In a recent speech to the Professional Contractors Group (PCG), legendary tire retail mogul Sir Tom Farmer warned would-be entrepreneurs against having simplistic, size-orientated goals for their businesses.
The Kwik-Fit founder may have sold a 700-branch strong tire retail chain to Ford for £1 billion in 2001, but for him size isn’t everything. He might not be Warren Buffet yet, but Scotland’s own "Oracle of Edinburgh" had this sage advice: bigger is dumber.
PCG is apparently the biggest organization representing freelancers in Europe, so it sounds like Sir Tom was preaching to the choir with his message of the importance of building businesses on a core group of key employees, and then outsourcing the rest. However, as virtually all the global tire manufacturers are now demonstrating in their collective quest to make an increasing amount of high-performance tires in low-cost countries with less human intervention, full-time employees are expensive and an inevitably long-term investment. And, as most national tire retail chains will concede, running large networks such as theirs is a similarly complicated business.
Sir Tom’s words have a particular resonance for the tire industry at large, and the U.K. business specifically, which is still built on a high proportion of family and independently run businesses. Take Sheffield-based Hawley’s Tyres, for example, the company may currently only have five branches at locations in the 50 miles around its hometown, but it does a tidy retail and inter-branch wholesale business and next year will celebrate its centenary.
Then there are the rapid advances of Bridgestone (in the last five years) and Hankook (particularly this year) in the truck tire business, both running business models which center on partnerships with independent truck tire businesses.
But with many local, national and international businesses wanting to aim for the stars – something for which they should be applauded considering the straightened times we live in – what’s the answer? Rightsizing, rationalization, common sense, whatever you call it.
Sir Tom Farmer’s comments come from experience. By the time he sold Kwik-Fit, the business had become one of the world’s largest automotive service companies with more than 12,500 people working in around 2,300 outlets across Europe. “Even in the large organization we became, there was no way that we could justify having every talent we required 52 weeks a year day in and day out,” he explains, adding that he initially resisted taking help from freelancers and consultants.
“I always thought how can they do a job for me? After all, nobody knows the job better than I know it. We found out we weren’t as experienced as we thought we were in certain areas of our business, including financial controls and, fortunately, we were not afraid to admit we didn’t have the talent or the ability or the training or the skills or the experience to run a business the size that it had become.”
Nowadays, Sir Tom advocates building a strong team of central players, who know when to call in outside support. However, there are limits: “Customer service, the human relationship that is such a vital part of any business, I would never have outsourced.” Which brings us back to square one. Finding the right people. (by Chris Anthony, editor of Tyres & Accessories)
