Burnt out by big company politics 15 years ago, Andrew and Sarah Charlesworth decided to give up their salary jobs with a leading hosiery company and set up their own lingerie business: "We finished work one Friday night in Dundee after a particularly hard week and said, 'this is mad. Why are we doing all this for someone else? Let's have a look at some products and see where there is a gap in the market to do something ourselves'."
Although Andrew and Sarah both had extensive industry experience, the first few years were an uphill battle. The lingerie duo had to identify the right premium brands to work with, despite their hands being tied for the first year by contractual obligations from their previous employer. But with the cost of setting up the business and delayed payment from customers, cashflow management was by far the biggest challenge in those early days.
"When we approached our first bank, it was quite a disheartening experience," says Andrew. "They'd never even heard of Christian Dior and they showed no interest in our business plan."
He admits that it was Sarah's determination which kept them going in those early days and concedes that on several occasions he toyed with the idea of going back to a nice job with a company car and regular salary. One of their first business acquisitions was a 12-year-old Vauxhall Cavalier with 120,000 miles on the clock.
Their finances were so stretched at that stage that Andrew remembers barely having enough petrol to put in the car when visiting clients and says they initially distributed goods from their garden shed.
But nevertheless the business continued to make steady progress. In the first year, their annual turnover was £19,000, in the second year it was £48,000 and in the third year it was just under £100,000.
But the real turning point came six years ago, when they were introduced to a business relationship manager at Lloyds TSB Commercial, who immediately showed a genuine interest in their business. For the first time, Andrew and Sarah felt that they had met someone who knew and understood what they were doing and this enabled them to develop brands in the way they wanted to.
"We were given the facts we needed about financial services and products, so that we could make an informed choice – it was so different from our experience with our first bank. I honestly believe that if we had stayed with our first bank we would still be stuck with a £30,000 overdraft and wouldn't be much further forward," says Andrew.
As a direct result of their relationship with Lloyds TSB Commercial, Intimates is now providing lingerie to some of the UK's biggest retailers such as Harrods, John Lewis and Debenhams. With the help of their current Lloyds TSB relationship manager, Chris Wardle, and Lloyds TSB commercial finance client manager Jane McLeod, who have been working with them for three and a half years, they have been able to review their cashflow management strategies.
"I'd initially approached Chris about extending my overdraft facility and then he asked us whether I'd considered invoice discounting. It was such a revelation, and particularly useful for us because we source a lot of our products from overseas and have to pay all the tax and duty upfront," says Andrew. "It helped us bridge the gap between purchasing new stock and receiving payments and our business has grown considerably since we made that decision."
With Intimates distributing lingerie for international firms, such as Hanro, Spanx, DKNY and Donna Karan, Wardle has also been able to offer them financial guidance in respect of currency fluctuations when importing goods from the US and Europe. He has highlighted the problems with foreign exchange fluctuations and helped them to establish a forward exchange deal, so that they can plan their cashflow better by agreeing in advance a set price to pay for goods over a specified period.
Intimates Lingerie now has an annual turnover of £6m and employs what Sarah describes as "a family" of 35 people, including Andrew's 21-year-old son, Ben, and 23-year-old daughter, Sophie, who they hope will both take over the business one day. They attribute their success to the fact that they have always remained true to their ideals and finding the right bank with a personal touch.
"Our ethos has always been to find the right product in the premium sector and represent that brand as well as we can. Andrew lives by the saying that profit is sanity and turnover is vanity and there's no point in taking any order, however large or small, unless you're going to make a profit," says Sarah. "We are also great believers that business can be done in a reasonable way and it's not about desk thumping and voice-raising."
Neither Andrew or Sarah are the type of people to become complacent and they are working on a detailed three-year plan with Lloyds TSB. They have ambitious projects ahead, including working with a new brand and doubling the amount of Spanx business in the next three years. Ben is also managing a new online business for them and they are also hoping to open a new boutique in London next year. Finally, having rented their premises at a Kent-based business park for five years, Wardle is now in discussions with Andrew and Sarah around purchasing the freehold.
"Andrew and Sarah's journey is a true success story," says Wardle. "They have shown that with a shared business vision, passion, the right financial planning and lots of hard work, you can succeed."
To read about other businesses supported by Lloyds TSB Commercial Finance visit: ltsbcf.co.uk
Guidance for SMEs
Chris Wardle is a Lloyds TSB relationship manager and has a portfolio of about 120 clients from a cross-section of businesses: "Whether you are a construction company or a legal firm, you need to assess whether you are managing your cashflow correctly," says Wardle. "If you aren't, you could be starving your business of the oxygen it needs to survive. A Lloyds TSB relationship manager can help guide you through this process."
• The most important rule is that a business can survive without profit for a while, but it can't grow without cash.
• Build a strong relationship with your bank manager and your accountant and ensure that they work closely together – this triangular relationship of trust is very important and will ensure that you maximise your business potential and profit.
• Have a business plan so that you optimise the way your business works and plan your year. A business plan helps manage finances more effectively through the peaks and troughs.
• Are you using the right financial product to suit your business needs? For example, do you have an overdraft facility or a business loan? As part of Lloyds TSB's commitment to the government's Funding for Lending scheme, Lloyds TSB has reduced the interest rate by 1% on all approved business loan, commercial mortgage and hire purchase applications for the full life of the loan. For more information visit lloydstsb.com/finance.
• There are other financial products that may be more suitable for your cashflow requirements. Lloyds TSB Commercial Finance can pay up to 90% of an invoice sent to a customer – often within 24 hours – paying the residual when the customer pays, minus a service charge. This gives a business the liquidity it needs to manage its day-to-day needs.
• You may not need a new financial product at all. Keeping costs down, reducing the stock you hold and negotiating the credit terms you have with suppliers are all techniques for keeping cash flowing. Invoicing promptly, credit checking customers and keeping a close eye on late payments are also essential.
This content is an advertorial produced by Guardian Professional to a brief agreed with Lloyds TSB, part of the Lloyds Banking Group.
Any property given as security, which may include your home, may be repossessed if you do not keep up repayments on your mortgage or other debts secured on it.
All lending is subject to a satisfactory credit assessment.
Lloyds TSB Commercial is a trading name of Lloyds TSB Bank plc and Lloyds TSB Scotland plc and serves customers with an annual turnover of up to £15m.
Authorised and regulated by the Financial Services Authority.
The Lloyds Banking Group includes Lloyds TSB Bank plc and a number of other companies using brands including Lloyds TSB, Halifax and Bank of Scotland, and their associated companies. Licensed under the Consumer Credit Act 1974. We subscribe to The Lending Code; copies of the Code can be obtained from www.lendingstandardsboard.org.uk.
Lloyds TSB Commercial Finance is part of the Lloyds Banking Group.
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