“Business leaders must be prepared to heavily invest”
Business Leader recently sat down with Andy Scott, a property entrepreneur and the Chairman and Founder of REL Capital.
As founder & chairman of REL Capital, a company that purchases and transforms UK SMEs, Andy has an extensive insight into how to transform a business that is struggling, into a thriving one.
Andy owns a series of businesses in the leisure, events, recruitment, property and transport industries, which collectively deliver a turnover of £25 million a year.
He made his first million aged 26 from property, and has since developed a portfolio of over 400 houses, hotel groups, nightclubs and bar chains, including 1 Leicester Square – the West End’s biggest venue.
Andy also purchases and invests in SME’s under his company Rel Capital, which in the last year has acquired six new companies operating out of Andy’s 50 employee-strong, central London office.
Can you give our readers an overview of companies you own?
We are a leading UK investment company that specialises in turnaround and high growth businesses. We purchase businesses that for one reason or another are either in decline or distressed acquisitions from insolvency situations. We roll our sleeves up, work hard to turn them around back to profit, operating in several different sectors including recruitment, leisure, haulage and entertainment. I also invest in property, my first passion, developing properties across London and the South Coast.
Can you explain your personal history as an entrepreneur?
Originally at the age of 16. I was a doorman at large nightclub to fund my studies which was great for meeting lots of different, eclectic people and I started speaking to a colleague who bought and renovated run-down houses. I have always been a grafter and was taken by the process of building something from scratch; when I was younger I rebuilt an old classic sailing yacht that I lived on while studying. I then went on and developed over 250 homes alongside building a collection of hotels but in 2008 sadly, I got wiped out by the global financial crash and lost everything. Although it led to a few depressing years, it has turned me into a better businessman in the long term. I now invest in multiple businesses across recruitment, leisure, pubs, events, property and transport sector revamping businesses from the ground up.
Why do you target SMEs for purchasing and transforming?
I strongly believe that businesses don’t fail, business people do. We purchase long standing businesses that have often made it past their 10th birthday. A tiny four per cent of businesses make it to their 10th birthday so those that do must have done something right, and often the reason they are failing are the owners or management team, who may have either lost interest, focus, going through personal problems, retiring or unable to service large debt burden. When we purchase these companies it’s because we see a resurgent great future for them and it’s always great satisfaction when we turnaround these businesses to success.
What are the main challenges in purchasing an SME?
Patience! Turning around a company isn’t a short-term project like property, instead it takes months, and years. Our turnarounds usually break even at best at the end of Year One. When investing in a business, you must be able to think and have both a short and long-term plan and if there are any bumps in the road you can’t escape or deviate from that plan. Business leaders must be prepared to heavily invest and ensure that they are prepared to build the company together with the team. Of course, it can be hard to let some of the team go, but there are important decisions to be made when buying a distressed company to bring it back to profit.
What sectors are your purchases in?
We mainly focus on leisure property, recruitment, entertainment and Pubs with around 10 companies in our current portfolio with four different management teams. I always invest in sectors that I either have a strong consumer or business knowledge in to ensure that I have the best expertise to drive them in the right direction. I also believe that these industries will always see demand from consumers in one form or another even with tech evolution.
How did it feel to make your first million at 26?
It was of course an amazing feeling to make my first million at such a young age, but I was quite reckless looking back. When I got wiped in the crash and lost £6 million, I had to rebuild my career and life from scratch – quite like the process of rebuilding a house. I worked back on the door of nightclubs, and in construction sites by day to get back on my feet. Now, I am incredibly careful and meticulous with the numbers, have very little debt, making sure that all my decisions will positively help me in the long term. I am very lucky to have had such highs and lows I feel and I’m excited to see the highs continue.
How have you grown your property portfolio?
I purchased my first property when I was 18 after being left just £5,000 by my Grandmother and I have never looked back – I definitely caught the property bug. From there, it’s grown from strength to strength – owning 8 different freehold hotels and have developed over 500 homes across the home counties and the South Coast of the UK with a total of £250 million worth of transactions. I currently have 50 houses in the planning process, which I am currently campaigning for reforms for the Government to meet its housing targets.
What are your business plans for the future?
REL is growing at such an unprecedented rate, which is really exciting. In the short term, I am focussing on my new property projects including the refurbishment of our two new Chelsea, London venues, The Pig’s Ear Pub in Chelsea, and Mare Motto on the Kings Road. Our turnaround arm is moving on nicely, with several businesses at different stages of health. For some, the current climate is presenting a foreboding future however, I am very positive and think the additional opportunities for the REL Group to develop long term.