But Nestor is most definitely a ‘glass half full’ kind of print boss, and turning adversity into triumph is what he enjoys most, so it’s little surprise that a decade later he’s the proud leader of one of the largest dedicated fold, stitch, trim finishing houses in the UK – that also just happens to be a past double PrintWeek SME of the Year winner.
Darryl Danielli How did you get into the industry?
David Nestor My dad Martin owned a flat-sheet business and I used to go in to earn pocket money when I was in my younger teens. He was also a director of a print finisher and I used to go in and man the back of a stitching line, or put shrinkwrapped packs onto pallets – and I learned my trade that way. By the time I got to my college years, I was basically an operator on either the stitching line or a folder. And that’s essentially how I financed my youth.
What did you study at college then?
Business, accountancy and IT. Unfortunately, though, by the second year I couldn’t ‘apply myself’ – that’s probably the best way to describe it. So my dad decided that the estimating department was the best place for me if I was going to apply myself more at the pub than at college. Within five years I was sales manager. Dad basically retired from the business and sold his share 10 years ago and I decided that I wanted to move on and build something myself. I’d known for a long time that I wanted to run and build my own business. Of course by this stage I had developed my own accounts, which I had a good rapport with. I have to say that I’m not a salesman, I build a relationship, and luckily for me they wanted to move their work with me.
How old were you at this point?
I was 21. So I created First 4 in October 2003 with two other managers, Kim Nicholson and Simon Eggleston [now operations and technical directors respectively]. We bought one folder, one stitcher and a guillotine just around the corner from where we are now in a little 800m2 unit and grew from there.
That must have been tough?
Yes and no. By the end of 2003 we were flying, but that was partly because, although I had put lots of sales orders in, I hadn’t managed to process so many purchase orders, so I desperately needed an accountant. Luckily my school friend Lorenzo [Fardella] had an accountancy degree. He was working at BAE Systems at the time, but I managed to convince him to join us, at the third time of asking, in January 2004.
But how did you get started, even buying secondhand kit isn’t cheap?
Basically we all dug as deep as we could and borrowed as much as we could to buy the machines. But it was tough. You know those wooden cable drums you see on the side of railway tracks or building sites? Well, I had a big one of those for a desk and a little one for a chair – and a telephone. That was my office.
You almost sound as if you miss those days.
Not really. As much as I loved it, this business consumed my 20s, while my friends were enjoying things like freshers’ week and going out and having a good time. I didn’t have that – work was all-consuming. I remember that when we got our very first stitching job, it was for a big retailer, but it was a two-line job, so the five of us had to run the line all week and all through the weekend to get it done. But that was our mentality then: get it done – and it still is. We work as a team, but we all have different skills and we complement each other. The thing we have in common though is that we all realised, even back then, that customer service was the thing that could differentiate our business from the traditional print finisher. The industry had changed, but we needed to evolve with it. I think that’s what makes us different, we still have that mentality of just do whatever it takes to get the job done and done well. There aren’t the margins in print finishing to have tiers of management sitting back. We all muck in.
What even Lorenzo? He’ll be ostracised by the accountancy community if that gets out.
We all wear many hats here; we’ll all part of the same team. On Lorenzo’s first day here, we were both on our knees laying carpet tiles in the office. When we finished he looked at me and said: "You do realise that last week I was ordering parts for the Eurofighter and now you’ve got me laying carpets." The mentality of everyone helping each other runs right the business though, and that doesn’t just come from the directors, it comes from the shop floor too.
When was the last time you were on a machine then?
Actually, it was two weeks ago. I stood in on one of the lines for four days, because we were that busy and it was a new job and I wanted to make sure it was right because it was so important. It was worth those 12-hour days, but I have to say, I had to go home each night for a long soak because I haven’t done that for while. It hurt.
You’re getting soft at the ripe old age of 31 by the sounds of it.
You might be right.
When you started First 4 though, was your youth a hefty cross to bear in an industry where the average boss is more likely to be nudging 60?
Being 21 and trying to be taken seriously by a customer when you can see in their eyes that they’re thinking, ‘bloody hell, how old is he?’ can be a challenge. But I’ve always built relationship accounts and a lot of that is done over the telephone, so actually it wasn’t that much of an issue. I love a challenge and I generally manage to under-promise and over-deliver. If I do that then people don’t care if I’m six or sixty. We’re also celebrating our 10th anniversary this month, so the idea of us being a youthful outfit is rapidly vanishing. We’ve still got a youthful outlook, though, and I want to hang on to that.
