I'll walk around the warehouse: 'Hi Pete. Hi Steve. What you doing? Why have you loaded those like that? Why are you not doing it this way?' So it's a real key part of the business all being under one roof. But having that cash, it showed me what I could actually do with driving the business, where I wanted to get to. But then I looked at maybe getting some PE money, private equity money. So I thought about that and I thought, I actually don't want any partners as such. Go to the bank and ask for more money? Well, I just got rid of them. So discarded PE, discarded partners. And I thought, you know what? A friend of mine said, you should float your business. I was like, okay. I looked into them and thought, you know what? It very, very daunting. I thought, how, how on earth am I going to go about that?
I mean the, the real key is getting a great CFO, which we've got. I've got Josh. The key to having a CFO is one who's very good with investor relations. And I would never have known about that. You know, you just think that floating company is the sort of thing that Lord so-and-so does and his son might go to market because his dad knows how to do it. But it is nowhere near as difficult as you think it is. It's just a very daunting thought that you've got to do it, that you've got to apply yourself, got to listen to people when they tell you something. You've got to understand it and ask, go about and ask questions why. But if you start off with a great CFO, one who's got a lot of experience in IR, investor relations, that is a real key part of this business. You then go and select your broker, the banker that's going to float your bank. So you have to go through the process of picking which bank you want to go with. And they're all very similar on the rates that they're offering. You could do a bit of negotiation with them as you, as you can with anybody. So I got what I thought was a decent-ish deal and it is quite a complex process because they know the right people to go and sell your business to.
Joanna: And what did you learn from the IPO process?
Mark: It taught me how to run a business. It gave us discipline. Going through that, it taught me the things that we weren't doing properly in the business. I mean, I thought our business was brilliant, but now it's a mega business and it's future proof. So going back to the original question about half an hour ago when you asked me, why did you float? The reason for it was, you know, I spent 35 years building this business. I wanted to build a business that would last forever. You know, I always thought I could get to 500 million revenue or more. I've got the business model in mind. I knew I what I wanted to do I just hadn't got the cash to do it. So that was the real reason why we actually floated, partly the fact you get some money as well <laugh>, but you know, I was fine before we floated.
You know, the money thing doesn't necessarily change you, it just makes life easier. And that was always a big problem for me. The fact that I was always battling with the bank and suppliers. So we'd be having flash sales every weekend to try and get some cash in the bank to pay suppliers and it was just difficult. Whereas now everything's all done in a fashion. It's a lot more orderly. Your cash flow patterns are all worked out properly. Your stock forecasted properly. Whereas I was putting out one fire over here and a fire over there and I'd one minute be working on the warehouse, then it'd be on the buy-in, then it'd be on the selling, then customer service, then it's on the sales team, then the drivers. So you literally go from one to another. Whereas now, yeah, we've got all these professional people that work for us, which is the real thing I didn't realize. When you float your business, the massive benefit you get is that you can attract some real key talents your business. I love doing it. And it's great fun. I would recommend anyone thinking about listing to go for it. You're only here once.
Joanna: You certainly are. It's a great message. And how do you find running a public company versus a private company?
Mark: More interesting. You know, you are learning things that you would never ever have learned. I mean, I could have carried on just running the business and doing very well, having a nice lifestyle, but you want it to last forever. That was what I wanted to do. I didn't want to think I've spent all those years and then you put people in charge who aren't that bothered at all. Well, they're bothered, but not as bothered as they actually should be. But running a PLC is great fun because everybody's driven with the same, they need to hit the sales targets, margins, etc etc, all the KPIs. The people you meet, the bankers and so- like yourself and all, all the people you'd never have met normally who you thought were like the untouchables, you know, I'm a lad from Leicester. I just started off in a semi-detached house, that's where we used to live, and here you are, running a PLC, so just proves anyone could do it as long as you apply yourself.
Joanna: Great. And you mentioned earlier about how Josh put in place an IR strategy for you. And you touched upon Josh's experience as a CFO. How much time now do you devote to your institutional shareholders and IR meetings?
Mark: Well, we're always available. We always say to anybody, any meeting, if you want to ring me up on my mobile and talk to me, that's fine. And hardly any of them ever do. So you probably think that more people will be asking you questions. Because we're doing well, you're obviously going to get less questions, aren't you? It's when things are becoming tough I would imagine you'd get more questions. Hopefully I'll never get to that point. But no doubt that's when the phone start burning. Yeah but you really don't have to dedicate that much time, but you do have to look after the people that you put in place and just make sure they're doing what they should be doing. But if everyone's KPId, they all know how many vehicles should be going out, how many products should be going out on each vehicle, how long each vehicle should be on the road for, and just put all these things in place for everybody, your aged stock, etc, etc.
It's all things you should be doing anyway in a business but you neglect when you're a private business. So now we've got these people in place. I spend more time looking after them, but not a lot of time because they're very intelligent people. They don't need me breathing down the neck every five minutes. But the investors, if they want to talk to us, talking to me or Josh isn't really as time consuming as you would think. People probably scare you by telling you it's forever spending time talking to investors. But that's not the case. You get the right investors who they're not there just for three months and sell it. Because we don't want anyone like that. I know you need liquidity and your share value, but you actually need the right investors in your business who were there for the long run and we don't just want to look for a quick buck.
