UK: COMING UP FAST - SPARKS FLY BOTH WAYS AS MENTORS PLUG INTO START-UPS.

UK: COMING UP FAST - SPARKS FLY BOTH WAYS AS MENTORS PLUG INTO START-UPS. - A business mentor and a young entrepreneur don't add up to an odd couple, says Nigel Cope, as one brings experience and an outside view while the other provides enthusiasm and vi

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Last Updated: 31 Aug 2010

A business mentor and a young entrepreneur don't add up to an odd couple, says Nigel Cope, as one brings experience and an outside view while the other provides enthusiasm and vision.

By NIGEL COPE.

April was busy for Sir Ronnie Hampel as the former ICI chairman prepared for his last few days in office before retiring as head of Britain's leading industrial group. Right up to the end he was still putting in 7am-11pm days as ICI got ready to announce the £1.7 billion disposal of some of its bulk chemicals businesses to Huntsman of the US. At the same time, Hampel was being put through a punishing five sittings for the painting of his portrait which will hang alongside those of his predecessors, among them Sir Denys Henderson and Sir John Harvey Jones, on the walls of the plush management corridors at ICI's impressive head offices on London's Millbank.

In between all this, he was making time to help out one of his external business interests. For, in addition to his non-executive directorships at British Aerospace and Alcoa, Hampel also owns 30% of Maintel, a small, £3.4-million turnover telephone maintenance company based in Battersea, south-west London. Though he does not sit on the board, he acts as the young company's voice of experience, giving its founders the benefits of knowledge built up during his 44-year business career with the chemicals giant.

'It is not about a sense of obligation to put something back. It is just something I think I can do,' Hampel says. 'From small things, big things grow.' He also points out that getting started can be the hardest thing in business. 'For example, when ICI bought Unilever's speciality chemicals businesses, it took me five minutes with Willie Purves of HSBC to arrange £5 billion of financing. Conversely, I can remember visiting Midland Bank in 1966 and spending an hour and half trying to borrow £5,000 to buy my current house - and failing. The hurdles to getting started are difficult.'

Tim Mason, Maintel's 33-year-old founder and managing director, has got started quicker than most. Having formed the business in 1991, he has managed to accrue a stellar list of backers, which also includes Bernard Taylor, the former Glaxo Holdings chief executive and John Booth, former managing director of global equities at Bankers Trust, who acts as Maintel's chairman.

The relationship between Hampel and Mason is a classic example of how people in smaller businesses can prosper as a result of the 'business angel' involvement of more experienced figures. It also demonstrates what an up-and-coming entrepreneur can learn from a captain of industry - and vice versa.

'When I come to see Ronnie, it always feels like I have come to see the headmaster,' Mason says. 'But I wouldn't say I am daunted by him. It is more a question of respect.'

When Mason set up Maintel in 1991, he had just spent four years working as a sales manager at Lynton Europe, where he ran an eight-strong team selling telephone systems. With a degree in electronic engineering, he was always interested in the sector, with an eye to one day setting up his own business. That chance came when the opportunity arose to buy £120,000 of telephone maintenance contracts from Lynton.

Mason was lucky in that Hampel was a friend of long-standing to his parents.

Hampel was involved with Maintel right from the start but initially in the informal role of mentor/adviser. It was only when a crunch point came in the development of the business in 1996 that Hampel became involved financially. He advised Mason and his partner Angus McCaffery on how to go about buying out the other equity partner. Mason and McCaffery spent several three to four-hour meetings together, first to establish whether or not it was a good idea to buy out a shareholder, then how to raise the £1 million required. It was Hampel who suggested it would be better to appoint a middleman to conduct the negotiations and a contact of Mason's put him in touch with John Booth. At that time, Booth was in the process of stepping down from one of the top jobs at Bankers Trust.

Booth was sufficiently impressed with Mason and the Maintel business that he offered to put up £250,000. Hampel invested about £100,000 while Bernard Taylor, another friend of Mason's parents, also joined the list of backers. Although Mason asked Hampel to join the board, he decided his status as ICI chairman might prove too domineering and suggested an ICI colleague.

