The light bulb moment behind LSE Group
THE boss of a major lighting group which failed four years ago has bounced back online.
David Gutfreund is now at the helm of the LSE Retail Group which is aiming for sales of £12m this year and has just moved to larger premises which he hopes will enable the business to hit sales of £30m by 2016.
LSE sells its products on a mixture of in-house, third party and market place websites, such as Amazon and Ebay. Its online brands are Value Lights and Iconic Lights.
The business, which is currently based at a 20,000 sq ft warehouse in Collier Street, central Salford, has agreed a five-year lease on 80,000 sq ft at Lyntown Trading Estate, off Liverpool Road, Eccles. It expects to add 50 staff over the next two years, taking the total to 85.
Mr Gutfreund’s former business was the Associated Lights Group, also based in Salford, which went into administration in 2010 after a lender withdrew shortly when one of its biggest customers, Focus DIY, went bust.
“My lender didn’t fancy the ride and called in the loan,” said Mr Gutfreund who saw the £40m turnover business collapse and 150 people lose their jobs.
“There were all these emotions that go with any loss, it was a loss of future security, a financial loss – it’s all of these things that anyone feels when they lose their job but for me it was more than a job, it was a business that I had been building.
“It makes you think differently. Some people say, if you haven’t gone bust once you’re not trying hard enough – that’s the US view but in this country they used to send you to prison if you went bust, that’s the culture here. It does make you aware of the risk and allow you to set your business up in a different way which is more robust in difficult situations.
“Any lender will have control over you through a debenture – or first charge – and you learn only to give the bank limited security. So you understand the real meaning of financial documents and who they give control to and you learn to play a better game. You can push lenders much harder for lower levels of security than you would imagine.”
Shortly after Associated Lights failed Mr Gutfreund set to work on a new venture after spotting a gap in the market for an online player that held its own stock. In 2010 the market was dominated by “clicks and bricks” players – those with shops and websites – and “drop shipping” sellers who do not hold their own stock but have orders sent directly from wholesalers.
He said this model gave him a price and service level advantages over these competitors. But he was aware that others would also spot the opportunity so he’s aiming for fast growth, aiming to increase revenues by around 80% a year.
“It’s more fun to aim for such targets,” he says. “It’s a sense of achievement doing something that’s worthwhile and you’re building a more profitable business because of economies of scale. For example, we now pay less than half of what we used to pay for parcel deliveries.
“Typically in a business you’ve got a market opportunity but it only lasts for so long. I thought this is an opportunity but in five years’ time it might not be there. There are competitiors and we’ve got to continue to deliver better products and petter prices in order to justify our share of the market.”
