postgraduate students in this collaboration

Transcription of Employer video case study- Sport Kitchen- Director- Gareth Wotton

Interviewer- Susan Barnes- Assistant Professor- Post Graduate Strategy Unit- Coventry University

Susan: Thank you in support our postgraduate students in this collaboration with Coventry University, in partnership with the Chartered Management Institute. Welcome and thanks ever such a lot for sparing the time to join us today.

Gareth: No problem.

Susan: Firstly, it would help if you could start by telling us a little bit about who you are and about the organisation you representing today, and what it does.

Gareth: OK, we’re, we’re small nutritional business based in the West Country. We’ve got a small staff of up to five depending on the, the time and we make, work both bespoke and fairly unique nutritional products aimed predominantly into the professional sports market.

Susan: Wow, that’s interesting. Excellent. So you talked about being five, five people seem quite small business and so can tell us a little bit about how it started and how it’s structured perhaps?

Gareth: OK, it’s, it started quite a long time ago when we were working with some performance nutritionist delivering fairly standard nutritional solutions in the food sector predominantly aimed at recovery for sportsman and then the, the niche for a shelf stable., very quick to prepare, macronutrient partitioned mill became apparent. We developed that as we were moving on in conjunction with some performance nutritionists and then we decided to take the product to market.

Susan: Excellent

Gareth: In terms of the structure of the business where we, we run ourselves fairly lean. There are times when we do take on additional staff if the demand is there and we also use some third party suppliers to limit the amount of technology that we need to employ. In terms of the business we, we, we kind of run ourselves with… everybody does everything and then certain people specialise in certain areas.

Susan: OK

Gareth: But we’re, very we’re, we’re not, we’re not structured in the way that a big organisation would be, and that I think you’ll find it, that’s true for all smaller companies there. You need to wear many hats.

Susan: Yes, that’s true. That’s very true. And can I just check with you? Are you the owner and, and founded?

Gareth: I’m the director.

Susan: You’re the director. Yes. Yes that’s right. So just to give us, our students a little bit of flavour of the sorts of things that you, you get involved, like you say, wearing these many hats, can you just give us a few examples of what, what that might be?

Gareth: I’m predominantly involved in the R&D for MPD, you know new product development and that side of it. That, that’s where a large percentage of my focus is. But then I also contract designers where required. I look at packaging solutions. I, I cost price and project for the business or the most, while I don’t actually run the accounts of the business. We’ve got somebody else that actually, actually does that with inside the organisation. But I mean my role can be from unloading lorries, taking pallets off the truck with the forklift, working on the production line, attending sales meetings, attending design meetings and kind of just pulling everything together.

Susan: Yes, that’s really helpful. Thank you. So can you tell us about any current or potential future issues that your organisation is facing?

Gareth: While in the present climate… I don’t think…Covid itself presents a number of issues in this, much as we’ve had to form bubbles. We thought we’d formed work bubbles of like a very small team which is reduced our core team and the major impact in that is it has slowed down our production and it’s slightly increased the cost of our production, which unfortunately you can’t actually pass on to the end user, to the business has to be able to absorb that. The bigger too, I think to a degree, you know if the vaccine is successful and we, and we have a bank sale of this situation and I think, I think the biggest factor facing us as a business will be Brexit.

Susan: Right OK, can you expand a little bit more on that?

Gareth: OK, well the issue, the issue will be many fold there in terms of the supply chain that the food industry uses is, is spread across, across Europe. So there are certain products that we don’t produce in the UK I let’s say rice for instance, which are our rice comes from Italy. That’s, that’s one example. A lot of milk powders are actually produced in Southern Ireland or the Republic of Ireland. So we’ve got those kind of issues in terms of securing the supply chain, and as you know, it’s very all well and good saying well, prepare for it, but unfortunately we don’t really know what we’re preparing for. A business can prepare for anything, but it needs a certain amount of time. So that, that that’s, that’s one issue. The secondary issue is we do a significant amount of export, not particularly into the EU. This goes outside of the EU, but we have certain concerns there with our, with our distributors overseas in terms of the impact that the additional paperwork in the ports will create and the delays that that could that could create for all shipping. Whether it be EU or normal EU, it can create backlogs that, but that has a number of issues in terms of; when does the product to arrive? When does the client want to pay for it? Do we have to extend the additional credit terms to them? Will it impact the shelf life of the goods when they arrived with the client? And it’s and one of those is that, that, that, that is a major problem when you, if you knew today look this will be the situation in 12 months you can put in processes to deal with this. When you’re being told to prepare for something, but you don’t really know the criteria, that, if you were a big corporation you could cover a number of bases, but as a small company we can only cover, we can make plans, but we can’t cover multiple scenarios. So that for us is, I think that for us is probably one of the biggest issues that were, that were facing at the moment.

