Interesting case study on the life so far of Ten Lifestyle Management. For £300 per month, Ten - intelligent support – helps it’s 450,000 with anything they wish that is legal. Founded by Alex Cheatle and Andrew Long in 1998 and funded by angels, they let costs run out of control. In 2003, TLM went into Company Voluntary Arrangement (CVA) and costs, mainly staff salaries, were slashed. Headcount was cut from 100 to 33 and all employees earning more than £30,000 (that is per year for any footballer reading this) took a 20% pay cut.
Last year the company had revenues of £12million and a pre-tax profit of £400,ooo and hopefully growing to sales of £17million this year. TLM is now debt free and cash positive.
Turning to equity, Cheatle owns 20%, 11 members of the management 10% and over 100 angels (private investors) the balance of 70%. I wonder if these angels are the same as the original angels and, if so, did they have to invest more cash? Why are co-founders Cheatle and Long not equal shareholders? Did one put lots of cash up, leave his secure job first or have the idea? Interesting to see if they used the Equity Wheel and a business plan resource.
Already they are finding it difficult to scale this business – they have done incredibly well so far; but we are just trying to learn – but are unlikely to need to raise more equity.
After a rocky start a nice little earner but when and how will the angels get their money back? Will the company have to be sold or floated soon? And always the problem of investing in a business that does not scale but, when on the right tracks, no need for more money. Even with more investment, they are going to find it very difficult to grow.
Just amazing that 450,000 people are so busy they need their services. It reminds me of asking the wonderful drivers of Camtax in the 1980s to take the kids and au pair to the supermarket. Such guilt!!