Rachel Hannan became a millionaire at 36 after selling out of her recruitment business. Now she helps other firms grow. Lizzie Murphy reports.
IT wasn’t long after Rachel Hannan sold her share of the executive recruitment firm she co-founded that she found herself at a loss in front of the 2011 census form.
“You had to tick a box to say whether you were employed, self employed, unemployed, retired or a student, and I didn’t fit into any of them,” she says. “I remember thinking: ‘Who am I now?’ Going from working 80 hours a week to nothing is a massive mindset change.”
After a brief hiatus, Hannan decided to try angel investing. At first she invested as part of a group but, as her confidence grew, she ventured out on her own.
In the last five years she has invested over £500,000 across 12 businesses in a range of sectors from medical devices to food manufacturing and even a music festival, although she admits that was a mistake. “I allowed myself to be carried along with the enthusiasm of other investors,” she says.
Hannan, 43, now only invests in industries in which she has some knowledge and where she can add value.
Her latest investment is Leeds University spin-out company The Real World Group, a leadership diagnostics firm where she is now chairman.
She is also non-executive director of North East recruitment firm Exclusive where she created a new business model, a partnership approach where the recruitment consultant is embedded within the client organisation.
She says: “I remember sending the MD an email, not long after I’d invested, called Project Disruption’. Our first client was one of the North East’s largest employers, which was brilliant.”
Hannan estimates that she has mentored about 100 small business owners in the last five years, many for free. She is part of accountancy firm BHP’s consulting team and chairman of Leeds Community Foundation. She is also on the board of Bolton University, an entrepreneur in residence for Connect Gazelles and is on the steering group of Forward Ladies.
“I don’t know how many hours I work now - it’s definitely more than what most people would call full time - but I have an inability to say no,” she says.
Hannan recently made her debut in property development with her first project of 10 starter homes completing in December last year.
She is now in the middle of finalising her second and third projects where she is funding the land purchase. “I wanted to diversify my investments and I did a lot of research,” she says.
Hannan believes she is often underestimated but says a determined streak is something she has always had. “I did five A-levels and I remember the teachers saying ‘you’re not going to have any free periods, are you sure this is a good idea?’ I just thought ‘There are extra slots in the timetable, why not?’”
She went on to study English language and literature at Newcastle University before returning to her home city of Leeds to embark on a career at accountancy firm Coopers & Lybrand. She left before taking her exams. “I’m a failed tax accountant because I walked away,” she says. “But it was braver than staying.”
Hannan fell into recruitment by chance. With aspirations to be a journalist, she took a job as a writer at Harrogate search company GNW Executive Search but soon switched departments after seeing how headhunting worked.
She went on to work for large accountancy agency HW Group in Leeds. “It was very fast paced and very sales-driven but I learned that the way I sell is by doing a good job and building a reputation for quality,” she says.
Following the merger of Coopers & Lybrand and Price Waterhouse to create PwC, Hannan saw an opportunity to rejoin her old employer at a time of rapid expansion.
Its main growth area was in the public sector. “For me that was a really big opportunity,” she says. “Part of the reason I worked such long hours was because I wanted to find the absolutely best person for those director roles. They make a real impact on the communities they serve.”
After spending some time in corporate finance, Hannan moved back into global HR consulting but when that part of the business was sold, she decided to make her entrepreneurial debut, jointly setting up public sector headhunter GatenbySanderson in Leeds in 2002 with her former colleague, Graham Goodwin.
The launch of GatenbySanderson disrupted the market, which then consisted of a small number of established players. “We were constantly looking to innovate in terms of what we offered clients and we invested a lot in technology as well,” says Hannan.
The firm, which had 90 staff at its peak, opened offices in Leeds, London and Birmingham. By the time Hannan sold out of the business, turnover was about £24m with a net profit of just over £4m.
She decided to sell out of the business in 2010 before the recession hit the public sector. The deal made Hannan a millionaire but she insists money was not her motivation for growing the business. “I wanted to show that things could be done differently - the financial rewards are a nice by-product,” she says.
She lives in Leeds with her partner and says her one luxury is her red Aston Martin DB9. “Sensible folk would tell you that you shouldn’t use an Aston for your every day car,” she says. “My view is: why would you go out and drive something else when you’ve got that sitting in your garage?”
Looking to the future, there are ‘loads of things’ Hannan still wants to do. “I think the important thing is never say never to anything because you just don’t know what opportunities are going to come up,” she says.
Rachel Hannan Fact File
Title: Business adviser and angel investor
Date of birth: June 4, 1973
Education: Prince Henry’s Grammar School in Otley; English language and literature degree at Newcastle University
First job: Paper round at the age of 12
Favourites holiday destination: Florence, Italy
Favourites film: Gladiator, or at Christmas It’s a wonderful Life
Favourite song: Proud Mary, by Tina Turner
Last book read: Jack: Straight from the Gut, Jack Welch’s Autobiography
Car driven: Aston Martin DB9 – in red
Most proud of: My amazing, supportive family and friends