Me And My Partner: Daniel Mitchell and Richard Makowski

A growing Source of value

The Source, founded in 1993 by Daniel Mitchell, 33, once supplied spares to the computer industry. Today it handles insurance claims for computer equipment and, with Richard Makowski, 44, as its new chief executive, it has a turnover of £16m

Daniel Mitchell

After sixth-form college I chose to move into the world of business rather than go to university. I got a job in sales selling office equipment such as computers and fax machines. I was doing very well and within my first year I was the top salesman in the company, which was a large distributor. I was full of confidence and thought I could do a much better job on my own and so set up my own office equipment business. Sadly it went spectacularly wrong. The reality was I had none of the experience needed to run a business. I could communicate with customers and I could sell products, but I knew nothing about financial planning, cash flows and management.

After 18 months I got a job in an asset-based finance company and this enabled me to understand much more about how a company ticks financially. I learnt how to read a balance sheet, understand the importance of cash flow and how to analyse a company's financial status. That, coupled with what I had picked up from the sales business, prepared me a little bit more for the business that I am currently running.

I worked there for a while and in 1992 I took a year out and travelled the world. It was on my return in 1993 that I set up The Source. At that point in my life - I was 23 - I pretty much knew I wanted to work for myself. The company, which primarily supplied parts to maintenance companies, was set up without any funding and we traded on supplier credit. I employed four people on day one. The business evolved over the next few years and then we decided to enter the insurance replacement market place.

In 1998, I was having a look at the business and thinking, what do I actually want? I enjoyed working for myself, and it was very nice to have the day-to-day financial rewards, but what I actually wanted was to create shareholder value and generate a business that had value to it. I couldn't see me achieving this with the business that I had so I started to look at what other opportunities there might be. After handling a couple of insurance claims from our corporate clients I was struck by the idea of moving into the insurance market, handling claims for the loss or damage of computer equipment.

Two years later things were going very well and I was looking for ways to expand the business. I was talking to people in the City about funding. I was not only looking for organic growth but growth by acquisition as well. This was when I met Richard. He was working for a venture capital fund that I was talking to and he came and did quite a lot of work on their behalf. The transaction that he was working on didn't come into fruition but Richard and I got on well.

I was looking to recruit someone who had the experience of running a bigger business. I had got to the stage where I could handle the business inside out but I didn't have the experience of safely challenging a business growing as quickly as we were. I wanted someone who could walk in and say, "Yeah, I have been there and I can deal with issues before they crop up."

Richard and I work very closely. Richard runs the business on a day-to-day basis, which frees me up to be more strategic, which is my sort of thing. I spend a lot of time client tracing and trying to develop our position. I also spend a lot of time looking outside of the box and thinking about the things that we do differently and how we can reinvent and cement our position in the market place.

I think working with The Source has ruined Richard from working in a big company ever again. Having spent so much time in a corporate environment I think he is astonished at how much fun it is working for a relatively small business, where you can make a decision at 9am and carry it out at 10am without having the politics. Also, when you work for a large company it is difficult to make changes because it is often hard to get a consensus, whereas we will argue something out between us and then get on with it.

I also think it is quite interesting how, in a relatively short period of time, I would regard Richard as being a friend rather than just a colleague.

Richard Makowski

I Joined The Source 18 months ago and am chief executive. It helps my whole ethos in life and my aim has been to grow the profitability of the company. I think the maxim I have used is to go in at the lowest unit cost for maximum service delivery. In my mind those two facets mark the success of every business venture.

I was a scientist originally. I did a doctorate in monocular biology and biochemistry at the University of Surrey. I then went on to do an MBA at Cranfield in 1985. When I finished I moved to a company called Celtec, who are and were the largest biotech company in Europe. I was there for five years. One of my roles was working with the finance team to raise finance for the company's internal development of drugs.

After that I went to work for BET. I started as an analyst, working in the finance department, looking at acquisitions and reporting directly to the chief executive and finance director, who was responsible for their cleaning division. The position then led to my becoming deputy managing director of Initial Cleaning Services. The company was having some problems and I assisted with the restructuring, which resulted in it becoming the most profitable company within the quoted sector in its field. The business turned around in two and a half years, which was one of my noblest achievements.

I then went to work at Mentmore Abbey plc, which had a records management division (originally called British Data Management, or BDM). I was brought on to help restructure the business, which unfortunately had experienced a profits warning because of its poor performance. I was tasked with not only restructuring the business but also improving the overall profitability and service ethos of the company.

The company then sold 50.1 per cent of the records management business to Iron Mountain, which is the largest company of its sort in the world. I stayed on with the organisation as the managing director and ran the business for them. While I was there I looked at any opportunities within the supports services sector, which is really my skill base. That was when I met Daniel.

Daniel was running a company that he had set up from scratch and he was looking at bringing on board a heavyweight management team in terms of preparing for the challenges ahead. What I saw in his company was an opportunity to rapidly develop a business that was a niche player in its sector, one where not only could we rapidly differentiate its service through value-added offerings but also significantly exceed market expectation with respect to service delivery.

Despite the 10-year age difference Daniel and I get on very well. There is such a critical agreement in personal chemistry, which makes the management side work so much better, whereby we are able to have good, constructive debates not only on a commercial level but also in the same vein on a personal level.