Originally a trade-only sprocket-fed listings form business called Continu-forms, the business grew in multiple directions to become CFH, with divisions spanning business forms, security printing, labels, print management and even screenprinting, generating sales of £45m with more than 400 staff. The late 1990s, however, saw a massive divestment spree, taking the firm down to sales of £16m by the mid 2000s, so that it could move away from the mature listings market to focus on outsourced print and mail, which came to be known as transactional print.

The firm also made the decision to put the environment high on the firm’s agenda, to the point that it has been directly responsible for the planting of almost 100,000 trees, resulting in it being honoured by the Woodland Trust with its own wood, near Burton-on-Trent.

The refocus, the adoption of the ‘Theory of Constraints’ business methodology and Broadway’s willingness to try new business models has put the company firmly back on the path to growth, driving CFH Docmail to predicted sales of around £40m in its next financial year.

However, right now, the thing he is most excited about is the lively acceleration of his new, 130mph all-electric car.

Darryl Danielli In the mid 1990s, CFH was a £45m business, but around the time you became managing director you made the decision to sell off a lot of your divisions – why?

Dave Broadway In the early 1990s, because I was into computers, I noticed that I wasn’t seeing dot-matrix printers advertised anymore; it was all laser or inkjet machines. So it became clear to me that our market for sprocket-fed paper was going, and listings paper was £22m, so it was almost half of the business. We decided that, if the market was going to decline, we had to be the biggest in listings. We also decided that there was an opportunity within our security side to provide a total service. We were already doing that for some clients, where we took a customer’s data and put it onto paper and sent out some form of personalised document. So in 1994 we built a laser room and put in two big machines and some enclosing equipment, and pushed the business in that direction. We also felt that the labels business was secure and invested in that area too. So we had three areas: listings, security and labels. 

But you ended up selling the listings business? 

As the 90s developed it became clear that listings paper was in terminal decline and we had one major competitor, Standard Check [then called Bowater Business Forms], so we felt that the best solution was for one of us to sell to the other – and they were the ones with the money.

And I guess if you had opted for a last man standing battle, and they had the deeper pockets…

…then they would be the last man. Precisely. So we sold to them in 1998 and that was the first change to the business.

Did you have to sell though?

No, but the timing was perfect as the business was still very profitable and we got a very good price. The market hadn’t reached crunch point either.

Crunch point?

It was 1999. I can’t believe we didn’t see it coming, but it was the millennium bug. Many businesses were afraid that their IT was going to fall over, so they updated their systems and added new laser devices and no longer required sprocket paper. We were lucky that we sold the listings business when we did. 

Was it pure luck?

Absolutely. With hindsight, you could see what was going to happen, but at the time, no one did.

Was that when you refocused the business then?

We came to the conclusion that with the growth we had on the security side with our outsourced print and mail services, that was going to be the future of the business, and we dropped labels in the early 2000s.

Again, this was a profitable business at the time.

It was; we sold it to the management.

These were quite brave decisions, though. Obviously with hindsight they were right, but at the time you were selling profitable, well-invested businesses.

That’s the best time to sell. But I think you have to focus and we thought the security side offered the best growth opportunity. It’s about having a strategy. So many businesses, even the biggest ones, don’t really have a strategy or genuine direction. While I can’t claim that we’re always brilliant at it or get everything right, we know where we want to go and take the decisions that back that vision rather than just hang on to things until we’ve extracted the last bit of profit.

But a lot of people would probably have kept them at the time, because they were still generating cash, and maybe just started cutting back on the investment to maintain margin.

That’s the problem: we all have a limited pot for investment, so you have to decide where to put it. It makes most sense to invest in areas where you think you see growth and divest the rest while they’re still profitable to realise the best value. Otherwise you’re just managing decline.

What size did you go down to after you divested the non-core businesses then?

We were around £16m by the mid 2000s.

So you had sold around £30m of turnover. Wow!

We stripped the business back to its core. It was the right thing to do. But we’ve been growing it back since then and expect to hit £40m or be very close to it in March next year.

So are you getting back to the size you were?

We are, but on a firmer base.

Do you mean more profitable?

Profitability will be higher than it was back then, yes. And the markets we’re in are generally at the start of the growth curve, not the end, like the old business was.

Still, those were some pretty big decisions. It’s incredible that you made that transition without any distress.

There was some distress here and there. 1999 was a really difficult year; the remaining part of the business lost £1m, but we had the cash from the listings sale to see us through it. It’s still a shame, though, because it hurts to lose that kind of money.