Susan: Yes I can imagine that is really does sound challenging because you haven’t got crystal ball and if you don’t know like you say the criteria…

Gareth:  You know, are we, would it be WTO so therefore if that is, what would be the import duties for the, for the raw ingredients that we require? What will that, how would that import our exports? If not, if it’s going to be some sort of trade deal, what’s, you know, where, where do, as a small company you’ve only got so much money that you can lay down in, in stock, in contingency. You can’t, you cannot layoff from multiple contingencies.

Susan: No, that’s absolutely true. Sorry to ask, but could you tell me what WTO is? For some of our students they might not be familiar with that expression?

Gareth: World Trade Organisation

Susan: Thank you. Yes, that’s great.

Gareth: But if you’re in World Trade Organisation, the impact on certain… For, for instance we, we, we, we use a very specific beef that’s processed and it actually happens to be processed in Denmark.

Susan: I see.

Gareth: Well I, I’m not sure exactly on this, but I believed that imported beef, if we were under WTO, would have something like a 45% import duties.

Susan: Wow. Gosh.

Gareth: So there is one scenario now, is it you, you could say, well we could say well we won’t, we’ll zero, as the British government could say, well we will zero rater, but if they do that there are zero rating it for beef globally.

Susan: Right.

Gareth: So that could be devastating for the British beef industry.

Susan: Of course yes.

Gareth: So we don’t know where, where to back.

Susan: No. That’s a really good explanation because that, the knock-on effect if you solve the problem for one type of business/ organisation it’s going to create problems for others.

Gareth: Yes, so it could completely devalue British, British, British beef producers.

Susan: Yes, yes, I see what you’re saying. Yes, goodness me and that’s just one example.

Gareth: That’s, that’s, that’s just an example of multiple of you know… yes and you know, we, particularly if you’re in, if you’re dealing with the nutritional industry, any, any, any kind of food based products. A lot of foods are, are commodities.

Susan: Yes

Gareth: So they’re global commodities. So now this is another factor that we, that we have to deal with in terms of is they’re actually valued at base in US dollars and they’re purchased, and they’re actually purchased on the futures market and therefore depending on crop cycles, reduced production levels, exchange rates, the prices of these products will, can change, and they can change quite drastically.

Susan: Yes. Goodness me of course they can. So nothing’s predictable really is it in that respect?

Gareth: No. I mean you know…. I mean, we’ve, we’ve notice recently, you know, but and on this may be more related to, to Covid, let’s say that some, some demand has dropped off on the global market. That’s actually effectively reduced prices, slightly. Very, very, very minimally, but if demand escalates, prices increase dramatically.

Susan: Yes

Gareth: You know, I mean, if you take any form of sort of like milk powder as a good example, when China had the crisis a few years ago, when the babies were being poisoned by the baby milk in China because it had a melon melamine, melamine to it.

Susan: That’s right.

Gareth: Suddenly the Chinese started to import huge amounts of milk powder because there, there, there, there the by-security of their home produced powder was no longer trusted. That pushed up milk powder prices within, within three months by 30 to 40%.

Susan: Goodness me. Yes.

Gareth: and in the raw bulk content you know, on the tonnage rate because it’s global demand and we live in a global economy.

Susan: We do. We do. It’s really…

Gareth: Forget the Europe etc. it’s a global economy and it’s a supply and demand economy.

Susan: Yes. That’s really helpful. Really, really good examples. Thank you. So yes, that, that answers that question very fully then thanks. So in your role as the director then, if we could come back to the leadership side of things, how do you use your leadership and team to move the company forward? You know, when you’re making decisions?

Gareth: Well, I, I, I’d say by, by community discussion, others might say dictorially.

Susan: OK, that’s helpful example. So have you got an example that you could share with us of what that might look like?

Gareth: We tend to have, if we, if we’re looking at the market in developing, developing products or looking to move into a new area, then will, will, will have a small team meeting, discuss it, take everybody’s feedback on it, see where we think for potential is, if everybody is of the same opinion, and then at the end of it we’ll, we’ll make a decision as to whether, whether to back the project or to put it on ice or whether to discard it.

Susan: Yes. OK, yes because I guess all decisions can’t not be impacted straight away. You’ve got to have a bit of a time to plan and obviously reacted to.

Gareth: You have a time plan and also as a smaller business you can, you can always it, you can look at something you say well, there’s a huge opportunity there, but quite potentially that it’s, it’s not a market for you to be playing in because it’s a market for the big boys.

