After travelling the world in a corporate role, Mike Wheeler decided that he had had enough of living out of a suitcase and so got a job running a small family business.
He says it was a “complete change” in lifestyle but, to begin with, he loved it. However, after a while he found the family environment difficult having come from a corporate structure and decided to try and buy the company, which sold 4x4 vehicle accessories.
Wheeler says that he had plenty of experience in acquisitions but both parties could not agree on a deal, so he decided to go it alone and Auto Styling was born in 2002.
Auto Styling, a specialist supplier of 4x4 accessories, was growing organically when, in 2004, one of the firm’s competitors, Truckman, approached Wheeler to see if he was interested in a joint venture. The plans didn’t come to fruition though, so Wheeler put his efforts into growing the business.
In 2008 Truckman, a manufacturer of hardtop units that fit on to the back of pick-up trucks to make them more secure, revealed it was experiencing financial difficulties. It had not been profitable for three years and had a “massive outstanding delapse claim” for a property it had moved out of some years before.
Wheeler decided to buy the business but after looking at the books, he reached the conclusion that "it wasn’t viable to do a straightforward purchase because of the losses and property issues”.
He then spoke to Truckman’s directors and told them that he was interested, but only if the company was placed into administration first.
“So we purchased them effectively as a pre-pack deal in April 2008. We protected ourselves from their past debts.
“Having said that, we honoured all of the orders they had in process, so we took on some debt but we couldn’t be liable for the dilapidations, we weren’t strong enough to do that.
“If we had done a straightforward purchase, we could have bought it for a pound. Because it was a pre-pack, we effectively paid top dollar for it.”
Wheeler says his only regret was not waiting as he “probably could have bought it for a fraction” of the amount he paid, which he says was “in the region of £250,000”.
He states that the reason he acted quickly was to ensure that customers did not suffer a break in service.
However, despite expanding Auto Styling with the acquisition of Truckman, sales began to drop in late 2008 as a result of the downturn. Wheeler says that the business was at risk, so he had to take action.
He asked the landlord of the Truckman site for a six-month rent holiday and eventually decided to break the lease, as the property costs, along with staff wages, were his biggest outlay.
Wheeler says that the only way the firm could survive was if Cheltenham-based Truckman was merged with Auto Styling at its headquarters in Brierley Hill in the West Midlands.
“We installed mezzanine floors and doubled the capacity of our unit by investing in the flooring.
“The payback was relatively quick. We transferred all of the production and the majority of the production staff came with us. And effectively we bus them up every day.
“This then put us back into a positive situation in terms of profitability. We had initially planned to run both businesses separately.”
Wheeler says that reducing overheads was key to the businesses' survival.
He explains that sales were still pretty flat within the Truckman division because most of the products tended to be bought by major fleets and, of course, in the downturn many companies could not afford to replace vehicles.
However, sales started to pick up in 2011 after being fairly static throughout 2009 and 2010.
Revenues grew by 40 per cent in 2011 and they have increased by another 20 per cent so far this year. Turnover in 2012 is expected to be in the region of £6 million.
Wheeler says that the ethos of the business is always to invest in it.
“We haven’t really taken profit out of the business since we started it. We’ve paid off a lot of the finance that we took out to acquire Truckman and we are paying off the leases we took to put mezzanine floors in.
“We’ve moved from having finance for the company as invoice discounting over to financing it through overdraft when we need it.”
What’s next for Auto Styling Truckman?
Wheeler says that his plan is to continue to grow the business.
His top tip for business is to always watch the costs.
“I don’t think you can run a business if you aren’t financially aware. You have to always consider both the upside and the downside.
“Businesses go wrong because people don’t look after their money.”
By Kirsty Hewitt