How did you bounce back?

It was the gradual move to transactional mail really. We effectively became a transactional mailing house by the mid 2000s, working for a lot of the banks, councils and firms that sent out critical documents.

Was it all client-direct work by this point?

We were still mostly trade around 2005, but we couldn’t see the trade buyers coming with us in the direction we were headed, so we decided we had to go direct at that point.

Was that a difficult transition?

Not as difficult as you would expect because the changes in the business forms market had largely destroyed the network of distributors that we had. We never really got in with the big print managers either; we always stayed away from them. In fact, nowadays, we’re generally in competition with a lot of them, but not too much.

But again you’re active in a market with rivals with deeper pockets.

Yes, but it’s a growing market and generally they’re not up to our standard. Whenever they have won work away from us – and they have – they have generally struggled to do what we’re doing for the client. It sometimes takes them years to move the contract because of the complexity of what we have done and their inability to duplicate that. So they can do a great sales job, but then they have to deliver it.

So you’re saying that you only lose on price then?

Well, it is price, but it’s also the story they can tell because they are big companies. When it comes to big clients, they can win business off us, but we have the edge on technology.

Do you win work off them too then?

Not to a huge extent; we tend to go for smaller business wins because we don’t really want huge contracts as they tend to be politically driven and therefore vulnerable. When there are top-level politics involved, it’s very hard for us to compete. We lost a big contract because the chief executive of the customer played golf with the chief executive of the print manager – you can’t factor for that. So we focus on small businesses.

When you say small businesses, presumably you just mean not massive financial institutions?

No, I mean ‘small’ small – down to one-man bands – through Docmail.

I thought you still had some large financial clients?

We do have some, in fact we have one that we won recently – they came to us because they liked working with a smaller business. So there still are certain targets that suit us.

So you work with big customers if there’s a good cultural fit, but you’re not looking for any more?

There has to be a good fit, but no, we’re not looking for any more. In fact, we had a big boardroom debate on whether we would take this client on, because while it was a big contract, we knew it would also have a big impact on the business. So after we won it, we had to decide if we actually wanted it. But because the culture was right, we went for it.

But it sounds like Docmail rather than large-scale transactional is where you see the real growth opportunity?

Where we really started to make some serious ground as a business was when we launched hybrid mail [Docmail] in 2008, because that gave us a clear strategy and direction. The strength and weakness of transactional mail is that it’s generally sticky – there’s a lot of software at the front end of the contract and there’s a lot of risk when things go wrong. So once you’ve won a contract, the customer generally won’t want to move again. But that also means it’s very difficult to win work off competitors.

Unless you play golf?

Obviously. But it’s very hard to grow that business organically.

Is it easier to grow your hybrid mail service Docmail organically? 

Yes. Because it’s aimed at smaller businesses, it can, and is, growing rapidly. The basic model is that any business can send a document to us and we can print and mail it for a lower cost than they could themselves. It’s obviously of value to bigger businesses, but it’s incredibly valuable to smaller businesses, and we’re always talking to the decision-maker.

What sort of growth are you after?

My target is 50% per year [for Docmail], and we’re on track for that. But the problem is that the growth curve will inevitably slow as the firm grows – to double it from the £5m-£6m it is now, in one year, is difficult.

It’s also an entirely different proposition to your transactional business, so how do you sell it?

We had to change how we sell, absolutely. There are probably 60 or 70 businesses that sell hybrid mail, but there’s only one that we really see as a competitor: UK Mail’s iMail.

Because they’re of a scale?

No, just because they’re the only other business that has got it right. And even there we have gone in slightly different directions: they tend to focus on direct mail and we focus on the transactional.

You were one of the first to offer hybrid mail in the UK – where did the idea come from?

We were doing something for Reed at the time; basically a system that would allow their various offices to print their letters here. And then we had some consultants in around the same time who were talking to us about the ‘Theory of Constraints’. I was just talking to one of them, who also happened to be a Scout mistress, and she was talking about the letters she had to send out to parents about a planned trip. We just talked through what we would need to do to take that burden off her, and that became Docmail.

Do you use the Theory of Constraints in the business?

We do – some people adopt lean or Six Sigma, but we use Constraints.

How does that work?

The basic idea is that any business process has its weakest link or slowest part – sometimes it’s external, such as the market, sometimes it’s internal, production or sales, say. Almost every business, or any process within a business, has a major constraint somewhere.

Do you always work with consultants at some level in the business?

