No matter how rich a poor man gets, his great grandson will probably muck things up, says the old Lancashire proverb. John Timpson, however, has proved the adage wrong. His shoe and watch repair business, founded by his great grandfather is thriving and, unlike most firms, has actually benefited from the recession.
Instead of buying so many new shoes, people are now more prepared to make do and mend. "Shoe repair did fantastically well, particularly in November, when the recession started to hit people, and it has kept up," says Timpson, 65, a likeable man who hums to himself "bombombom" as he works, steers clear of emails and keeps his appointments in a monogrammed leather book. But though likeable, he has fought a long, determined battle to make his £53m fortune.
By the 1960s, ownership of Timpson and ultimately, control of it was dispersed across an extended family and the firm, which then made shoes as well as repairing them, was going nowhere. Hounded by City analysts and shareholders to maximise profits, it was eventually taken over by United Drapers in 1972. Timpson's father then the chairman was forced out by his uncle. "That strongly affected my management style," says Timpson, by then a director. He decided that if he ever became chief executive, he would settle for nothing less than full control.
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
In 1983, he got his chance. On the advice of a lawyer friend, Timpson led a £42m management buyout £30m came from selling the freeholds on the firm's stores and leasing them back, with most of the rest from venture capitalists. "I wasn't rich. I had less than £100,000."
The next four years were a struggle. Cheap imports were driving shoe prices down and competition on the high street was growing. "I realised the shoe retail business wouldn't make it long term," says Timpson. So in 1987, he sold the retail business for £15m, but kept the repair side, which had by then expanded into key-cutting. By 1991, Timpson had grown through acquisitions to 200 shops nationwide, and was turning over £16m a year. But then the group fell victim to changing footwear fashions. Stilettos and big heels were out, and the dry summers much more shoe-friendly than wet weather didn't help. "It was a nightmare for shoe repair." Profits fell from £1.5m to £0.5m. But with shareholders keen to get out, Timpson finally got his chance to take full control of the company.
Mortgaging his home for £1m, he bought 100% of the firm. "It was horrendous at the time." But it paid off. In September 1995 he bought the 120-store Automagic chain, taking turnover from £25m to £35m. In 2003, he added another 200 shops, snapping up his biggest rival, Minit UK. And despite his desire for control, he's no micro-manager. "The whole secret is that we give the people in our stores total responsibility to deal with customers. They can treat our price list as a guide and deal with complaints themselves." Timpson calls it Upside-Down Management, and it clearly works turnover was £113m in the year to 30September 2008, and is heading for £150m this year. "We have the freedom to use common sense and not follow other people's rules. We do things because we want to, not because we ought to."
-
Will the Bitcoin price hit $100,000?With Bitcoin prices trading just below $100,000, we explore whether the cryptocurrency can hit the milestone.
-
Inheritance tax receipts jump 11% even before Autumn Budget overhaulOfficial figures show inheritance tax receipts are rising even before the chancellor’s changes to reliefs
