Julian Young: Helping firms profit from the 'long tail'

One of the big questions facing many business owners and managers is how they should run their supply chains.The conventional wisdom is that firms should have only a few key suppliers, and focus all their efforts on developing a close relationship with them.

However, Julian Young disagrees, believing that this severely limits your options. Instead, he thinks that the internet makes it much easier to have a "long tail" of suppliers and he has built not one, but two firms that help companies follow this strategy.

After a career managing logistics for the Royal Navy, Young joined recruitment firm Securicor in 1994. While there, he realised that one supplier alone couldn't meet his client's needs. So in 2000, together with Corporate Services Group (CSG), a global outsourcing conglomerate, he set up Comensura, which helped clients manage a large number of suppliers.

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Comensura grew to make £2.3m in annual profits by 2007. But CSG's role in providing funding meant Young was not the largest shareholder and he needed central approval for key decisions, making him more of an employee than an owner.

This led him to sell his stake in Comensura and strike out on his own, founding Matrix SCM (now Matrix SPS) the following year. Like Comensura, the new firm aimed to become an "Amazon for services", using the web to enable businesses to expand their supply chains.

But instead of being part of a bigger company, Young largely funded ithimself with only £250,000 from Hamilton Bradshaw, the private-equity firm founded by Dragons' Den starJames Caan. This gave him much more control over his company, especially since Caan had limited expertise in the area.

Building another business from scratch was not easy. Even though Young had an established track record and knew what the market wanted, he still had to work hard to win customers. As he puts it, "nothing gets around the sheer hard work of getting clients".

While his past success meant that he "never doubted the basic model", he admits that "when the company is burning cash, and you are cutting your salary to keep the lights on, you start to doubt things". He only stopped having sleepless nights when the firm finally moved into the black and cash flow started to recover.

A key moment came in 2011 when Birmingham Council decided to use Matrix to manage a small part of its social-care budget. After seeing "massive benefits", Birmingham increased its involvement with Matrix: the firm now manages all of Birmingham's adult social spending and some of their children's care budget.

At the moment Matrix manages over £460m of local authority money, producing £3.6m in fee revenue. Young's firm has branched out into the yacht-racing industry, helping Ben Ainslie Racing to manage suppliers for its America's Cup efforts. Despite these successes, Young admits that it is still a challenge to "persuade people that there is a better way of doing things".

Overall, Young thinks that "running a business is a journey that you learn from". In his view, one of the key lessons has been the importance of salesmanship. He warns prospective entrepreneurs that "if you are not prepared to get on the phone and visit customers, then forget it".