Joanna: Yeah. And you spoke about your employees, how many of those are shareholders and was that important to you?
Mark: Yeah, it was. I thought, give them all £3000 worth of shares each, so talking about 150 employees. Now we've got just over 200, Jo. You're giving people a part of the business and all of a sudden you've got 150 managers running around the building, which is great. They're all like, why are you doing that? Why are you doing that? And it's nice having people. You're helping everyone aren't you? Not just yourself. And that is very important with whatever you do, isn't it? Treat people the way you wish to be treated.
Joanna: Absolutely. And then just touching upon your retail shareholder base. How do you manage communications with retail shareholders?
Mark: Yeah, I mean we've done a few webinars where you get say 30 odd people or more on a webinar and that was quite interesting. They've all got questions to ask you. If you're in touch with your business, which you should be when you are in a PLC, you know all the numbers so anyone can ask you anything and it's fine. You sit there and go through your deck, your presentation that you've got, you've worked together. So Josh predominantly, he works on it because he's the expert at that. And then he'll say, 'what about this Mark?' And we go through it and discuss it and it's not as hard as you think. Like again, you should know all this stuff anyway. It's your business. You built it. If you've parachuted in, it's a lot harder I would imagine. But luckily I started it so you can answer most of, or all, the questions.
Joanna: So ESG is obviously very important to you and we're standing in this very impressive warehouse and I notice over there in the corner there's a section where you recycle all the cardboard and all the packaging from the day.
Mark: That's right Jo. It is very important to us. We were doing that before we floated the company. So it's just something that was great to have been doing already. And so I just always apply logic to everything, or most things I should say. And I thought, you know, when you're delivering a product, you want to take away the old packaging, which includes the polystyrene, the polythene, the cardboard, the strapping, so all those things, and then recycle them all with your own equipment, which is what we do. That's what all that recycling kit over there is. But it's not wearing away like it normally is, they've actually got it all nice and tidy and swept up, which is great, but it's just doing the right thing for the environment anyway, isn't it? You should be thinking about these things and not have someone tell you that you need to do it. You should just go off and think, right, what would the customer like me to do? Well, okay, they'd like us to take away all the packaging, recycle it properly. So it is very important to us and it's something that we should all be, you know, fully aware of and be responsible for recycling it all properly and effectively. And it saves the customer a problem. And, you know, they're happy, they've got the new appliance and all the rubbish has gone, the old product is gone as well. So it's all taken away from them and we dispose of it all and sell it onto third parties who then use it again, and the packaging is already resold again for more appliances, which is great.
Joanna: And who inspires you both professionally and personally?
Mark: Interesting questions. A very close friend of mine I've known for 38 years who has been battling cancer for six and a half years. Someone like that who still remains positive. And when you get out of bed and you start moaning and complaining about things and this friend of mine has never ever complained about anything, which I do think about all the time, and also said to me, your job is to make at least one person smile every day, which, it might sound a bit cheesy, but it's true. You know, you've got to treat people the way you wish to be treated. And it's made me wind my necking over quite a lot of things when I think about that. That you need to be nicer to people rather than just shouting at people. No one deliberately does a bad job. Sometimes I think I'll perhaps go over the top a bit, but then thinking about things like that makes you just calm down a little bit and treat people in the way that we should be treated.
Josh is an inspiration. I've never met anyone who works as hard as him. And people who put themselves into training courses. For example, there was an incident that I was walking through our warehouse and one of the young lads who started when he was, I think he was about 18 years old here, and he was being pushed and shoved around a bit within the business, in the warehouse, because he was in quite a hostile environment and he always used to be walking around with his head down a bit. I was just trying to big him up and 'come on son, you know, you're doing a great job. Well done'. Anyway, he was on the forklift the other day and I was walking towards him and he stopped the forklift, jumped off it. I'm like, 'oh, hiya, how are we doing?' and he said, 'this job is the best job I've ever had.' He said, I know I've not had many jobs, but I absolutely love it. And he'd done 200 hours this particular month and he said, look at this. It's true he took himself out after work and got on a training course to learn how to install appliances. So he jumped off the floor, left, show me the car, this new Mercedes he is going to buy, he's only a young lad. And seeing things like that, you are actually giving someone a position within your business and the opportunity to better themselves. He's off the local estate, Reese, a young man. It's great to see people like that. I just love it. And that's what gets you outta bed in the morning, thinking that you've got people that you're helping. And I love doing that. And that's the best thing about running a big business. You know, it's not all about me. It's about your business, isn't it? And the people that work within your business, and you want them to all flourish.
Joanna: Absolutely. No, that's a really great ethos and really great story. Finally, as a CEO, what keeps you awake at night?
Mark: Selling More. That's it. I was just want to sell more.
Joanna: Mark, thank you so much for taking the time to speak with us today. You've definitely made us smile today.
Mark: You think so? Thanks Jo, thank you very much. Cheers.
Joanna: You can find more on the Be Inspired series at lsegissuerservices.com/spark.
