Bob Rae - BDZ Holdings

Should you ever be looking for inspiration in how to succeed at business, then Bob Rae is the person to turn to. An hour spent in his company will help focus the mind, open up new ways of thinking and re-energise the brain. He might own a Ferrari but, as he celebrates the 30th anniversary of his first company – he is on target for a budgeted £44 million turnover this year – Rae remains one of the most unassuming and modest men you could hope to meet. Privileged to undertake just the third interview of his distinguished career, Alison Dewar finds out more.

Born in Hong Kong to parents who were refugees from China, Rae’s life changed completely at the age of seven when his father died. His mother later married a serviceman and moved the family to the UK, where he attended a variety of schools, both home and abroad. A spell at Farnborough College was his brief introduction to the Thames Valley before he went on to study engineering at the University of Nottingham. His first job was as a civil engineer and, had it not been for the fact he was made redundant in the 1976 recession after just three months, it could well have set him on a completely different career path. As it was, a move into recruitment followed, setting the scene for his first business. Today, 30 years later, he is managing director of Newbury-based BDZ Holdings, the holding company for businesses ranging from property and packaging, through to music, hotels and web design. Already a member of the Thames Valley 250, this July the company moves into prestigious new £1m headquarters in the centre of Newbury.

What led you to launch your own business?

In the late 1970s, the rise in demand for people with electronic (not IT) skills was just beginning and I started to specialise. At 27, I was headhunted by a management consultancy to open a hi-tech recruitment operation in Newbury – I even had to look at the map to see where it was, the concept of the Thames Valley didn’t exist then. I set up the business in December 1981 with a colleague Bob Archibold, and within 18 months we had achieved a £1.5m turnover – not bad for the early 1980s, especially during a recession.

Within two years, we parted ways with the original consultancy. I asked the local bank manager for a £10,000 loan to start my own business and he gave it to me. It’s the first and last time I’ve ever needed an unsecured loan to start a business. On August 1 1983, ARC (Archibold Rae Consultants) was born and within six months we had £100,000 cash clear in the bank.

In the mid-80s, you expanded into training and relocation, how did that happen?

Our clients included businesses such as Motorola and Intel who were recruiting staff for the emerging technologies. The people with those skills were scarce and very often when they got a new job, they needed to move. I met someone with connections to the relocation business and saw synergy between the sectors, so we started ARC Relocation in 1984, which went on to become the largest independent relocation company in the UK with clients including Tesco, BP, Cadbury, Bass Brewers, Mobil Oil and Pfizer.

We knew that for someone needing to move, the biggest nightmare was not being able to sell their house. With initial start-up funding of £1m from Kleinwort Benson, we built the relocation business on the idea of offering equity release.

It’s a simple premise, the house is valued, we release the equity to the individual, allowing them to move and take up the new job, while the client company underwrites the deal. We then manage the property sale and often help the family find their new house too.

You appear to have the ‘Midas touch’. Have you made mistakes?

Absolutely, there have been plenty of failures. In the early days, I noticed that you never see older people working in recruitment, so I decided I had to have a Plan B and diversified into office equipment. Although I was the investor, I handed over control and the head office was some distance away. It didn’t work out and over about 18 months I lost at least £50,000, a lot of money in the 1980s and it taught me a good lesson.

At the time of the 1989/90 recession, we had offices in Manchester, Munich, London and Newbury and a huge infrastructure which was costing us half of our monthly income. Virtually overnight that income halved as everyone cut recruitment, no-one was moving employees and training budgets were cut. We had just enough to keep us going for two months and we had to close some operations. The one reason we survived was because I always believed in owning our own assets, so we were able to raise funds against assets such as our company car fleet.

How did you ‘bounce’ back?

Our salvation was to generate new ways of earning income and we launched two new businesses, Asset Management and HomeMatch, which is still a cornerstone of our business today.

Using our skill set of being able to sell properties, we went to the banks and building societies and offered to use those skills to manage their portfolio of repossessed properties, re-selling them so they got their money back. It was very successful and we worked with big building societies and banks including Britannia, Citibank and many others.

As the business evolved, we pioneered an innovative part-exchange scheme, enabling builders and developers to offer part-exchange to their buyers without any of the risk associated with operating their own scheme or funding the purchase themselves.

Over the past two decades the part-exchange model has grown tremendously to the extent it is now our core business – it will turn over £35m this year – we rebranded into The PX Partnership in January 2013.

HomeMatch, which we also launched post-recession in 1991, is an innovative service for the corporate relocation market.

It’s a fantastic postcode-based geo-demographic system which enables you to accurately identify and match the value of like-for-like homes in different areas of the country. It was way ahead of its time when we launched it and, if I have one regret, it’s that we have not yet realised its full potential.

How has this latest downturn affected you?

Because we were involved in the property sector, back in 2005 I could see the recession coming. I also knew it could be a time of opportunity, if you start a business in a recession and it survives, you will be in a great place. When it did arrive, I started looking for opportunities. In 2010, after being told about the business by an employee’s friend, I bought AirPack Protective Packaging, which produces custom-made inflatable AirPacks for fragile goods. We hope to turn over £2m this year and double it year-on-year.

The same year, one of my former bank managers came to see me to help find him a new job. When he told me about a start-up he’d been involved in which had gone into receivership, I could see the potential, so I bought it and made him general manager. Today Air Structures International uses patented rigid air technology to produce inflatable portable football goals and floodlights worldwide. We have a lot of ideas and products in development and believe the technology has huge potential to be really big in both sports and other sectors.

Where does a music business fit into the mix?

Everyone in Newbury will know Hogan Music. Patrick Hogan was a contemporary of mine and we worked together on a young musician award at Newbury Manor. which I owned. We bumped into each other again and he told me about his idea to develop a whole new musical concept in the town centre – a four-storey building with a shop, music academy and outstanding teaching facilities, a repair facility, recording studio and a space for jazz gigs. It’s a really exciting project and off the back of it Hogans has just won the Fender franchise for the region, which is thrilling. We’re just waiting to start work on the refurbishment.

Is there any connection between such a diverse group of companies?

The connection for me is that I simply want to do something that hasn’t been done before. I’m not interested in a “me too” business, if there isn’t an opportunity for you to be the very best, then don’t do it.

How hands-on are you?

Each company is managed by its own general manager who has the focus and passion necessary for that particular business. I add value through my 30 years’ experience in business, effectively I take a chairman’s role. If they need help or guidance, they come to me – I don’t go to them.

What are you most proud of?

It has to be The PX Partnership. It is the engine at the heart of the group and we hope to grow that business alone to £100m within the next five years. It’s achieved seismic change already and the potential is tremendous.

We have only 39 employees and the group is on target for a £44m turnover this year. I don’t think there is any other business in the Thames Valley which can match those numbers per capita.

Do you ever have any downtime?

I don’t see what I do as work, I see it as a way of life. I love to take my two boys with me when I travel, but the beauty of technology means I can work anywhere and can respond just as quickly wherever I am.

What’s your business motto and where do you see yourself in 10 years’ time?

To make a difference – then move on and make a difference somewhere else. Everything I do is for a reason, I’m very focused and right now it is about making a profit. Ten years from now, when the boys have finished school and university, I want to find the right project to help young people in business achieve their goals. And when I do, that will be not-for-profit – my way of giving something back.

Bob Rae: BDZ Holdings