Susan: Yes

Gareth: You know, the big corporations, the people with big money, big marketing budgets, big buying power to, to deal with. So sometimes you’re better off at identifying certain niche is that you can service well and, and you can service…

Susan: Brilliant, thank you, that’s really helpful. So again, just touched a little bit on Covid earlier, but I mean, I’m assuming that’s quite a big change, but has there ever been a situation where as a business changes occurred and, and how have you approached it? You have to change things as a result maybe?

Gareth: Trying to think of a, of some good example for you really. We had to very, very quickly moved premises a little while ago because…

Susan: Did you?

Gareth: the building, a building next door to our industrial unit burnt to the grounds, which, it was a huge fire. It was, it was colossal. I mean, I mean, it was like what kind of war zone. And there, the impacts of that was multiple in terms of the roads were closed, we couldn’t get in and out to our unit for a, for two weeks, but then we had the secondary consideration that there was a lot of dust being generated. We didn’t know if the dust contains, what is it?

Susan: Asbestos?

Gareth: Asbestos. So therefore we had to close. We had to find temporary, we had to find temporary production facilities which in the food industry is not, not easy to continue and move our business and we, we had to make that decision, well within 72 hours really and we had to put things in process. So basically it’s again, it’s a group meeting, a quick chart and it’s like well, you go find out about that, you go and find out about this, I’ll find out about that, will reconvene and will make a decision.

Susan: Yes, that’s quite a big example to be honest because that’s starting from scratch pretty much from a different building altogether, isn’t it?

Gareth: Yes and then you’ve got to go through and then you, you know, we ended up moving, regulatory councils, so we move into another area, so we had to re-register the business. We had to get all the health certificates put in place and everything like that. We had to change all of the accounts for the courier companies, the delivery companies and, and everything like that so. That was a fairly kind of, a dramatic change really, you know.

Susan: Brilliant example. I mean, I’m just feeling it there. I mean you, you talk about it so calmly, but actually there’s a lot of complexity there.

Gareth: Yes there is, but I think the other thing is, you know…I think one thing I’ve learned over many years of, of being in business is that what you have to do when you when you get a situation like that, is stop, take a deep breath, don’t put any energy into concerning yourself about any issues or, and channel the energy into actually creating a solution. And the solution may not be the right solution, but it is a solution. If you, if you, if you worry and bound around and run around, kind of like a headless chicken, you often don’t get the right decision, and you’ve wasted time.

Susan: Yes.

Gareth: You know, these things become time critical, so some sometimes, not the best decision is the better decision, if that makes any, does that make any sense?

Susan: Yes I understand exactly what you’re saying there. Yes, yes indeed. Yes, yes. I like that example.

Gareth: You might look back and go, oh you know really, maybe we should have done that, but would you, would you have got, would you have got there and how much business would you have lost? How much time would you have lost etc.?

Susan: Yes, yes. That’s, that’s really valuable advice. Thank you for that. Yeah, I understand what you’re saying. And so you’ve, well you talked about how decisions are made and communicated. What do you find at the moment are the most effective communication methods with, with both your staff an annual client group?

Gareth: With well within, within the team, it’s, it’s just a face to face, you know, very old-fashion. You know bit of paper on the wall and a marker pen and, and, and bouncing ideas. Very much so. And, and you know, having worked in, in, in many kind of industries in other ways, and bigger, I still think that that’s one of the most effective ways of, of achievement is, is interaction, you know, and I’m bouncing ideas because bouncing ideas may send, send you off in certain tangents and you know that, that’s often the positive guts of, often the positive solution. With customers, particularly customers that are further afield, it’s the meeting, such as the one that we’re doing now, you know whether it’s Skype or Teams or, or anything like that, but definitely face to face real-time communication. You know and at the end of the day, even with, with some of the some of the clients, at the end of the day, what’s achieved in a face to face one hour meeting often yields better results than multiple emails, Skype meetings etc. You know, maybe I’m really old, you know, maybe I’m a bit of a dinosaur, you know, but I just still feel that that personal human interaction in the end of the day, you know business is, is, is, is human interaction. Maybe if you are a very large corporate, it’s different, but you know, for small to medium SMES that’s definitely, that’s definitely you know what’s required.

Susan: That’s really helpful. Thanks very much.

Gareth: That also goes to meet, to working with suppliers as well.

Susan: Right.  OK, yes.

Gareth: I think that’s a very valuable fact. It’s, it’s a relationship you know.

Susan: Yes it is.

Gareth: And I mean just on that, one thing that we found is, and this is a valuable lesson, I think it business is, the is the cheapest supplier, is not necessarily the cheapest supplier.

