Dealer Profile: Brigg?s Bang Theory

Although Martin Briggs may aspire for MCB to be as sleek and sexy as a Jaguar dealership, it does very nicely at the Skoda end of the scale, says Drew Cullen

Martin Briggs is the owner of MCB Computing ? a #1 million computer retailer and assembler in North Wales ? and financial director of the 25-strong Network Buying Group. He is 47 years old and married to an Inland Revenue tax inspector. They have one daughter, aged nine. Briggs intends to vote for the Monster Raving Loony Party at the general election.

After leaving school, I spent a year out working the Pontins camps as a disc jockey and entertainer. I even did a couple of recordings for Canadian radio stations. This should have been my career, but lack of money and parental disapproval forced me into a proper job. I spent the next 13 years working in accountancy, first in Bournemouth and then in Liverpool. I felt trapped ? I never wanted this as a career and I copped out of doing any exams.

I got into computers in 1980, when my employer, Bailey Page, decided to computerise the practice. At the time, the only vertical market package was CSM (recently bought by Pegasus). We decided we could do better ourselves, and I took on a freelance software programmer to write our own software. This provided my escape route. The software led to the foundation of Business Information Systems, which I set up with Frank Brown, the freelance programmer.

Today BIS is one of the market leaders in systems for accountancy practices and Frank is still very much involved. This was my first selling position and I was bloody brilliant. In three years we grew the company from nothing to #500,000, which wasn?t bad for the early 80s.

By 1985, it was the trapped scenario all over again. There were minor differences of opinion over the future direction of the company. I couldn?t see myself selling one accountancy system for the rest of my life. I was bored. So I decided to set up a PC consulting practice. This was very successful for three or four years, and I had customers all over the country.

But as the price of computers fell, it became harder to find people willing to pay a couple of grand for advice when the kit was only #1,500. They could afford to make mistakes. The writing was on the wall for the consultancy. But there was clearly plenty of business in selling computers, and I decided to get involved.

In 1989, I opened a very small shop front and started flogging Amstrad kit. But I had jumped on a dead horse ? Amstrad was a dying brand by this time. So shortly afterwards I decided to start assembling my own PCs. Retail was a complete culture shock. I had been used to dealing with small and medium companies with my consultancy. I was now thrown in at the deep end, dealing with what Compaq calls micro-businesses ? which is quite an insulting term, if you think about it ? and also consumers.

I quickly discovered how snotty customers can be. And this hasn?t changed that much over the years. We still get customers saying ?I want a computer?, but they don?t know what they want it for. The level of ignorance and fear of computers is still very high.

In the first year our profit from the retail side outstripped the last year of the consultancy business. This wasn?t due to any particular skill on my part ? 1989 was the ultimate time to get into the market, and we were the only computer retailer for miles around. Our catchment area extends 20 miles north into the Wirral, 15 miles south, and stretches out 60 miles along the coast to Anglesey. It?s not unusual for customers to drive 30 miles to visit us.

We don?t sell purely on price ? you won?t last long doing that. We offer a mixture of price, service and longevity. MCB is the longest established retailer/assembler in the area and we are a name here.

We strive to do everything professionally ? it means people come back to us. Year on year, the numbers of machines we have built has grown, and our only competition has been other local PC assemblers. By 1993 there were six local rivals, now it is down to two. Dell, Gateway and Viglen do not address our market.

The major retailers undoubtedly take business away from us. Chester is about six miles away and it has Dixons, Virgin, Currys, Comet and Toys R Us. We have not cracked how to get business away from these companies.

Local radio is our prime marketing spend, backed by advertising in freebie newspapers in the area and bi-monthly mailings to all our customers. We also sponsor local community activities such as the children?s workshops in Theatre Clwyd. Conversion is never a problem ? without exaggerating, 80 per cent of all the people who walk in to our shop wanting a computer will buy a machine from us.

Many big companies believe that dealing with micro-businesses is unprofitable. That perception is totally wrong, but long may it last ? we owe our biggest revenue generators in absolute and margin terms to services, support and ongoing sales to our micro-business customer base. It is very easy to sell service to micro-businesses ? unlike the consumer sector, where it is virtually impossible. We will provide maintenance contracts if required, or telephone tech support, and we have repair facilities.

Hardware and consumables are our major focus, but we also sell off-the-shelf applications such as Sage Sterling and Datafile, and Works and Office.

We have also had a flirtation with computer games ? if I could isolate any element of the business that has lost money, it is games. However, there is a below-the-line aspect of getting people in to browse the titles. Lately we have focused on budget CD-Roms which are selling through quite well. This is the right price range to be a total impulse purchase, and more to the point they are profitable. People who spend a tenner on a CD are unlikely to complain if it is not what they expected, whereas customers who spend #30 to #40 on a computer game will do everything to get their money back.

Last year we stopped selling all consoles to concentrate purely on PCs and allied products. You might say that we missed out on a boom for Sony Playstation, but I say turnover is vanity, profit is sanity. There was no money in consoles for the independent dealer ? which is fair enough.

It seems eminently sensible to me that the manufacturers give better terms to multiples than to local dealers. There are so many whinging independents ? they are living in cloud cuckoo land if they think they should get the same terms as the multiples.

Independents need to be totally flexible if they want to stay in business. We start off every year with a mission statement, within three weeks it has changed and we will change it again the following month. We are totally driven by the market.

I am also a great believer in any co-operative activity with other dealers which will help the independents survive. Not everybody shares this view. Over the years, I have approached every assembler in the area to see if we could work together in some way, but they were all deeply entrenched in their own businesses. And look what?s happened ? four have gone to the wall.

