Q&A: Gareth Lippiatt, Sports Xtra

What gave you the idea for Sports Xtra?

Having graduated from Loughborough in the summer of 1999, I worked in California as a professional coach for several months and saw a completely different culture for children's sports provision to the traditional UK system. In the States, parents are prepared to pay a premium for their children's activities. They expect a high quality experience to... That's where the Sports Xtra seed was planted.

How did you turn the idea into reality?

The opportunity to start my business arose in 2002 after I'd been working in several schools as a freelance coach. Through this experience I had gained an insight into the systemic issues that confronted schools regarding sports provision. The schools and parents loved the service that I provided so I saw an opportunity to create a brand and the Sports Xtra concept was born.

How easy was it to grow the business?

The business has evolved through several phases, each with its own challenges. I'm sure that it never felt this way at the time, however in hindsight, building a business that was largely dependent upon my own abilities and a few 'handpicked' staff was fairly straightforward.

A greater challenge was transforming this from a business that relied heavily on customers' demand for my personal attention and trust in me into belief and loyalty in the Sports Xtra 'brand'. An increased workload and greater geographical coverage necessitated more staff and as every employer will know, that's when growing a business gets 'interesting'!

And the franchise model? Any issues?

Becoming a franchisor and building a network with national coverage was a greater challenge still. The logistics alone present their own problems, in addition to regional differences and the varying demands and personalities of franchisees. I find that the challenges that now confront me are usually more about leadership than business acumen. My head office team and the franchisees are all well aware what needs to be done, the issue is keeping everyone motivated and on the right path towards achieving it!

How do you marry the twin aims of altruism and profit?

Good question, although this isn't something I've ever struggled with. As an entrepreneur, I've always believed that if I concentrate on ensuring that I'm the best at what I do, the pennies will look after themselves. Of course that premise also relies on devising a profitable business model in the first instance but if I wasn't confident that I had a product with a market that would pay a viable rate for, maybe I'd have started a charity instead!

Other social enterprises struggle with this balance. Fancy lending them a hand?

We've actually recently donated three franchises to a charity called Sports Traider, who create opportunities for underprivileged children to participate in physical activity, and we're creating a sustainable model with them whereby those that can afford to pay for the provision help to fund those that cannot. It's a project we're really excited about and hope to extend this model into other areas of the UK.

Is the public sector one of your main sources of revenue? Have you been hit by the cuts? How have you responded?

We've always been careful to retain a balanced distribution across our income streams in order to mitigate the risks of accessing public funding which is always subject to changes in policy. There certainly has been an impact on some revenues since the change in government policy last year, however this has hardly been unexpected or without warning so we have been encouraging franchisees not to rely on subsidised provision.

With corporate business, we always look to be proactive rather than reactive and have therefore been exploring innovative ways to reach our customers and the development of new products. We launched the franchise opportunity at the start of the recession three years ago and have increased turnover from £200,000 to well in excess of £2m over that time so we haven't done too badly!

How important are online tools to your business?

We've embraced all the modern forms of communicating with customers and prospective customers including e-shots, social media and an interactive web-site with an automated booking facility. The on-line media tend to be cost-effective and a valuable part of our marketing mix, however we also believe that these should only compliment the face to face interaction with our market due to the personal nature of the services that we provide.

Has the upcoming Olympics been a boost for business?

We're certainly anticipating that the Olympics will prove to be a catalyst for further growth over the next 18 months and as the event draws nearer, I'm sure that the nation will be gripped by Olympic fever! The UK public takes a while to 'warm up' to these global events but the fact we're hosting it has got to start sinking in fairly soon!

I heard on the news that my Olympic ticket application is one of 20 million from the UK public so perhaps that will be the wake-up call? That indicates that the interest is certainly out there and we look forward to harvesting that next year

What are smartest business decisions that you have made so far?

In fairness, I've made some great decisions but I've made some terrible ones too! I've actually learned far more from the mistakes and, as entrepreneurs, I think it's important that we have the ability to confront failure and embrace the lessons that may be learned.

As for the smartest: In addition to growing my own business at the time, I took three years to research the franchise model which we've now successfully deployed, examining competitors in our own sector and comparable business models in other markets.

I spoke with consultants, refined our business model, re-branded and prepared the infrastructure to facilitate rapid growth once we launched the concept to the market. All of those factors were important but the two 'smartest' decisions were both designed to create differentiators between us and the competition.

Tell us more...

Firstly, we offer a 'management franchise' as opposed to the 'job' franchise that is the other option adopted by every other franchisor in our sector. We identified that a key factor that was necessary for us to retain a greater degree of brand control, consistency in product delivery and increased sales was in recruiting franchisees who would manage the business and build a team of coaches to deliver the products, rather than being deliverers themselves.

It was certainly a risk to bring in franchisees from outside the sector, going for their business and management experience over industry knowledge, but in most cases it has paid off!

Secondly, the sports provision market is saturated by deliverers of traditional mainstream sports such as football, rugby, hockey etc. In order to provide schools, parents and children with a different option, we've positioned ourselves as non-traditional physical activity specialists delivering courses such as street dance, rock-it-ball, rock climbing and Spy School. These have been immensely popular and our product range sets us apart from the rest.

I'm a big believer in the value of doing something different and focussing on the USPs. By examining your business model, pricing structure, level of service and product range, there is always an opportunity to differentiate your brand.

How difficult is it to find franchisees when you're so passionate about the business?

We've awarded 33 franchises in the last two years so we haven't had a problem in recruitment! In fact we're now ahead of our network growth targets and have therefore taken the decision to consolidate for six months to test, evaluate and evolve our internal systems and processes. We have the momentum in our market at the moment so I'm certain we won't stand still for long!

Personally, I have found it a challenge and frustrating that few people seem to naturally possess the drive and passion that I have for business... But perhaps people wanting to share in that is one of the reasons they choose to come on board with us?!

It must be regulatory minefield when your 'customers' are kids and you need to be very careful who you bring on board?

We are extremely careful in selecting who represents our brand both in terms of franchisees and delivery staff. As with any franchised business, robust training and operating systems are absolutely key to any success and we have developed an industry leading professional development programme to ensure that risks are as mitigated as they can be.

We're also founding members of the new trade association which illustrates our commitment to driving forward the delivery standards and quality assurance of our industry generally, as well as that of our own business.

Find out more about Sports Xtra

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