Ed Reeves

An entrepreneur who provides “virtual” PA services owes his growth to a nifty land deal. Kirsty Hewitt puts on her best telephone voice as Ed Reeves reveals...

Securing a mortgage for a £750,000 property isn’t particularly hard. But imagine if your business was only three years old and had an EBITDA of just £40,000.

Ed Reeves, founder of outsourced reception and telephone services firm Moneypenny, was in this position in 2003.

He launched Moneypenny with his sister Rachel Clacher in 2000 and when the business started to grow they decided they needed new premises to house their expanding workforce.

However, Reeves says that it was nighon impossible to find a building to rent on reasonable terms.

He eventually found one that he thought would be ideal for their needs, but was turned down by the landlord on the grounds that the business was “too young”.

So after searching for other premises, he stumbled upon an old printworks for sale in Wrexham and, although it was in “one hell of a state”, Reeves could see its potential.

The 12,000 sq ft property was on the market for £750,000 – a lot of money given that Moneypenny was only turning over a “couple of hundred thousand pounds”.

Reeves says that he managed to secure a mortgage because the building came with about three acres of land for which he had already agreed a sale.

He sold the land for £150,000, which “pretty much covered the mortgage deposit”.

“It was commercial development land. We had a big problem trying to get a mortgage and it was only through the immediate disposal of the land that we managed to do it. It was a big, big fight to get the mortgage,” he tells EN.

When he got the keys to the property, Reeves only had 15 employees and just £50,000 to refurbish the building, which he says was “ridiculously big and overgrown with weeds”.

“It was one of those moments where everyone thought we were stark raving bonkers because we only had 15 people, yet we trying to buy a building that could house around 250,” he adds.

Given his shoestring budget, Reeves had to refurbish the building in two stages. He converted one half into office space and left the other half until he needed it, which was 12 months later.

“It was an enormous risk for a start-up business, but it gave us the opportunity to grow the business as we needed.

“It also focused everyone on the challenge of filling that building and let everyone know that we were not going to stay as a small, traditional answering service. Our goal was to scale up the company.”

Reeves toyed with the idea of sub-letting part of the building in order to generate an income, but decided against it as he knew he wanted the space for his growing workforce.

Buying the building also meant that the firm’s balance sheet was boosted almost overnight: “As soon as we refurbished the building its value doubled to £1.5 million, so we had a £1.5 million asset value on our balance sheet”.

Reeves says once he “removed the barriers to growth” by ensuring there was enough space for the expanding workforce, he then set about focusing everyone on growing the business to fill the remaining space.

More than 250 people now work for Moneypenny and the original building that Reeves bought for £750,000 is now at full capacity.

Reeves has since bought two more buildings and the firm’s work area now covers about 36,000 sq ft.

So what’s next? Reeves tells us that Moneypenny, which is the trading name for Callitech Ltd, a company in turn owned by Tdkp, a vehicle owned by the Reeves and Clacher families, turned over “a shade over £10 million” in its last financial year. It will, he says, continue to grow at or near its current rate of between £2 and £4 million pounds a year over the next three years.

He tells us that the recession has helped the business to grow because people are actively exploring more ways of creating efficiencies and are more receptive to alternative ways of operating.

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