Independent dealers need a trade association. In the early 90s, the National Association of Computer Retailers (NASCR) did a good job, but it has totally lost its direction in recent times. It is trying to be all things to all people and failing to seriously address industry issues.

I am a member of the Personal Computer Association (PCA), which is now the trade association for the computer industry. Whatever you think of his opinions, Keith Warburton, the PCA?s executive director, has done a sterling job.

I am relaxed about the European CE legislation. I don?t believe we need to have our machines CE-tested as all our components qualify and we use our best endeavours to make our machines comply. The proposed European warranty legislation is a much bigger threat. This could cripple the sector of the market we operate in.

I fear that the EU will not listen to our representations. The day it introduces this legislation is the day we withdraw from retail. Currently our business is split 60:40 between retail and micro-business. But our profits are 80:20 in favour of micro-business. So until this happens, we are committed to retail.

Many of our small business customers originally walked in because they wanted something small, like a mouse mat. MCB is actively involved in the Network Buying Group. This was conceived on a drunken evening in 1994 as a buying group to get the best possible deals in the market. Ingram Micro is our preferred supplier and it takes us seriously.

Collectively we have much more negotiating power than we do individually. But gaining a couple of percentage points is not the only incentive to joining Network, which has evolved as an open forum to exchange ideas. This is the most valuable aspect for many of us.

We meet every couple of months and go around the members? shops. Nicking your colleagues? best ideas is a good way to grow your business.

You can feel very isolated as an indie, but with Network you know you are not alone. Network started off with eight firms and is now up to 25 ? and a couple more are joining at the next AGM. Network has to keep growing, but it will continue to do this slowly. Prospective members must produce a full set of audited accounts and they have to commit to a percentage of their spend with our preferred supplier. Many companies find this objectionable, and I can understand why, but we have no intention of changing this policy.

I believe that the market is now ready for a franchise dealer scheme. There have been some in the past, like Calculus, which failed because it was too early and because it was run by a distributor ? the now bust ZCL. Distribution and retail are totally separate markets. Now we have the Hewlett Packard Office Centre, which is totally ill-conceived in my view. It does not offer anything, I am distinctly unimpressed.

I have heard that Compaq is introducing a scheme for dealers, but I don?t know the details. There is definitely room for a franchise network.

One of the major problems for independent retailers in expanding is to ensure continuity of product, supply and presentation ? like McDonald?s or Marks & Spencer. The computer industry is prime territory for a company that could deliver this.

I assemble PCs, because the margins are better. There are many companies offering to build PCs for independent dealers, but the quality, without exception, is unacceptably low. We have tried out two companies. With the first, we ordered 20 machines, 18 of which were dead on arrival. The second company was not quite so bad, but its DOA rate was still in excess of 50 per cent.

The only way the figures stack up is if the machines can be delivered straight to the customer. The moment you have to open the carton to test the machine, then it is cheaper to build yourself.

Microsoft and Intel are the only brand names that matter with my customers. We have never bought Microsoft software through the authorised DSP channels, because it is too expensive ? about 30 per cent more than the legitimate grey channel. But Microsoft is very heavy-handed: last year it told one of my customers that the software he had bought from me was illegal, even though it was a legitimate, but grey, OEM copy. Microsoft promised me an explanation, but this is still not forthcoming. It obviously knows that I do not have the resources to take it to court.

Naturally, I would like to buy software from the DSPs, and I am prepared to pay a slight premium to get kosher product. But the differential is too great. The DSPs are taking positive action by bundling MS-products with components such as memory or graphics cards, and this is effectively bringing down the price of the software.

Intel is the only other brand our customers ask for. The company has done an incredibly good job of marketing its product, and I am happy to ride on the back of this. Why try to sell AMD, Cyrix or IBM when Intel does the selling for me? Intel MMX is now flying out of the door, purely because of the television advertising.

MCB has eight full-time employees and two-part timers. I have one full-time assembler who can comfortably put together and test four machines a day. At the moment, we are averaging 60 sales a month. MCB has always been cash positive, but I would not refrain from expanding. I just haven?t found the opportunity yet ? maybe I have been blind. There is a book by Michael Gerber, called The E-Myth, which says the great mistake for entrepreneurs is to work in their business when they should be working on their business. In order to expand, I would need to put in a good management team fairly quickly.

I learned through my PC consultancy that there are only so many hours you can work in the day. The problem is that I like being in control ? entrepreneurs are the world?s worst delegators. You can get very attached to your business. It is like having a second wife. I have always been very interested in off-the-page selling, and if I could see a way of making money I would go into this market. But I can?t see how companies selling marginally above cost can make money in this sector. Clearly, it is a question of scale.

I am constantly on the look out for another retail site in an appropriate location in the region. On good days, I am very keen to find another site; on a bad day, when I have taken #20 over the counter, I wonder what the hell I am doing in retail. Sometimes I think it would be more interesting to set up another company called Quality Systems.

MCB is very good at the local system assembler price bracket, but this is the junk end of the market. We are the equivalent of a Skoda dealership and we are very successful. But this is by omission rather than commission. We have drifted into this market and there is no quality attached to it. I would love to be selling quality machines to the Jaguar customers.

I am confident of the future for independent retailers, but I wonder if I can keep up the momentum as I get older. I love my job. The best part is the flexibility and the pure adrenalin flow I get every day.

Assuming I can maintain this enthusiasm, I will continue to grow the business.