Walking through the offices though, you’re incredibly lean.
We have to be, but we have to have incredible systems in place. There are basically three of us in the office. We do all our own payroll. The accountant comes in for two days at the end of the year and that’s all the outside help we have. Having a finance director who is notoriously tight certainly helps to keep costs down.
It does sound like you and Lorenzo are more joint managing directors.
That’s probably true; we complement each other really well and we both fill each other’s shoes if the other is away.
Apart from when it comes to the accounts, of course.
Good point. But the two weeks he was away over the summer looked great, because I didn’t put any purchase orders in again.
Is it still very much a family business?
Yes, but not just my family. My dad came back into the fray around 2006/2007 as overall production director, which enabled a real growth spurt. That was also driven by a substantial reinvestment that began at the same time. We put a Palamides on the back of every folder, we retooled our stitching operation completely. We’ve also now got four enclosing lines for the new DM division and we’re now looking at our budgets and forecast for 2014 and what areas our next investments will be in. Back to the family though, my younger brother is here and one of the other director’s sons also works here. But we’re all family at First 4.
Is your dad still part of the business though?
Absolutely, and I’m really pleased about that. There are days when he wants to do something his way, but I want it my way. Nine times out of ten we seem to end up doing it his way. It’s a joy. Seriously, he brings a level of experience that me and Enzo just don’t have, as do the other directors, and that’s incredibly important.
That experience must have come in handy because the trade finishing sector seems to have had an even worse time than the print sector?
When you look at some of the departures, it’s sad. There have been some big names that have fallen.
But perhaps its because your business was only born a decade ago and your relative youth meant that you didn’t approach things in the same way, or perhaps you just didn’t have the same baggage?
I’m not sure it’s that simple. Perhaps the difference is that we don’t just sit back and wait for sales, we go out and talk to people, try to understand their business, where they’re going, where we can perhaps help. You can’t just wait for customers to come knocking; it’s difficult to just be just a ‘local’ trade finisher. You’re just too vulnerable. For us nowadays, less than 5% of our turnover comes from within a 30-mile radius of Blackburn, we’re national, we have to be. We had to evolve.
Evolve how?
Well, besides expanding our geographic reach, another example would be that 10 years ago we stitched a million magazines and sent them to a mailing house. That was big for us. Now our volume work is tens of millions and might have a thousand versions and have 13 weeks booked in with Royal Mail. Now every job is accompanied by a spreadsheet. That never used to happen.
How do you want to evolve the business yourselves though if you think you’re the perfect size now?
We existed for nine years on our core business of fold, stitch and trim. Over the past 12 months, we’ve added DM, die-cutting, inline inserting and a number of customers are looking for us to manage the whole post-press process for them, where we project manage other suppliers. And that’s all happened in the past 12 months.
Has anyone asked you to actually manage their entire bindery for them?
We have been approached, but I’m not sure that would work. If we took care of all the bindery output for a client, I’m not sure how our other customers would feel about us, in effect, becoming an inplant for their rival. We’ve also looked at acquisitions, but nothing we have looked at seemed a good cultural fit. We want to grow this business, but we’re a nice size. I think our future growth will be focused on new services and adding more for existing customers.
What’s going to be a ‘nice’ size for the business in the future then?
I think £5m-£6m, a lot of that will come from the DM business and some other new areas we’re looking at for 2014. Whatever we do it has to make money and be backed by a sensible investment.
Speaking of "sensible investments", is it true you only buy secondhand equipment?
It depends, but we always buy well. Our last stitching line was valued at £600,000 brand new, it only had 100 hours on it and we bought it from eastern Europe for £100,000. It came with six brand new log feeders worth £28,000 each that were still in their crates. We’ve always bought really good secondhand kit, it’s the sensible thing to do. The used market at the moment is great. The Palamides systems, though, we buy those new because the latest technology is fantastic.
There must be something you’ve done right – you’ve been shortlisted in the PrintWeek Awards SME of the Year category three times in the past four years, and won it twice already. So there must be something about your business model that just clicks?
We’ve grown organically, steadily, year on year. We’ve not got carried away; we’ve invested in the parts of the business that needed investment, we keep a very close handle on costs and – I know I keep saying it but it’s so important – just making sure we keep a focus on customer service is critical to our success.
