“Getting fired was the best thing that ever happened to us”
It’s fair to say Tim Gray’s first steps as an entrepreneur didn’t get off to a flying start.
Working as Sales Director for leading UK milk transporter manufacturer Melton Tankers, Tim commanded a six-figure package.
But after the UK dairy industry was deregulated in 1989, haulier confidence disintegrated, resulting in the whole milk tanker replacement market shrinking by over 50%
Tim could see the writing was on the wall, and tried to diversify the company’s offering, but was over-ruled by the owner. So Tim began exploring a new business start-up with fellow employee Chris Imrie. A couple of exploratory confidential conversations with TCL clients were somehow leaked to the owners of Melton. Tim and Chris were called into the Managing Director’s office and summarily fired!
Broken windows and bank managers
The next day, Tim woke up with no car, no job, and a big mortgage. Surprisingly, he found the moment quite refreshing.
The same day they found and rented “a horrible but adequate building”, boasting broken windows, lots of damp, no heating, and a dusty office.
Tim rang around to get some business. The first order came from a milk haulier in the Yorkshire Dales to refurbish a single tanker. Tim and Chris both took bank loans to get them through their first job.
A few months later, Tim saw a tanker in pieces in a trailer repairer’s yard. He called the owners of the tanker, and discovered that they were refurbishing old tankers, then hiring them out. That conversation led to £250,000 ($320k) of work in the first year of trading. And there was better to come.
After a year in business, TCL moved to new premises in nearby Brighouse – five times larger than the workshop in Leeds.
Tim’s warning to his previous employer proved accurate. In 1994, Melton went into liquidation, and hauliers began to look elsewhere for new tankers. Orders started flooding into TCL’s office in Brighouse, and by the end of 1995 the business was turning over £6.5m ($8.5m).
The price of growth
But this rapid growth came with a price. Although turnover had soared, the team was working flat out, yet the business only increased profit by £2,000 ($2500).
As Tim ruefully reflects: “It was financially pointless but at least we had established ourselves.”
Something needed to change, but Tim’s prophesy was coming true. With a new deregulated market and fewer owned tankers on the road, the rental market was booming and TCL seized the opportunity.
This time Tim borrowed £14,500 ($19,000) from his dad, and bought TCL’s first old tank. The team refurbished it, financed it, and rented it out. That enabled two more tanks to be acquired, which in turn led to four, then eight, finally peaking at 280 tanks on hire by the time that TCL was sold.
This opportunity and Tim’s dad’s small loan enabled the rental business to start. This was also the start of true success for TCL, because rental was where the profit was; and it was the rental income, not the engineering work, which proved attractive to TCL’s eventual acquirer.
Rent hikes and burnout
In 2000, seeing the rapid growth and success of TCL, their landlord decided to increase its site rent by 200% overnight. The team endeavoured to negotiate, only to be served seven days’ notice to quit. As the arrangement was outside the Landlord & Tenants act, they had no recourse.
That morning, in what both shareholders saw as a serendipitous act, Chris drove into their office a different way, spotting an empty shed two miles away from TCL’s premises. Approaching the owner, they struck a deal and moved in seven days later.
But for both Tim and Chris, the landlord episode was a sobering warning, and shortly afterwards they located an appropriate site and built their own factory.
In finding a site, TCL deliberately set a ceiling on size of 11,000ft² to improve work-life balance. The new building allowed them to build four tankers per month and no more.
As Tim puts it, “the animal was now easy to feed” – with around 60% of what was built was for their own fleet 40% was sold to others.
To sell or not to sell
Few shareholders approach exit with the opportunistic flair of Tim and Chris.
Tim explains: “We weren’t approaching BCMS saying we must sell. We had already been to a number of accountants, and they had come back with a wide range of valuations. Some were ludicrously low, predictably none were ludicrously high.
“I said at the time, the only way we will ever know the true value of TCL is when an acquirer is sat there, with a cheque book and pen. Even then, it isn’t sold till the seven digits appear on the bank statement.”
“Just because we go through the process doesn’t mean we will choose to sell. But it does mean we get the truest valuation we can get on the worth of the business at that point in time. As far as I can see there is simply no other way to do that.”
The catalyst for exploring a sale was Chris’s health. Both his father and uncle had died relatively young, so Chris had been clear from the outset he wanted to be retired well before he was 50. As Chris puts it “I didn’t want to work myself into the grave.” Tim didn’t want to end up working on his own, so a full exit was the most attractive option.
Deal or no deal?
Eight months after BCMS was appointed, the deal was done.
The final acquirer surprised both Tim and Chris. Tim recalls: “No one else would have thought of putting us together with the company that bought us. Our buyer, Gordon Turner the MD of Turners, had a penchant for rental businesses. He saw the opportunity at TCL, and ultimately outbid all the others.”
But it wasn’t quite that straightforward at the time. The first offers all came in by 10 am, and by noon, Tim had sent an email to all three, effectively thanking them for their interest, but making it clear that the offers were simply too low.
Then in an unexpected twist, Gordon Turner rang up expressing concern, genuinely believing he had made a really good offer. Tim and the BCMS Deal Leader jumped in a car to meet Gordon in Glasgow. In the conversation that followed, it became clear to both parties that there was a simple misunderstanding about the performance of one division of TCL. When it was explained and fully understood, a revised offer was made, and the deal agreed.
Life after selling up
On 20th May 2008, Chris and Tim were sat in the office watching their online bank statements. A few seconds after 11.30am, a seven figure sum dropped into their bank accounts, and reality hit home.
It was a strange feeling, akin to sending a child to university,” Tim remembers, “They’ve grown up and left you, and you’re not responsible in the same way anymore.
After staying on for 18 months after the sale, Tim left TCL, “as I found it difficult working in a large operation, (Turner Group of Companies), having to obtain permission for most of my deals!”. He then spent 12 months doing very little commercially. He and his wife had always dreamed of buying a farm overlooking the Cornish coast, with an art workshop for his wife, and a mooring on Helford River.
When it came to it though, neither of them wanted to leave their parents. Instead they stayed in Yorkshire, and bought a large Georgian mansion instead.
Tim bought a 46-foot yacht in Greece, and began exploring the Mediterranean. He also obtained his Association of Racing Driver Schools (ARDS) qualification at Silverstone and now instructs at motorsport events all over the country.
Tim the entrepreneur could not stay house bound, or even cockpit bound, for long. A customer approached him wanting to acquire a tanker on lease purchase. Tim found himself back into business, and now has 57 vehicles on lease purchase, offering a cradle-to-grave service, finding and leasing tankers to individual client specifications.
Chris got to retire before 50, and he’s delighted with the change of lifestyle, and improved health. He and Tim see each other three or four times a year, and Chris has built a property portfolio, which provides an income without undue personal involvement.