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Timpson Blog
There’s no single reason for splitting this business into two
Q Two thirds of my company’s revenues come from one activity – sales of a cheese – and my business partner thinks we should split this from our other food product activities so it gets the attention it deserves and we appear bigger. I disagree – won’t this just mean we add costs, become less efficient and dilute the brand?
A Your question doesn’t really give enough information. You say that 65pc of the sales are cheese, but what else do you sell? Perhaps you are in the yogurt business, or is it something completely different like baked beans or bananas?
Even though I don’t know the detail, I am inclined to agree with you. Your partner must make a very strong case before you sit back and allow him to build a second empire of overheads to control 35pc of your turnover.
Think of the situation in a different way. If you were just selling cheese and then acquired a company that brought in the new products, your first move would be to cut out their head office and run both businesses through your central overhead.
By creating a new division not only would you be adding to your cost base but you would also be making life more complicated. It is difficult to look in two directions at once.
For some years, we have been developing a locksmith service with a call centre and a team of mobile locksmiths. It is quite different from our high street business so we decided it should be a separate division. We made progress but
we didn’t make money.
Last year, we brought it under the control of our shop network, giving one of our regional managers responsibility. It has made a massive difference. We have cut costs, increased sales and made life simpler.
Unless your partner has a compelling reason to change, stay as you are. It is hard enough to make money. Don’t make the task more difficult with a complicated structure and higher management costs.
Q What is the most useful piece of business advice that you’ve picked up from a rival recently?
A It is rare for a competitor to come up with helpful hints, but it can happen. Several years ago, the chief executive of our then competitor Mr Minit (we bought the business in 2003) told me about the success of their covert cameras in a campaign to control theft. We copied their system and immediately saw the benefit.
Most of the information we gather about the competition comes from their employees, especially when their business is going through a rough patch. You can learn just as much by observing a company with problems. Staff on the front line are often the biggest casualties in cost cuts and are only too keen to tell you where their bosses are going wrong. They have taught us why it is so important to look after your good employees, especially when times are tough.
Colleagues who are carrying on the day-to-day business often have a clearer view than managers at head office – the lesson is to keep listening to your people.