'One bit of advice I would give is don't just take the first cheque that comes along,' Mason cautions. 'Think to yourself: What do they want? Can I work with them?'

Hampel and Mason appear to work well together. Mason gains the obvious benefit of the experience of a FTSE-100 chairman, while Hampel gains an insight into what it is like to be starting out from scratch. For, as Hampel admits, as an ICI career man he never trod the lonely entrepreneurial path himself. He never set up a business, but he regards himself as 'entrepreneurial in spirit'.

He says: 'One of the things I've learned is that age is no barrier to imagination or success. My generation has a different attitude to things.

We are, perhaps, less liberal. We operated within a framework of custom and regulation which restricted you. I can see now that, historically, we haven't tended to let young people loose early enough at ICI.'

For Mason, the benefits of having such a mentor are obvious. 'His experience of running such a large company makes him very decisive,' Mason says.

'Things are either black or white. When you are running a small business, you can get too close to things. It is useful to have someone come in with a fresh view from outside.'

Since the buy-out, Hampel has maintained an 'arm's length' relationship with the business, leaving Mason to run it but making himself available when required. These days, he probably spends no more than an hour and a quarter on Maintel. But he says there are two points he has tried to impress on the young entrepreneur: 'The first is not to overstretch yourself financially,' he observes. 'It is vital to keep your expenses within your cash-flow. Otherwise you become a prisoner of the banks and on the road to collapse.'

The second, he says, is the importance of people. 'There is a danger in small businesses that you are not ruthless enough with people. You develop loyalties and friendships. But some people are unable to grow with the business. Sometimes, for example, the guy that ran the finances when it was a £100,000 business is not so good when it becomes £2 million. If you are not ruthless about that, they can inhibit growth.'

It is clear from the list of his contacts that Tim Mason is lucky that his family friends happened to include the chairman of ICI and the former Glaxo Holdings chief executive. He concedes that he was in a better position to get finance and advice from backers than were many of his entrepreneurial peers. But, he maintains, this need not matter. 'When we were looking for finance, we wrote to loads of people. Some we were put in touch with by people who knew them, others we did not know at all. Anyone could have done that. Just write to them, talk to them and get them keen on the business. When people have become successful, they are interested in people coming to them for help. It's flattering.'

Hampel agrees and dispels the notion that there is little in common between a huge conglomerate such as ICI, with sales of £11 billion, and a small telephone service company with only a seven-year record. 'A big company is an amalgam of small ones,' he says. 'We have entrepreneurs at all levels of this business who have started businesses from scratch, just like Tim did.'

Mason also says that emotional support can sometimes be as important as the financial backing. 'At the beginning when you are working all hours, there is no one there to say: "Yes, you are doing a good job." It is useful to have people from outside the business to comment.'

And the future? Maintel has grown quickly, doubling its turnover every year since its formation. Last year it made profits of £500,000. The company now has over 8,000 clients nationwide including Bosch, the Royal Mail and BT. Mason says he may float Maintel but points out that one of the advantages of having private backers rather than venture capitalists is that 'they are not champing at the bit for an exit'.

And Hampel? Now aged 66, he plans to take life a little easier post-retirement, spending more time with his wife and on his two sporting pleasures, golf and tennis. He is a low-handicap golfer and a member of the committee at Wimbledon's All England Tennis Club. But he will keep his two non-executive directorships and maintain his interests as a business angel. 'It is fascinating watching small companies grow,' he says.

WORDS OF WISDOM FROM AN OLD TIMER AND A NEW BOY

Sir Ronnie Hampel's advice to business start-ups:

- 'The right people are vital and there is a danger in a small business that you are not ruthless enough. Some people are unable to grow with a business and can hold it back.'

- 'Don't overstretch yourself financially. Otherwise you become a prisoner to the banks and you are on the road to collapse.'

Tim Mason's tips for up-and-coming entrepreneurs:

- On seeking funds: 'Just write to people and talk to them. Get them keen on the business. When people have become successful they are interested in people coming to them for help. It's flattering.'

- On accepting funds: 'Don't just accept the first cheque that comes along. Think to yourself: What do they want? Can I work with them?'.

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