Cost management must be challenging though?
Our biggest cost is labour; we’re not like a printer where the biggest costs are materials and consumables.
Do you use zero-hour contracts then?
No. Everyone you see out there is full time. We never use temporary staff.
Never?
I know temporary staff are used regularly throughout the industry, but no, I don’t believe we could get away with it. Partly because of the type of work we do, but also because we’re an extension of our customers’ binderies and I don’t believe that unskilled staff are the right solution. I don’t want to have to tell a customer that we had a problem because a temporary staff member made a mistake. Mistakes inevitably happen sometimes, but it’s how you deal with them and learn from them that counts – how can you do that with temporary staff? I know it’s a cliché, but our staff are our biggest asset.
But how do you cope with the ebbs and flows then? Or is a lot of your work contracted?
No, none of our work is contracted. I wish it was. We’ve got certain jobs that we’ve been doing for four or five years that come in every week, and regular and very large door-drop campaigns, but they’re all done on a handshake. At the end of the day, why would a printer give me work if he had capacity?
How do you plan for the future though?
It’s not all bad, we’re virtually booked out for stitching in October, for example. But you’re right – we can’t take anything for granted. The way we’ve always looked at it is take it one job at a time. We get a job, we do it right and hopefully the customer will come back. Like I said, I’m not salesman, I want to understand our customers and build a rapport, and the best way to do is that make their life as easy as possible – as easy as if they were binding on site. But we can’t ever forget that 90% of our customers are trade, we’re not DFS, we can’t offer interest-free credit or slash prices to encourage them to release a job. They either have a job to outsource or they haven’t.
That’s true.
Since 2006/2007 we’ve focused on broadening our customer mix too. We’ve tripled the number of customers spending money with us regularly since then, and our top 10 are all fairly equal, before that we were vulnerable to a handful big customers.
Are people much more open about using trade houses though, or is it still a bit of a secret?
Not at all. We’re getting much more involved from the front end, certainly compared with five or six years ago. It used to be that the trade finisher was only called in if a job was running behind schedule or if the printer had run out of bindery capacity. But now we’re called in by customers when a job is being specced out. We make suggestions on how we can add value to a campaign, or make it easier, faster or cheaper. Our customers certainly don’t make us feel like the poor relation any more.
What don’t you like about the industry though?
Phoenixes. The fact that, to use a video game analogy, someone can be playing the game and then hit the reset button when it goes wrong and start playing again with no consequences. That really upsets me. It hurts my customers’ businesses too. Equally, in the past, we’ve been hit by customers that have phoenixed. I have to say, though, in the past two years, perhaps because of the type of customers we deal with now, we’ve not had any major worries.
Anything else?
Profit shouldn’t be a dirty word in print and all too often it is. We’ve all got to make profits to enable us to reinvest in our business, whether you’re a printer, finisher or brand owner. We’ve all got to keep moving forward. All of us. We should be celebrating successful and profitable businesses.
Hear, hear. And how’s business now?
Good. Forward bookings are strong, volumes certainly look like they’re going to hold up going into 2014. We rely on printers running at around 80% capacity, because less than that and they’re not putting work out, so if we’re busy then that’s an encouraging sign of the health of the industry.
So has the industry turned a bit of a corner then?
I’d like to think it has, so yes, why not. Print has a place in the market, it’s a purchasing driver.
What are the challenges facing the post-press sector though?
Market price is still a concern, but I think there will always be a market for trade finishers, because print processes are far faster than finishing processes, and that’s the key – as long as that gap remains there will always be a market for people like us.
Final question: what have been First 4’s highs and lows in its first decade of operation?
Our highlight has to be October 2010, when we won SME of the Year at the PrintWeek Awards – we fell off our chairs. We never thought we had a chance. When we won it the second year, that was incredible too…
…and the lows?
Very early on we had some significant bad debts. One sticks in my mind: it happened when we were on the verge of moving into these premises six years ago. At that time, we lost a customer that was spending £45,000 a month with us, so it wasn’t the bad debt, although that was bad enough, it was the loss of revenue. It almost made us kybosh the move. But because of that loss, we started actively looking for new business and as a direct result of that we took on two major new clients that more than mitigated that loss and have grown substantially since. If that £45,000-a-month customer hadn’t have gone bust in 2007, there’s a strong chance we wouldn’t be the company we are today and growth might have stalled. So I can’t help but think that that bad debt might have just been the making of us.
