What Andy Alderson did when the phone stopped ringing

Andy Alderson worked in car sales for over a decade. Then he saw where the big money was and set up Vanarama.


Andy Alderson: avoid "analysis paralysis"

Sometimes entrepreneurs don't have their best ideas until they've been running a company for a while. After working in car sales for over a decade, Andy Alderson (now 45) set up Vanarama in 2004 as a traditional forecourt-based dealership. The company was moderately successful, making enough money to justify a staff of five people. But then, in 2007, he had his big breakthrough.

He realised that the big money was to be made in leasing commercial vehicles to firms over the internet. Despite the fact that there was already a huge number of "bedroom brokers" in existence, his firm quickly established itself.

However, in 2008 as for many businesses disaster struck. The "phones stopped ringing" as demand from firms was battered by the credit crunch and the recession that followed in its wake. Luckily, a non-executive director who was advising Alderson had guessed that hard times were coming and so had forced him to draw up a list of thingsthat could go wrong, along with aplan to respond to these challenges."It was a good thing that she did," he jokes, "because everything we listeddid happen."

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The first thing he had to do was to cut back on the extra staff he had taken on during the boom period. He also realised that the only thing that he could compete on was price. As a result, he slashed his charges. It worked well, with the lower prices translating into larger sales volumes, which in turn allowed him to negotiate bigger discounts from suppliers. He also decided to keep a certain number of vehicles in stock.

This meant that he was also a retailer, rather than just a middleman between the tradesmen and the manufacturers (indeed, he is currently raising money via crowdfunding to increase stock levels further). This allowed him to complete deals much more quickly than most of his competitors could manage.

By 2012, Vanarama was the main leasing firm in the UK, employing 25 people. Alderson admits that maintaining this position "has been difficult". In order to stay ahead of potential rivals, it's key, he says, to keep "strengthening our proposition". This has involved taking stepsto broaden away from the internet by starting a franchise scheme. He also launched his first TV and radio campaign in 2013. Finally, he has sponsored the Football Conference (the tier below the Football League). These tactics have paid off, and the business is expected to produce a turnover of around £22m this year (£18m in 2014).

Alderson is not a fan of endless analysis, or what he terms "analysis paralysis". Instead, budding entrepreneurs should simply "go for it". That doesn't mean you should throw caution to the winds you need to "know your numbers". One of his biggest frustrations is watching Dragons' Den, and seeing entrepreneurs' pitches fall flat when it comes to their balance sheets.

As well as keeping track of the money, you need to "have an idea of what you are good at, and what you are not" and there is no shame in "taking advice and asking for help" when it comes to the latter, or even hiring staff who can provided expertise that you lack. Finally, don't be a micro manager.You need to "let people get on withtheir jobs and make their own mistakes".

Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

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