You’ve heard many sad tales by now about business victims of recession, but what about launch successes in that time? What about John Savage who, with a mortgage to pay and a third son, Jack, on the way, quit his management job during dodgy 2011 and, at age 31, lit a Flame – Flame Heating Spares, a company whose annual turnover after three years is now at £1.4m, and all achieved with a team of 11 working from three centres?
From 200,000 parts in stock, the firm’s counters at its outlets in Gateshead’s Team Valley, Durham and South Shields supply trade and retail customers with replacement parts for all domestic and commercial boilers, heaters, catering appliances, warm air units, gas and oil burners including heating controls, combi boilers – also UV cylinders and solar equipment in a growing range of new and renewable technology.
The company mainly supplies engineers, gas suppliers, large contractors, utilities like British Gas and Scottish Power, but also some consumers directly online and through a little marketing. It has also got onto the preferred supplier list at Durham County Council and is in talks with South Tyneside Homes. “With stock readily available on the shelf, we’re going to approach all the local authorities,” Savage says. “They’re being more sympathetic towards local businesses now.”
Could this rapid success be the manifestation of an MBA? Hardly. Savage left St Wilfrid’s College in South Shields at 16, having been neither “interested nor drawn into it”, and indeed with no outstanding grades. “When I left I still didn’t know what I wanted to do in life,” he admits. Initially he went on the dole. He announced at his weekly obligatory encounter for job allowance that he didn’t want to work anywhere for less than £100 a week. In his heart, and his innocence, he wanted really to run a business of his own.
Bless them, the placement people steered him towards the interview for a job as a £120 a week management trainee at Plumb Centre, the nationwide supplier of plumbing and heating products, which had just opened one of its 490 branches in his home town of South Shields. He got the job and at 17 was working in the warehouse. “I thought that great at first, but then truly hated it for two years, until I found I actually liked dealing with customers on the trade counter.”
His first management role came at 20. His personal amity, knowledge, experience, and sound relationships, cemented over years through providing good service, took him upwards in two national businesses, then finally enabled him to set up a business along with a former boss turned personal friend.
“I could have tried anything, truth known. But I’m pleased I’ve stuck to what I know. You feel you know a lot. But you learn even more once you’re having to do everything from sending a letter to chasing debt. Previously that was all done for me in back office, though I had experience in running it, and in employing and managing staff.”
His experience at Plumb Centre was complemented by years at Plumber Trade Supplies in Sunderland, where he built strong relationships. “I had a great career, mind, at PTS. I was branch manager for four years. I got well looked after, had a good boss and a great team. But I thought while still young enough I’d try to set up for myself.”
Did he start at the right time, then? Savage laughs. “If I’d started 10 years earlier I’d have made a lot more money by now!” However, he contacted his good friend and former colleague Gary Riseborough, with whom he’d worked for 15 years, and who in fact had been Savage’s immediate boss before setting up his own heating company. Together they had nearly 50 years of experience to put into their venture.
“We had a good chat about setting up together. We agreed: ‘Let’s just go for it.’ People thought us mad because we were right into the recession. All was doom and gloom. But I never read the newspapers or watched the news. I just went ahead, doing what I wanted to do. You need a bit of cockiness and self-belief.”
They opened their first unit at Perth Court, Team Valley, in 2011. Kathryn, his wife from Horsley Hill like him, thought him crazy at first, giving up an area manager’s job. “But deep down I knew it wasn’t what I wanted to go on doing. It was bit of a rocky road to start with, but I knew what we wanted to do. Gary and I put a business plan out there and stuck to it.
In 2013 both the trade and North East business generally were surprised – but not Savage or Riseborough – to learn that one of the top independent builders’ merchants of the region, the Sunderland based A Thompson & Sons and sister company TAPS, had collapsed under two years’ losses. Managing director Anne Ganley, business award winning daughter of the
firm’s founder Albert Thompson, had hoped to save the operations. But a winding-up petition from HM Revenue and Customs forced administration.
Weeks later KPMG administrators announced the sale of the businesses and certain assets to Grafton Merchanting GB Ltd. Savage, who’d had dealings with Thompsons, says that although unpaid tax appeared to force that closure, goods in his view had been sold too cheaply there. “When we first opened we were always coming across various prices.
