Welcome to Growth Stories, a new series from Gazprom Energy where we sit down and speak with prominent business leaders about how they got to where they are today. From the challenges they faced to the lessons they’ve learned as they built a business, we hope you find their tales of hard work and determination as inspiring as they are insightful.
First up, we’re talking with Tom Ralston, Managing Director of Ultra LEDs and Tagra Lighting. Moving into self-employment straight from college, he founded Tagra Lighting when he was just 24 years old, armed with only minimal capital investment but plenty of drive and determination.
He has grown his employee base from 0 to 22 and has an overall turnover of £3.5m, supplying an ever-evolving lighting market and building a trusted network of global suppliers and clients along the way.
Here is his business’ growth story.
To begin with, could you tell us a little about your business? Specifically, its history and how it has changed since you first launched?
Progressing straight into self-employment from college, I started my first business at 21, which was a small-scale, buy-and-sell operation in water sports equipment. Though I was far from knowing the ropes at such a young age, the experience was invaluable, and it definitely gave me the skills I needed to create a foundation for bigger things.
Three years later, I launched Tagra Lighting, aged 24. LED technology was relatively new at this stage and so the company specialised mainly in project work, reducing the energy bills of large warehouses and small retailers.
As LED lighting became more mainstream, it was necessary to evolve in order to find a niche in the market and carve out our identity. We identified areas and opportunities where we could excel, and the business grew very quickly.
Growth is without question one of the most challenging aspects of running a business. What challenges did you face as a business leader, and what strategies did you employ to overcome them?
One of the biggest things I have learnt about growing a business is that doing too much too quickly can do more harm than good. We were growing between 100-150% in some early years, and the processes, staff capacity, and operational functionality all required a scale-up to keep in line with that growth.
For me, growth felt like completing different levels on a computer game: if I excelled too quickly, I ended up losing a few lives and having to start the previous level again! I needed to learn the fine art of balancing opportunity and risk — but this is something that only the proper experience could help me achieve.
To what extent have external factors (like changing trends, the financial landscape) affected your business over time? And what can businesses do to future-proof against these kinds of peripheral shifts?
I have always kept a decent amount of cash in the bank for any unexpected dry spells to ensure I never run too lean. It’s impossible to tell what the future can hold and how it will affect the business, but a good idea is keeping your fixed costs as low as possible. This is really important to ensure your business can weather the storm in times of change.
Can you identify three lessons you’ve learnt in your time as a business leader? And how have they affected your own role as a manager and owner?
Your business is only as good as the people who run it, so look after your staff and hire the best talent. I consider any people who work for my business very carefully. In hiring the right people, I’ve also learnt to delegate more responsibility to key employees so that I can concentrate on my own strengths and responsibilities.
Secondly, giving shares away isn’t such a bad thing. I sold 20% of shares in the early years to a private partner, and the wealth of skills and experience they've provided have been instrumental in company growth.
Finally, and perhaps most importantly, try not to let the stress affect your personal wellbeing. Taking breaks and switching off have been crucial to me being an effective leader — you cannot pour from an empty cup, so it’s essential that you balance your work and personal life properly. Burning the candle at both ends never works for anyone.
Healthy business growth often relies on several factors. What facets of business would you say have promoted growth in your organisation the most? And what should SMEs look towards to improve/develop so they can maximise their chances of success?
Slow and steady wins the race is an approach that’s been super helpful. Having robust processes and business values in place helps ensure everyone's pulling in the same direction too. Once you have those, it feels as though everything else can simply fall into place.
And employ the best people. Hiring talented people that are keen to succeed helps me let go of control so the business can scale. Some employees can only take you so far on your journey of growth.
If you’re going to deviate from your path, then reinvest sensibly and take calculated risks. Business is about taking risks to a certain degree: without investing in new opportunities, you can’t grow. But that doesn't mean that you should be reckless.
Finally, work hard! Opportunities will come your way if you give them enough chance. However, you do have to look after yourself so you can be effective in leading your business and making the most out of opportunities when they do arise.
What one piece of advice would you give to other business leaders looking to grow their business?
Keep your costs low and protect your margins. You can’t grow without healthy margins to reinvest and put into things like marketing, sales, and fixed overheads. Luckily, there’s plenty of ways to improve your margins over the long term.
For a start, look at how your turnaround time from order to delivery can be improved. Can anything be sped up, automated or eliminated to streamline the process? When a customer purchases from you, consider upselling, cross-selling or increasing your average unit of sale per customer.
Likewise, it’s worth weighing up any low-margin clients, products or services and whether you can afford to cut them. Doing so allows you to put the time and money you’ve saved back into the higher-margin parts of your business.
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If you were to start a new business tomorrow, what would you do differently and why?
I think many SMEs are keen to hit the ground running, and while that’s certainly admirable, raw energy is a poor substitute for a lack of forward planning. Like I said earlier, doing too much too quickly caused me some setbacks. Though there’s value in getting your hands dirty, so to speak, it’s not the way I’d approach starting a new business.
There has to be something guiding you towards your goals at all times, but certainly in those make-or-break early days. So, if I was starting up a new business, I would lay out the company values and key processes before I started anything else, then set myself tangible targets to work towards.
We would like to thank Tom for taking the time to feature in our first Growth Stories instalment. We hope you have found his insights interesting and helpful.
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