Surround yourself with good advisers
Reginald Larry-Cole knows all about resilience. His successful business was whipped away as banks pulled funding at the height of the credit crisis. He rebuilt, using peer to peer lending and now runs Buy2Letcars and Wheels4Sure with a combined £4m turnover.
For Reginald Larry-Cole, entrepreneurship came to him by accident. He left school at sixteen and got a job. It wasn’t until he was in his thirties that he decided to take a different path. He went back to college, trying to hold down a job at the same time. His employer was generous, but his colleagues were resentful. He started to weigh up his options.
His partner suggested he set up on his own, which would be easier to manage around his college time. He looked around for a business he could start and spotted an opportunity in car credit. He says: “There were lots of car credit companies, but they treated people poorly. Yet often the people were there because they had had some kind of misfortune – a bad marriage, a lost job. They had become prisoners of their own circumstances. They were in a situation they weren’t proud of.”
This meant these people paid extortionate rates for unreliable cars. Reginald’s premise was that he could get those with poor credit a good deal. The process would be collaborative – he would run through the costs, and potential alternatives. Then, one of his team would go and buy the car, getting the best price possible.
“We went from being a one-man band to something much bigger. In 2006, we had £1m turnover, growing to £2m the next year and then £1m per quarter. We had eight employees, four sites and were doing well. We were diligent: we didn’t want to get one over on the customer, or on the finance company.”
That all changed in April 2008, when he got a call out of the blue saying the bank was now refusing to underwrite the company’s credit. The business had no funding, overnight. Reginald tried to hold everything together: he spent the next few years speaking to 150 sources including banks, business angels and venture capitalists, getting 150 nos.
He gave up and went to work in a car showroom in Battersea, but soon realised there were plenty of people buying brand new Range Rovers for cash, even in the depths of austerity. Audaciously, he put an advert in the Sunday Times, saying he wanted to talk to someone with wealth who might be interested in a new venture. “It worked,” he says. “Twelve people showed an interest. I took the first one, and he said let’s keep it exclusive. We met the following week. Three hours later, I had funding and a new business.”
While he recognised that banks did what they had to do, he knew he no longer wanted to rely solely on them. He realised that when times got tough, they would only look at certain types of business. He learned to expand his funding base, to lower risk. He didn’t want all his eggs in one basket again. Further funding came through peer to peer lending, for example.
Reginald’s business model was simple – people lend money, they buy a car, lease the car and once the lease is over, the car belongs to the business and can be sold. The system worked and the business has been recognised widely by the industry. Fleet News, for example, recognised it as a top 50 car leasing company.
Reginald likes to see it as the world’s first car leasing company funded by people for people. Everyone else is reliant on the banks and, by extension, is vulnerable to the withdrawal of funding.
Reginald is now in the Barclays Entrepreneurs Index. He works with fifteen manufacturers (he started with one), employing thirty people across five different locations. The business is five-star rated by clients on Trustpilot.
He says: “In life, bad things happen to good people. If you miss a Sky bill and don’t resolve it in time, it can stay on a credit rating for six years. Then you can’t deal with mainstream lenders and you have to go down the sub-prime route. You can find yourself paying 50% APR, paying through the roof for a very old car, spending more on repairs. This is not viable if you depend on it for your job.”
“For us, if someone has a job and an income that’s verifiable, we run them through a stress test to check their disposable income after water, rates, mortgage and so on. If they’ve got £400-500 left, we can put them in the right car. If you’ve got five kids, a Corsa doesn’t solve your problem. It’s a consultative process. You know what you’re getting and we know who you are. We act responsibly to our investors.”
He admits he has made mistakes along the way. He urges aspiring entrepreneurs to be prepared, run the business mentally and physically before going to investors. He believes in surrounding himself with good advisers, accountants and lawyers who will tell the truth and feel part of the business. He is also careful on who he entrusts the business to: “It’s my baby, so I think carefully who I leave it with.”
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