Learning lessons from having recession claim a business

He talks about his experience of building up a company only to see it crash down around him with brutal honesty, demonstrating his passion for the business and his gut-wrenching sadness at how it ended.

"It's been a very sobering experience and you feel very lonely with it," he admits.

Mr Firth had grown wine merchants Playford Ros from a 3.8m turnover to 5.4m, selling imported wine to 700 customers including Manchester City Football Club and rail operator GNER alongside hotels and restaurants. It employed 29 staff at its headquarters in Thirsk.

But in June 2009, after a series of cash flow problems, the company was put into administration and subsequently sold to a competitor.

Mr Firth has now set up a new wine business, putting into practice the lessons he has learned from his past experience.

He joined Playford Ros as sales director in 1991, working alongside owner Nigel Munton. In 2002, after rising to the post of managing director, he completed a 1.8m management buyout of the business.

"It was heavily geared and charged from the start because we had an overdraft and invoice finance. It's good if you're growing a business quickly but once it starts to level out it gets expensive," he says.

The bank was supportive at first, increasing the business's overdraft and lending more money but by February 2008 the world economy was becoming more uncertain and money was increasingly tight at Playford Ros.

The company was put under the scrutiny of the bank's special situations team and it appointed a temporary financial director.

Mr Firth says he remained optimistic that the company would pull through. "I genuinely thought we would resolve the issues and keep the bank happy."

But during 2009, the bank became reluctant to lend more money and wanted further security for the company's debt.

"It became a situation where we weren't going to get out of it," says Mr Firth. "I worked hard on saving the company and it was very stressful." He adds: "I knew about two weeks in advance that the business wasn't going to survive and the accountants said they wanted to try to sell the business on the quiet. It was almost surreal, really. Things were happening that I had no control over."

The business went into administration in June 2009 and Hull wine merchants House of Townend bought the company the same day.

Mr Firth stayed on at the firm but only lasted a week before he resigned. "It is very difficult to go from being the owner of a company to having to follow somebody else's orders," he says. "It is gut wrenching to let go of something you have built up for such a long time."

Mr Firth has now set up a new wine business, Firth & Co, supplying upmarket hotels and restaurants.

The company is predicted to turn over 300,000 in its first year. "It's just me now, driving a van, meeting clients and delivering the wine. I'm now doing what I always wanted to do and just working with the top end clients," he says.

"Playford Ros grew too big. My target for this company is about 1.2m turnover and five staff."

Looking to the future, he says: "Business people are programmed for success. Some people don't recover from failure but hopefully I will."

FIVE TOP TIPS

The top five lessons Andrew Firth believes he has learned from his experience

Employ good financial, operational, and sales directors. Don't take second best.

Don't make the mistake of believing the banks are your friend.

Don't be reckless with debt.

As the head of a company, don't believe you can do everything. Do the things you are really good at and let other people take care of the rest.

Stick to your core market and don't try to build the company bigger than it needs to be.