I wouldn’t say always, but we’re not afraid to if they know more than we do, and if we think we will learn something. At the moment we’re working with some consultants on applying the Theory of Constraints to project management.

How did you come across the theory?

Someone phoned up one day and said they could fix our estimating system and we ended up talking about the Theory of Constraints. It made a lot of sense. The first book about it was The Goal by Eliyahu Goldratt and I would recommend it to anyone in a leadership role of a manufacturing business, because it just focuses your mind on a few obvious truths.

I suppose it also helps generate opportunities because it makes you look at the business from a different perspective?

It helps clear decision-making; if we’re looking at a new contract, an acquisition or capital expenditure, we’ll consider what it will bring in terms of added value, additional overheads, the extra investments necessary, etc, and then you make a decision based on ROI.

Couldn’t you just read the books, rather than pay for the consultants?

We’ve read all the books and while they all make absolute sense, sometimes when you want to bring that into a business, consultants are helpful because they have the experience of implementing it.

And I guess they don’t have the baggage you’ve picked up from being so close to the business?

Maybe, but also not everyone will interpret the book in the same way, so it’s helpful to have someone who gets it, knows how it works and has experience of applying it.

Did you have some kind of epiphany, then, when it came to adopting the strategy?

Not really. I read a hell of lot, but have a rubbish memory and all of this stuff just mixes in my head and at some point, occasionally, something sensible comes out. I see my role as being about strategy, direction and the contractual bits, because it’s my business. It’s the directors that run the business in most other senses.

Are you not really involved in sales and operations then?

I’m involved in all of it to an extent, but I usually try to leave certain things to people who are better at them than me. I’m not a networker; I’m not someone who runs a business on charisma, that’s not me, I’m a thinker. So I let the charismatic people talk to customers and let the operations people, who understand how things work, focus on that.

That’s a lot of trust.

I like to think I know when people are trying to bullshit me. If there’s one thing I want to do it’s deal honestly and fairly. As a business we don’t mislead people internally or externally. If I believe a customer is treating us unfairly, I’m quite happy to see that customer leave, and we sometimes even work towards that.

Is that something you’ve learned in your career?

I always trust people at least once, and in most cases that’s rewarded, but sometimes people let you down. The other thing I’ve learned is around the principle of having a strategy and direction; even if it’s not quite the right direction, as long as you know where you are going and constantly reassess it, you will realise at some point that you’re going wrong and can fine tune your navigation.

Do you mean the only bad decision is no decision?

No, occasionally it’s best not to make a decision at all because things sometimes just sort themselves out. 

So is the key then admitting when a decision is wrong?

You have to be brave and recognise that a decision was wrong, but that can be hard to do because quite often you will be heavily invested in that decision financially and emotionally. Besides, no one likes to be wrong – I know I don’t.

If the majority of the other players have got hybrid mail wrong, how did you get it right? 

We create and deliver documents. The aim of the business is to do that through what I call the three ‘Es’: the most environmental way, the most efficient way, and the most cost-effective way. In fact, we try to apply the Es to everything we do. The three main strands we have are Docmail hybrid mail; Velopost, our own cycle-delivery of post in Bristol, Bath and Edinburgh, which delivers our own post, but also offers a collection and delivery service for businesses in those cities; and Dotpost.

Velopost must be quite tough on the cyclists; it’s pretty hilly around here.

I did it last month. I went into Bristol and worked for the day delivering and sorting.

You went out on the bike?

Yes, I wanted to be on the ground to see what the problems or issues were, or just how we could improve and change things. I find that with anything like this: you have to do it on the ground to find out what you can improve. So my son Joe, who runs that part of the business, came with me and we did a couple of rounds to see what worked and what didn’t. We came back with a few ideas and now we’ll implement those. 

Do you do that around all parts of the business?

Most parts, but then there are parts that I understand pretty well anyway, but for some of the new bits, it’s really useful.

And how is the Velopost service performing, business-wise?

It’s challenging. I do admire Royal Mail for what they do [with final mile] because it’s not easy when you try it yourself. But the volumes are too low right now.

Can you make money doing it?

We will do; the local collection and delivery side of it is quite profitable because we’re competing with stamps and franking machines, and at 30p or whatever, we’re quite competitive. But for our own mail here, if we delivered that to Velopost areas, then we’re competing with Royal Mail downstream access that is nearer the 20p mark. So our aim is to win more local pick-up and delivery work. 

What’s Dotpost?

