When the small janitorial supplier that Shaun Chatterton, 54, worked for was bought by a larger rival, he knew he wouldn't stay for long. "I went from being a director in a small firm to being a much smaller part of a big operation." Desperate to "get some control back", he left after one year to set up on his own.
It was 1988. His new outfit, CPD, focused on reselling well-known cleaning products to businesses and shops around Hull. "It was strange to go from working for a company to being its competitor, albeit a very small one." Chatterton didn't have much start-up capital. Instead, he was relying on the "good relationships" he had built. "I had contacts with suppliers and customers so I was able to get the business going straight away."
On paper, Chatterton faced an uphill battle. "Product distribution is all about scale. I couldn't bulk-buy like my competitors and I was about 15% more expensive." So he decided to focus on smaller customers "who my bigger rivals wouldn't make the effort to see" such as hotels and restaurants in the east-coast holiday towns of Whitby and Scarborough. "People also bought from us because they saw us as cleaning specialists unlike bigger rivals who sold everything."
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
His tactics worked. By 1999 CPD had 20 employees and annual sales of £3m. Yet profit margins were tight. "I felt it needed to take another direction." Consumers' growing awareness of environmental concerns provided the ideal opportunity to launch a range of suitable cleaning products. Chatterton outsourced the development of environmentally friendly soaps and cleaning fluids, branding them Maxima Green. "The timing was right.It let us make higher margins than when we sold other people's brands."
Buoyed by the range's success, he launched his own mineral water. Again, CPD profited from a "trend that was on the up". But the real breakthrough came on a trip to Monaco. Chatterton had gone to watch the Grand Prix on a trip "that was more social than business" when he met a contact for US stationery giant Office Depot. "I realised that CPD did not have to be limited to cleaning products. Our logistics and client base could be used to deliver almost anything."
Chatterton began to position CPD as the middleman between the manufacturers of "almost anything" and their customers. "Most large shops don't want to deal with lots of different factories so they look for a partner like us to take care of product delivery." The product range now spreads from "teabags to TVs". General logistics and distribution now accounts for about 80% of CPD's £25m annual turnover. Chatterton acknowledges how the company has changed. "CPD did well at the beginning because clients wanted a specialist. Now people want a one-stop shop a company that can deliver a wide range of goods."
However, Chatterton hasn't given up on cleaning. Keen to rebuild the cleaning side of the business, he recently became a majority shareholder in Green Planet Solutions, a specialist in environmental cleaning. "It is a company with a lot of potential in a growth industry." And his latest project is a book, in which he "will share some of the business ideas that I have learned with CPD".
-
House prices rise 2.9% – will the recovery continue?House prices grew by 2.9% on an annual basis in September. Will Budget policies and ‘higher-for-longer’ rates dent the recovery?
-
Nvidia earnings: what to expectNvidia announces earnings after market close on 20 November. What should investors expect from the semiconductor giant?