We felt they were selling very, very low, knowing what the costs were. I think that was certainly detrimental.” Flame Heating Spares did pick up a little business as a result. “But I like to think we were already pretty well established by then.”
Ironically, the administrators tried to keep Thompsons trading initially but found stock levels so low that after two days’ trading just £12,118 was taken across the firm’s stores
and a deficit of £5,000 was recorded over that period. Debtors owed £1.59m, fated not to be fully recovered.
Undeterred by bad news from any quarter, Savage opened a second outlet at Dragonville Industrial Estate, Durham, then recently a third at South Shields, where he has lived all his life. This year the firm will expand further, with Stockton, Newcastle and Sunderland all being considered for the next couple of openings. “It depends where we find the right person to run it,” Savage says. “If things go well from there we might move beyond.”
The hardest part of setting up, he found, was getting established and making sure the business grows. “That’s ongoing. Raising finance also. I spoke to a lot of owners with their own business in my industry. It was amazing what doors and opportunities opened up. Some became clients.”
While there’s no fat evident on the bone, there’s clearly a structured organisation and innovative thinking guiding it. Fittingly for hard times, the Flame was lit for a mere £80,000, with Savage and Riseborough, who is sales director, putting in £10,000 each, the balance coming from a local private investor. That has become the pattern. Each location has an investor director, someone perhaps working in the area already with experience. “It works very well both ways,” Savage says.
The only state support was “a little funding” through Business Link for Flame’s e-commerce website. “Unfortunately,” Savage recalls, “the company we used went bust so we had a lovely website we didn’t know how to use. There was no-one to phone for any support. But at least we’ve got a presence online.”
Better presence online, more branches and the hire of two apprentices and perhaps a spread into commercial piping are the immediate intentions. “Our website doesn’t reflect our business in total at the moment. I’d like to incorporate our financial incentives on the site – all the kind of stuff reflecting the full service we provide. We want to make it mobile friendly too.”
The financial incentives extend both to industry and domestic customers, for while a lot of its supplies reach the general public through the former, domestic buyers have been increasing all over the country via the internet.
The critical third year for a start-up has presented no concerns but, then, there is never a shortage of work for plumbers and heating engineers, and therefore for heating parts suppliers either, especially as demand is well spread over the year – summer time for schools work, for example, and winter for domestic jobs. Even as we talk, the temperature is dropping, the phones are ringing.
“It’s exciting times at Flame, and I’m delighted to be part of the business,” says Gary. From John’s position too, mortgage concern seems a thing of the past now. Little Jack is three happy years old and life is good for brothers Keiron, 14, and Daniel, seven, too. Even Kathryn must surely feel John jumped in the right direction, showing that it’s an ill recession indeed that blows no-one any good.
And if it does mean him working an 11 hour day during the week, and an emergency callout some Saturdays, that surely suggests a business continuing to move in the right direction – and especially if housebuilding continues to pick up.
Little things mean a lot
At a time when interest charges remain low, Flame is devising new services, selling new products and making financial offers other merchants don’t. “Through finance, we’re helping local engineers to run their businesses. I think we’re the only ones in merchant trade, definitely within the North East, offering financial support.
“If a customer’s boiler breaks down, and the parts are obsolete meaning a new boiler and an unexpected cost, our finance can help. We can spread costs over 12 months, interest free. So, indirectly, we’re also helping people to replace old or broken down boilers in their homes.
“And, by enabling home owners to apply directly now for finance, the service helps improve
the warmth in their homes on reduced bills, simply by delivering improved efficiencies similar to those available through government funding schemes.
“We’re doing this because, as the Government has rightly identified, too many homes are running on inefficient boilers, many of them nearing life’s end and costly to replace. We’ve been finding that the public see some funding schemes currently operating as complex and daunting.
“Our aim is to provide a simple service at source, making the process easier and quicker. Working with many people in the trade across the region, we’re also able to help home owners find a reliable installer in their area.”
There’s a rental service for the engineers too. They have to use a flue gas analyser to commission boilers, once installed. The instrument needs to be sent yearly to its manufacturer for calibration, which can mean a period with no analyser – in other words, downtime. They can hire a temporary analyser from Flame.