We only had one loss-making year in the last 11
American Matt Archer, born in San Fransisco and now living in leafy Cheshire, talks about how his company, ICP Networks, ‘accidentally’ became the sixth biggest networking equipment trader in the world.
In this article, you’ll find out:
- That starting a business during a downturn isn’t necessarily a bad idea
- How ICP responded to the market call to really make money
- That every successful business has its tough times
- That forging ahead in a caring way is a great way to stand out
How did your global journey start?
In 2002, during the dotcom bust, I sold my share of a previous IT business and thought it would be a good time to start another IT business, ready for the next new business wave. At this time, the marketplace for refurbished IT equipment was not nearly as mature as it is now.
In addition to that, before the dotcom crash most international business involved buying equipment from the USA and importing it to Europe. What’s more, you mustn’t forget that the web wasn’t what it is today.
We set up to sell refurbed equipment, but advertised on our website that we would buy redundant equipment. We found to our surprise that there were more companies wanting to sell their equipment than wanting to buy. This was down to consolidation in the wider marketplace, the dotcom crash and so on.
This meant that we ended up flipping the previous model of buying in the USA and selling to Europe and instead bought in the UK and Europe and sold to the USA.
We reacted quickly to this revelation and made this our model, even though it was unintended, and the opposite in large part to where we thought our model and market was or should be. We put a lot of resources into our web marketing and websites to further consolidate our position in this market, and were one of the first companies in this space.
Are you making money?
We are sustainably profitable and had only one loss-making year in the last 11 years.
What are the ups of trading globally?
It’s impossible to say this without sounding too corny, but…the best thing has been working with my global friends inside and outside of ICP Networks. Also, working hard and making sacrifices affords you a few luxuries and lets you choose to work with people you like, respect and trust.
…and the downs?
Where do I start? We’ve been broken in to five times over seven years and had the stolen equipment offered back to us on two occasions. We then provided information to the police that should have led to arrests and nothing happened.
Like all businesses we’ve had problems with not being paid and clients going bust, particularly where we’ve let one or two companies with good payment history go beyond the credit insurable limits, and they then have gone bust, but this is all part of international trade.
One particularly bad case was a $2 million deal that went south, after setting up a new purchasing company and gaining project financing. We took delivery of a small portion of the deal, $300-400k all of one product, then no delivery on all of the profitable parts we had pre sold to pay for the stock.
We had arranged a currency swap between GBP and USD at around 1.95 and the rate fell to around 1.75. With no sales to balance the purchase we lost about £30,000, just on the currency trade. Then the list price of the product was reduced by 20-25 %, meaning what we could sell them for reduced.
This resulted in having pretty much all our eggs in one basket of a reducing value product that we had far too much stock of, at a time when all of our cash was concentrated in that product so that we had a tough 6 months trading out of it.
My going global philosophy is: Things that don’t kill you truly do make you stronger; cash really is king, and expect the unexpected, particularly when dealing with 80 tax laws and 30 languages over a few different continents.
Are you expanding further?
We have physically expanded and renovated our facilities to be arguably the Greenest IT building in Britain. We are producing more than double the energy we are using. We’re leveraging our already strong web presence and have started our ecommerce arm of the business this year, which is going to be a fantastic resource for our SME clients.
Having over 20,000 networking items in stock; being housed in the Greenest IT HQ in Britain and having an amazing team (nearly 50% of which have been with the company for 10 years) meant that we were able to enter our new ecommerce market place as a leader from day one!
What’s more, expanding our business from our enterprise and corporate clients to SME businesses has been fun and exiting. It’s great to see other companies we’ve worked with recently begin to grow and expand their IT estate and locations.
Fingers crossed that the foundation for a wider economic recovery has been set and businesses in general can look forward to a little more confidence and stability. This will allow the SMEs to further invest in the staff and infrastructure they need to keep growing.
For more information, visit: www.icpnetworks.co.uk
Speak Your Mind