It’s our online document delivery service, designed to protect the business in the future.

No print then?

No print, I’m afraid. Lots of businesses are trying to move their delivery to online for statements, invoices, etc. But how many of those accounts does a customer want? I personally find it frustrating having to go to lots of different websites, all with different passwords. So our thinking is that a consumer should just have to go to one site with one account for all of their critical documents. The way we see it is that there can only be one supplier in that market...

...because otherwise the consumer gets back to the point with multiple sites and multiple passwords?

Precisely. So we’re going to have a go at being that one supplier. We may be a bit small for it, but the way we’re going for it is the marketing route – we’re not charging for it. If a customer uses us for a mailing, then up to 10% of that can go through Dotpost free of charge – no set-up cost, no mailing cost. At this stage, it’s more a case of us building up a database of consumers using the service that will be of value in the future.

Isn’t this a bit like turkeys voting for Christmas, buying the presents and then cooking themselves?

We are potentially destroying our own market, absolutely. But in my view if we’re not doing it, then someone else will. I’ve always believed that if you’re not attacking your own market then someone else will and you won’t see it coming. It’s clear that many businesses want to move to online documents, but most are failing and that tends to be because there aren’t enough reasons for consumers to do it. It’s not an easy thing to do: the migration is slow and you need to give consumers a reason to do it. We think we have a model that will work, though. Yes, we will take away a proportion of our capacity before we start to see a return, but at the same time we’re winning new business off the back of it.

When did you launch it?

In March this year.

By the sounds of it, it will have a fairly long tail in terms of ROI.

I’m not expecting to see any real revenue from it for four, maybe five years, but if we don’t do it, where will we end up? Royal Mail is telling us that post is moving online, so one day we might end up with no market at all, if we’re not careful.

So this is your bet on the future?

We need to make sure that we’re one step ahead of the market and at the next stage of its development. And seeing as the business is about the creation and delivery of documents, then this fits that role perfectly – it’s just that the delivery doesn’t involve print.

Are there any competitors yet?

There are lots of software solutions that do this and local councils have access to those, but they’re expensive and the issue is how you deal with consumers who want paper documents. Our system can handle that with no client intervention. So this is our long-term project, Velopost is a mid-term project and Docmail is our short-term project that is already delivering strong growth.

Couldn’t Royal Mail just launch a service similar to Dotmail and kill it?

Not really, they would only be able to offer the electronic side of it. I’m under no illusions, it may not work. Zumbox in the US, for example, tried to do it as a software solution, but they couldn’t and closed down earlier this year. Again, they didn’t have the paper solution. Pitney Bowes has Volley, but they don’t seem to be able to find a route to market. What we’re looking at is our clients doing the marketing, in effect. Between them they have half of all the UK addresses and our cost of marketing to those addresses, if the client wants us to, is putting a sheet of paper in a mailing they’re already receiving. It will be a long road though.

It’s an interesting idea.

You have to know what the threats to your business are, and for printed mailings it’s online. So you have to protect yourself and that’s what we’re doing while at the same time enhancing our service to clients.

And possibly future-proofing your business I guess?

Hopefully. We think it will work and we’ll do everything we can to make it work. Besides doing new things is fun. It fires people up.

So what fires you up? What are your ambitions for the business?

I don’t know that we’re targeting a certain size, but I just want to be a pain in the arse for Royal Mail. Hopefully we’ll get to the point where we have half the UK addresses signed up to Dotpost and maybe Velopost running in 10 or 15 major towns and cities. But perhaps we’ll get slapped down by Ofcom before that happens. 

Book club: Broadway’s top three business reads

The Goal by Eliyahu Goldratt

“This is how we run our business. ‘Throughput Accounting’ is a totally different way to view your financial statements. It’s obvious when you look at it, and allows far better decision-making, and comes directly from the concepts in The Goal. Another book by Goldratt, It’s Not Luck, uses the concept of a ‘Mafia offer’ – one you can’t refuse – and is very much the basis for our Docmail, Dotpost and Velopost products.”

The Soul of a New Machine by Tracy Kidder

“This is a book on designing and building a mini computer in the late 1970s. It is an incredibly good read, and introduces the concept of ‘skunkworks’, which I have used on a few occasions to get projects done quickly within the business. This is as much a good read as anything else, but is one of those books that triggers your own ideas.”

In Search of Excellence by Tom Peters

This is probably where I started on business books. The concepts and ideas that Peters came up with here can still be relevant today, but this is more in this list as my starting point in business reading.”