Ian Smith is the CEO of 1pm plc, an independent provider of finance facilities to the SME sector. Today, he offers Business Leader an insight into his company, his leadership style, and why he calls himself ‘the imposter in the room’.
Can you tell us about 1pm and what it does?
The 1pm name is derived from ‘one payment monthly’, which is the clue that we’re a money lender. 1pm is a non-bank, speciality finance provider focused on lending to SMEs in the UK, and, in particular, to smaller businesses – so the ‘S’ in SME. We’re a hybrid lender and broker, so taking lending risk on our own balance sheet, but also arranging finance from other lenders.
We’re deliberately multi-product, providing all the main finance products SMEs require, namely asset, loan, vehicle and invoice finance – this range of products sets us apart.
We are currently lending circa £140m, generating circa £30m turnover, 80% of which is interest income from lending and 20% is commission income from broking. We have six UK sites and employ 190 people.
We’re proud to be providing finance to the SME sector in the UK – the engine room of the UK economy – and filling the finance gap where traditional high street banks don’t now operate as they used to.
Why is there a gap and why don’t the traditional banks serve smaller SMEs?
Traditional banks are increasingly moving to automated systems, larger deals, vanilla terms, so not geared up for ‘story deals’ or for high-volume smaller, potentially unusual deals or more complex situations.
We have real people doing the underwriting and taking credit decisions, which means we offer a traditional service; speaking with customers, visiting borrowers, working with them to structure deals.
Larger banks are very happy to lend to us to lend on to SMEs. We have nearly £200m of bank facilities ourselves, so very well-funded with operational debt – which is vital since cash is our raw material.
Tell us about the journey – how did 1pm develop?
The 1pm group is the product of a five-year buy-and-build strategy to establish a multi-product, risk-mitigated alternative finance platform. The original company relied entirely on broker-introduced deals and was engaged in quite high-risk lending. There was a need to diversify, in terms of lending product, introducer channel, asset categories funded, and debt facility providers used – in short, there needed to be much more spread in everything we do to reduce down-side risk and that is what we have achieved.
1pm is quoted on the AIM market of the London Stock Exchange, and has been since 2006, so has been able to raise equity funds for acquisitions – we have completed eight in five years – and enjoy a stable and supportive base of institutional and private shareholders.
How did you become involved with 1pm?
With experience in working with smaller, listed entities, I was asked to take on the role of Non-Executive Chairman initially and I immediately saw an opportunity to expand the business and the need to mitigate inherent risk. Having identified and executed the first acquisition, my fellow non-executives asked me to step into the CEO role to take the business forward.
I describe myself as a ‘deal-doer’ and have spent my career helping businesses transition from one stage of development to the next, and have seen all stages of the business cycle from start-up, scale-up to flotation and exit.
For me, there are only two important things in business; having the right strategy and implementing it well. Everything else flows from that. I regard myself as a strategy implementation practitioner, so designing and implementing an expansion and scale-up strategy and leading its delivery was an ideal fit.
My experience of the financial services sector is just the six years I have been with 1pm. When with bankers and finance people, I describe myself as ‘the imposter in the room’, but that gives me licence to ask the basic questions and expect a straightforward answer, which has many advantages.
How have you found being a CEO in an unfamiliar sector?
Adopting a straightforward methodology for implementing a strategy effectively is applicable to any sector, so it’s been a similar journey to the other sectors (mostly technology-related) in which I have worked.
But there are differences – I have found the absence of any real appetite for meaningful collaboration between companies in the sector frustrating; collaboration in technology sectors such as biotech, medtech and hi-tech engineering is commonplace and often a cornerstone of commercial success.
Leasing and invoice finance are great industries to be part of, but working together to modernise and innovate is not a key feature.
What I do know from working in different sectors with growth businesses, is you do need fellow executives around you who are steeped in the industry and I have been able to assemble a first-rate senior management team at 1pm who ensure we deliver on our plans and promises.
What’s important to you and what shapes your brand of leadership?
We’re not only a listed entity, but also FCA-regulated, so we have corporate governance and financial conduct standards to uphold. We’re also a commercial lender and need to be agile, entrepreneurial and innovative, never more so than when in crisis management phases such as dealing with impact on businesses of the COVID-19 pandemic. And we’re also growth-oriented in challenging business conditions. So, managing these sometimes-competing dynamics is a daily task.
I like to lead through coalition, consensus and alignment. That requires three key things; a direction-defining purpose, a binding culture and a pool of talented people who identify with both. One of my favourite phrases is ‘the culture of an organisation is shaped by the worst behaviour its leader will tolerate’. That sounds like a table-thumping dictatorship – it’s actually quite the opposite, but it is about being clear what standards are expected and where the lines are drawn.
Bringing through the next generation of leaders is also key. We have just launched a talent leadership programme for 11 selected 25 to 35-year-olds from around the 1pm group – I sometimes refer to them as the ‘junior board’ – who will deal with real business issues during the course of a year. It is incumbent on any leader, in my view, to identify and invest in the future CEOs.
What are your ambitions for the next five years?
We have ambitious plans to grow the 1pm group, both organically and through further acquisitions. So, additional scale is key, but along with growth comes further change and evolution.
As business lending increasingly follows consumer lending, in terms of customer expectations along an increasingly-digital journey, and with more onerous regulation, we need to be relevant and ready. In two years’ time we need to be bigger, more digitally capable and even more agile, without losing the traditional financial disciplines that have made us successful
And personally, with that achieved, my ambition is to hand over to the next CEO for the next phase of the 1pm journey.