Michael Welch of BlackCircles.com - getting to the £50m sale

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Michael Welch

How would you react if you sold your business for £50 million?

Michael Welch said he was “neither up nor down” when he sold Black Circles, his online tyre ordering and fitting company, to market leader Michelin. It was only when the shareholders went out for a celebratory dinner that it struck him.

“I realised that the team of people around the table backed me when it was an idea and they’re all pals,” he told ScottishEntrepreneur.com.

“That was the moment, if you’re ever going to feel emotional about anything, you realize that we may have closed the chapter on working together at Black Circles, but the friendships will live on.”

The Liverpudlian, who now considers himself an adopted Scot, having set up his business in Peebles with a grant from Scottish Enterprise, is still only 36.

He may think his story pales in comparison to the ‘romantic memoirs’ of other entrepreneurs, but in fact it paints a vivid
picture of the hard work involved in setting up and selling a successful business.

“Graft, being enthusiastic and putting a shift in – there’s no better way to get a result. Common sense is underrated,” he
said. “There really is no substitute for experience and knowledge, you just have to learn and develop all the time.”

He started his first business at 16, selling tyres online using a website he taught himself to create. He was only doing this to make some money – he had left school and been made redundant from his job as a tyre fitter. His online savvy was spotted by Sir Tom Farmer, who invited him to come to Kwik Fit and head up the ecommerce team. When the company was bought over by Ford, Welch spent some time in Detroit, but became disillusioned with the new management and left to set up on his own again.

“Tom is the most inspiring person I’ve ever met,” he said. “I was lucky enough to get exposure to him and work with the dotcom team and Ford and Forrester Research, these were the thought-provokers of the time. But I wasn’t popular because I was questioning everything, I was always on ‘receive’ – always learning and developing. There wasn’t time to think about how cool it was, at any time someone could find you out and kick you out. I’ve been brought up to see that situation as a privilege, so I couldn’t screw it up and throw it away.”

It was an observation of Sir Tom’s that sparked the idea for Black Circles, the company Michael left Kwik Fit to establish.

Farmer knew that the biggest competition to the chain was the independent sector, which was fragmented and difficult to predict. Michael realised that if he could “make an army” out of the thousands of small garages across the UK he would be onto something, so he adapted his first business idea – selling tyres – to include fitting at the customer’s local garage.

“It was a new strategy every morning,” he joked. “You try everything until something clicks. But the culmination of all those mini-wins makes your formula and that’s when you adopt a strategy and become more consistent.

Could we have grown faster and bigger? Probably. Would we have done that to the detriment of the business? Definitely.

We’ve been cash flow positive since year one, profitable for half the period. The advisors I managed to get round the table: Sir Terry Leahy, Graeme Bissett, Kevin McDonald and Steve Pottinger in particular, all have solid business backgrounds.

Their message was always “prove the business”. I didn’t really understand what they meant until a year or so before we got there. You have to focus the mind on growth, making money, happy customers – that all made the foundation on which we can now grow.”

He credits staying in Scotland as part of his success. In Liverpool he struggled to get business support of any kind, but, having moved to Edinburgh for the Kwik Fit role, he found Scottish Enterprise to be very helpful. The organization provided him with a £1000 grant for a computer and printer and three months free office space in Peebles – it was all he needed to get started.

“I’m married to a Scot now so I’m well and truly locked in!” he joked. “We live in Edinburgh and absolutely love it, it’s a pretty special place. In Scotland there’s been a period, while I’ve been in business, where it was a bit cliquey, there was a bit of an east and west thing, but people like Sandy Kennedy and Chris Van Der Kuyl [at Entrepreneurial Scotland] have worked hard over the last few years to try and bring together business and business leaders and create inspiration. I think we have the ingredients for something really exciting.”

He remains at Black Circles and is relishing the new challenge of taking it global. Money has never has been the main motivator for him, he prefers indulging his competitive streak and mastering new skills, so is enjoying looking at non-executive director roles and other opportunities.

“Where’s there are opportunities to get involved with other businesses at an early stage then that’s exciting, I’m privileged that people would entertain my involvement and take my words on board,” he said.

“A lesson for me has been when you’re bringing together a team, you’ve got to take the opportunity to bring together the right characters, because that can last a lifetime.”

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