Sunday, July 08, 2007

Build Your Own Telecom

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It’s with a sense of pride that Matthew Riley announces his six-year-old telecoms company Daisy Communications boasted nearly £20m in turnover in 2006 and seven acquisitions in the past 12 months.

The firm buys communications services wholesale from network providers and repackages them for its customers, who are mainly small businesses, into a simple to understand bundle. Daisy’s customers then receive one online bill for their landline, mobile and broadband.

It’s a proposition that perhaps wouldn’t stand out from the crowd if Riley’s early business structure hadn’t laid the foundations for a model that competitors are struggling to crack.

Riley got local businesses – stationers, office equipment suppliers etc – to sell the Daisy package to all the businesses they already had on their books in return for a percentage of the customer’s bill. Riley describes the process as planting small acorns that have grown into large trees throughout the UK.

“Competitors have tried to use the same model and approached our business partners offering them an extra 5% commission, but the problem is, if they left us they’d loose the residual commission they’ve already built up with Daisy.”

Riley’s model is not the product of chance. Before setting up Daisy he’d already built and sold a recruitment company, a fibreoptic cabling firm and a telecoms consultancy.

Despite his experience of the industry, he still decided to go back-to-basics for some of his market research. “I literally knocked on the doors of some businesses and asked if they’d buy the kind of service Daisy would offer. I went back to all of those companies that had said ‘yes’ at the time – and every single one of them signed up.”

More than a little door knocking went into forming Daisy’s business plan, however. “It took three months and probably around £2-3,000 worth of man hours to put together,” says Riley.

Armed with his killer business plan and the £300,000 start-up capital he’d raised from savings and a loan secured against his home, Riley started Daisy at home in Nelson, East Lancashire in 2001. The firm then moved into a friend’s attic before making the leap into offices.

Riley has no intention to relocate. “It’s quite a run-down area – high unemployment, skills shortages. Finding the right staff was a struggle so we don’t want to loose them by moving away.”

Growth has been rapid, mainly due to the decision to reinvest profits back into the business. Not content with the past year’s seven acquisitions, Daisy is still on the lookout for similar telecoms firms to takeover.

Although Riley admits the acquisitions are a major factor in the company’s growth he stresses it wasn’t in the original business plan. “It’s just something that developed as the company grew.”

So why Daisy? Riley chose the name after a brainstorming session in the pub. “I just thought it was sounded fresh – not like traditional telecoms companies.” With an AIM stock market flotation in the pipeline for late this year, there’s still some blossoming for Daisy to do yet.

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