Susan: Really?

Gareth: Sometimes costly, sometimes cost you more in the long run.

Susan: I’m with you.

Gareth: Supplier that supports you in delivers to you.

Susan: That’s a good point. Yeah.

Gareth: And he’s willing to work with you.

Susan: Yes, so get that personal relationships really important in the face to face aspect. Yes, yes, because it’s more than them just supplying you, isn’t it? It’s all added things as well.  So yeah, that’s a good example. Thanks a lot. So just on the final note then in terms of the entrepreneurial perspective, is, is, is how you manage risk and sort of what, what stops you from growing into a bigger company? Or are you planning to go into a bigger company?

Gareth: Yes. OK, so that’s interesting. Some of that comes down to desire, if I, if I think because I don’t think that within the culture of the business we, we, we, we desire to be a multinational you, you know. We like the way that we work. Yes, we want to grow the business, you know undoubtedly and we see some opportunity and we have a lot, you know, we’ve got a lot of stuff that we would like to roll out. When you talk about rolling out product timing is, is, is quite crucial. So if you’re going to launch a new product, and I think particularly if it’s a premium product, I think the present climate is a good situation, when jobs are in question and people are concerned about their financial security, that’s often not the best time to launch it.

Susan: Yes, true.

Gareth: Ok. If you were addressing a specific niche and demand is there and you can hit the curve at the right point, that’s, that’s the right time to do it. Sometimes being the first person to market is not the best timing because sometimes your building product awareness and other people will enter the market and you will lose some market share.

Susan: Yes

Gareth: That kind of answer everything?

Susan: No, that’s really brilliant, yes.

Gareth:  In terms of managing risk, there’s, there’s, there’s a number of things there. One is to obviously try and keep your business cash positive where it, where, where you can. Certainly limiting your exposure. It’s, I, I mean this, what I’m going to say now could in some ways hamper growth, but I think you always need to have in mind some sort of exit strategy.

Susan: Right.

Gareth: And I think if you’re thinking of launching products, I think the, sometimes it’s better to come to market with a, with a reduced risk in terms of the investment which… which makes the product not as profitable as it could be

Susan: I see.

Gareth: So what you do is enter the market and get the product there and test it and see the demand before you upscale stock and production and everything else which brings in the profit.

Susan: Yes. That makes a lot sense.

Gareth: If you enter the market working out basically I’ve got to have 20% on this, but I need to invest £30,000 in packaging or and £50,000 in stock, the risk, the back-end risk is too high.

Susan: Yes.

Gareth: You’re better off, you know taking the, you know, because when you buy packaging ingredients everything it’s volume related, to a ceiling. The more, you know, you buy 100 kilos or something and it, let’s say for instance it costs you £10. You buy 100 tons of it and it cost you £5.

Susan: Yes.

Gareth: Right. It won’t get much cheaper than the £5, but that’s the kind of thing. You’re kind of better off initially pay it, projecting, projecting your costs on, what you see your volume purchasing being, establishing your price points off of that, you’re taking a here on your price points on the initial seeding and launching of the product. So you get into the market, check the demand is there, build your volume and then going to margin.

Susan: That’s a perfect example. Thank you so much.

Gareth: Does that make sense?

Susan: Absolutely 100%. Yes.

Gareth: Because I think there’s a lot of time, I mean, you know, I mean, I’ve, I’ve started, you know, we started this from kind of quite limited finances when we, when we did Sport Kitchen, we’ve had other brands in everything else, but we, we did that quite limited and that’s basically the way we did it and it is, it is effective. Now some people would say no, no, you’ve got to go in and be big and bold and you can and if, that if, and if you’re successful it’s great, but if something goes wrong e.i you have a financial crisis and nobody buys your product and you’re staring it, thousands and thousands of pounds worth of stock that’s, that’s a bad situation to be in. So that’s kind, that’s kind of how we, that’s how we risk manage.

Susan: That’s a perfect sample. Really, really helpful and very detailed. So thanks very much for that. That’s just amazing. I can’t thank you enough. Excellent examples. So that draws us to the close of this interview, this chat.

Gareth: And also business ethos I think, you know, in, in in terms of, you know, businesses being more community-minded.

Susan: Yes, yes good points yes, yes.

Gareth: These are all things that they, they, they are developing, are happening and, and needs to happen.

Susan: Yes without a doubt yes that’s so true and very, very topical like you say thanks. OK then thank you again. Really appreciate that and I know you’re very busy. So thanks again for your time.

Gareth: No problem.

Susan: I hope everything goes well in the future, especially with regards to Brexit. Take good care. Thank you. Bye

Gareth: Thank you. Bye bye.