Most would consider spinning a new company out of the 70-year-old family business and listing it to be a daunting task. Not Stephen Falder.<br/>And this is a business with success in its near grasp, finds Joanne Birtwistle
What were you doing two hours before your company closed down for the Christmas break? Running around like a maniac trying to sign off various projects before the end of year, or perhaps the more leisurely pre-Christmas classic of tidying your desk? Stephen Falder was busy cooking a full four-course Christmas dinner for a staff of 14 at Manchester biochemical company Byotrol, which is listed on the Alternative Investment Market (AIM). And no, he's not the chef - he's the company's founder and deputy chairman.
"I'm a great believer in food building teams," explains Falder. "Everyday at 10am we all sit down to a hearty cooked breakfast.
It's a really good start and it's an efficient way to catch up."
There has been plenty of activity for Falder to update his team on of late.
Byotrol spun out of the family-owned specialist paints business HMG Paints onto the AIM in 2005. Its first-half results, announced in mid-December 2006, are less than glowing at first glance, showing a loss of around £31m against sales of just £3116,000.
But the numbers alone are misleading. Ten years after the accidental discovery of its key product, also called Byotrol (found while developing an anti- microbial paint for a breadmaker's proving rooms), and after years of research, development and meticulous ground work, the company really does look to be on the cusp of harvesting great rewards.
"We've been really careful to make sure that the way we plan the business is more important than the announcements," says Falder. "Sometimes you can allow a timetable to dominate and potentially damage what you are doing."
A unique biocide, Byotrol not only kills off bacteria such as MRSA and E.coli, but crucially covers the area being treated with a microscopic coating that is long lasting and prevents bacteria from attaching itself to the surface, leaving them weak and unable to breed.
The product has obvious applications in the healthcare sector and, in October 2006, the results of a four-month study carried out at Glasgow Royal Infirmary were published.
They showed a 50 per cent reduction in MRSA in a ward using Byotrol compared with one using the usual cleaning and disinfecting regime.
"They used the product once a day on about 5 per cent of the ward's surface after full disinfection," explains Falder. "We had several weeks where there was no MRSA at all on the Byotrol side."
After these results were published, in mid-November 2006, Falder secured a deal with Synergy Healthcare for Byotrol to be used as an ingredient in its product range, an important way in to the healthcare market. "There are contracts and there are approved NHS suppliers and Byotrol isn't one yet," explains Falder. "We can shake our fist at that or we can get real and say our product is ideally suited to being the ingredient brand, so let's find partners like Synergy, who are developing a very good name in infection control."
In those same few months, Falder was also busy raising £34.6m through a share placing and Byotrol was granted a Chinese patent. "It's clear the Chinese are a major workshop of the world now and products made for all of our target markets are likely to have some form of work done on them in China," says Falder. "So, leaving aside the fact that the Chinese market is huge, the most important thing is it will prevent a copycat leakage into our principal early-target markets."
Apart from healthcare, there are other applications that are easy to see, such as in the food industry. If confectionery giant Cadbury Schweppes had been using Byotrol to clean its factory equipment, for example, it could have saved itself the estimated £330m cost of a salmonella outbreak at one of its plants in summer 2006.
But Falder says he is holding back on what could be the biggest of all: the consumer home care market. "We have been careful not to degrade the product by using it in simple products.
On the day it was invented Byotrol was essentially a toilet cleaner.
One day it might end up in people's bathrooms as a safe alternative to bleach but it should go there after it's been proven in healthcare and food and areas where people can see how clever and good the technology is," says Falder.
A deal with North West retail giant Pets at Home to use the Byotrol product in own-label products such as dog deodorants goes some way to demonstrate the diverse potential. Falder's plan is to raise awareness of the product's capability and then act as a technical service partner for companies to use Byotrol concentrate in their products; this phase of the company's growth is about selling and developing markets and partnerships.
But will the company fulfil the promise it shows? "It does look a bit too good to be true, doesn't it?" says Falder, adding that the company expects to see some meaningful numbers in coming years, with forecast sales of £34m for the financial year to September 2008 and £39m predicted for the following year.
There can be no doubting Falder's belief, energy and enthusiasm for the company and the product. "It comes from selling paint for money, you see," he laughs. "If something is as boring as watching paint dry then you have to be able to put a story around it."
And there is something of the entertainer about Falder too, which is perhaps why he is a partner in specialist fireworks display business Brimstone Pyrotechnics. He says Brimstone is a "proper business", but admits he does it for fun, devoting around ten to 15 weekends a year to putting on big displays for weddings, New Year celebrations and the like.
Falder says he just can't relax. If he sits down for too long, he gets bored. So his other varied commitments include: chairman of charity Community Forests Northwest; chairman of the sector skills council for the process industry, Proskills; an active membership of the CBI; and now a non-executive director for HMG Paints.
You might expect Falder to miss being involved with the family business on a daily basis now that Byotrol is his full-time concern. "I talk with my brother and father about HMG and they ask me about Byotrol and I say: "Sorry, you are shareholders I can't give you that information.' And it drives them mad. I love it!" he says.
According to Falder there is "no difference at all" between running an AIM-listed company (Byotrol floated in July 2005) and the family business. "That's been the biggest pleasure and surprise to me.
When you leave the business and go outside, disclosure is more formal and people tell me that when you go to a main listing it becomes more arduous," says Falder. "But both my brother, myself, when I was an executive, and the management team at HMG are very rigorous about information control, disclosure, openness and knowledge.
I've lost nothing by becoming an AIM company and I've not been forced to do something I wasn't used to doing
"What I have noticed is that talking to people as a plc gives you greater gravitas than as a limited company, and that makes a difference. Being part of AIM is being part of a club of people who are passionate about their businesses. There's a feeling of newness and vibrancy that, when you come from an established and traditional industry like paints, is not there because most of the players have been there a long time."
So does Falder plan to stick with this company for the long term? "At the moment, as one of the developers and inventors, it is very useful that I am involved in the development of the product," says Falder. "But over time brand management issues will take over and I have no illusions that one day there will probably be a better senior management team for the future of Byotrol than the current one.
"That might mean some major brand business buys us, or letting the new generation move on. The nice thing about coming from a family business is you don't think of yourself as indispensable."
The succession planning is certainly in hand. Falder's three children, aged 14, 16 and 18, have all shown an interest in joining the family business. And Falder says perhaps in another ten years - he is 46 today - he sees himself as a business angel in the science and technology industries, working with "people who don't need £310m from the City but who are looking for advice and maybe a few hundred thousand pounds"
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