Hard cash

Cash Generator franchisee Geoffrey Latham is still surprised by the fast-paced life he now has, as Trevor Johnson discovers

Geoffrey Latham has been around a bit. With his brother Phillip he ran a successful Cardiff-based property investment and development company and had previously survived the hurly-burly of the licensed trade.

He was no stranger to business pressure - in fact, he thrived on it. But he admits that Cash Generator took him by surprise. "We were looking to develop a franchised recession-proof business alongside the property company - we even considered McDonald’s - but Cash Generator seemed the ideal choice," Geoffrey remembers.

"It was a niche business which was needed in the community and had a very promising growth potential. We liked the corporate style of the company and we liked the people who ran it. It seemed a logical step for us to acquire a Cash Generator franchise - and it's certainly proved a very profitable one."

That was eight years ago. Now Geoffrey and Phillip have three Welsh Cash Generator stores - two in Cardiff and one in Newport - and plan to open more.

Launched as a franchise in 1997 by its founder Brian Lewis, Cash Generator claims to be the UK's most successful buying, selling and loan store group, with one of the country's highest non-food turnovers per square foot.

In simple terms, Cash Generator provides money for people who, for one reason or another, need it in a hurry. Stores hand over immediate cash for second-hand goods. If you would like your goods back when your financial situation improves, Cash Generator has buy-back schemes. There is also a cheque cashing service for the four million people who don't have a bank account.

READY MONEY
"There are millions of people who are working hard but find it a struggle to get by and these are the people who operate on a cash basis and appreciate that we can provide them with ready money when they need it," Geoffrey Latham says.

"They might bring in a video or a TV to raise some money for the weekend and then buy it back later in the week when some money comes in. It's important to them to get some cash quickly, and that's where Cash Generator can help.

"We give quick decisions with the minimum of fuss. We also take care of our customers - which is why over 90 per cent return to our stores again and again. A lot of our customers also recommend us to their friends. We give a personal service to local communities and find people appreciate it."

Geoffrey admits that, despite the comprehensive training scheme, the hectic pace of a successful Cash Generator store still took him by surprise. "Second-hand products are cheap, and to generate a healthy turnover you've got to sell a lot,” he says. “The business is very fast moving and there's always a lot going on. You wouldn't become a Cash Generator franchisee if you wanted a quiet life.

"When we opened our first store, it was the pace at which things happened and the speed customers flowed through the door which took me by surprise. It was like stepping out of a gentle little punt down the river and straight on to a rollercoaster ride. We liked the concept straight away and it has exceeded all our expectations - a niche-market that's cash-based and recession-proof with plenty of profit and expansion potential."

That was certainly Brian Lewis's intention when, after becoming a millionaire through the sale of his company MCF, he opened his first second-hand goods store in Bolton, Lancashire, in 1994 and became a franchisor three years later.

Currently Cash Generator has over 80 franchises and five company stores that together have a turnover of over £50 million. The ultimate Cash Generator target is 300 company and franchised outlets.

Cash Generator says that its success is based on two basic facts: “One, we give our franchisees the best possible chance to succeed with the least possible risk, and two, we give their customers the chance to get something they want that they can't get anywhere else."

A Cash Generator franchise costs around £150,000 with a minimum personal investment of around £45,000. For this, franchisees receive an intensive eight-week training course, help with finding premises and setting up business and computer systems.

IMPRESSIVE SUPPORT
Company advisers will even go along with would-be franchisees to visit bank managers and help raise finance. Norwich franchisee Steve Cooney remembers that none other than Brian Lewis went with him to see his bank. "The bank manager was impressed,” he says. “But I later realised that was the sort of help you can always get from Cash Generator."

To keep franchisees up to date with business developments, courses and regional seminars are held throughout the year. There’s also an elected council of franchisees that meets regularly with Cash Generator bosses to plan strategy and iron out any problems.

What can a Cash Generator franchisee expect to make? Potential annual profits can range between £40,000 and £100,000 per store. "It's hard work," Geoffrey says, “but the more effort you put in the more you make."

He worked in his first store for a year. "The hands-on experience was invaluable. Now we have an area manager, an operations director and 24 staff and I spend more time on planning and strategy."

Cash Generator franchisees come from all walks of life - salesman, shopkeepers, retired military, engineers and housewives - but Geoffrey points out that having some idea of the ways of the world can be an advantage.

"There have been people who perhaps come from very sheltered backgrounds who haven't been able to cope, and if you have spent your working life in, say a city bank, being out on the front line discussing how much someone's video player is worth can be a bit of a culture shock,” he says.

"We cash third-party cheques including wages, insurance and those from the Inland Revenue. We also cash personal cheques and customers can defer repayment for up to six months to help balance their finances. Unlike banks, we are prepared to cash cheques while you wait once we have completed some careful checks -including being absolutely sure that the people in front of you are actually who they say they are.

"Of course, you have to be cautious when cashing cheques, but Cash Generator has very comprehensive systems in place to protect against fraud and the latest computer technology has minimised the risks dramatically.

"But the fact remains that cashing cheques can be a risky business and you will be hit now and then, but if you're doing well you can just absorb it as part of the overheads. Some customers cash cheques with us simply because they don't want to put them through their bank account - maybe they have a large insurance cheque and don't want to put it into their account in case the bank uses it to reduce an overdraft facility.

"We have an enormously varied range of customers. A lot of our second-hand business is with people who simply don't want to advertise goods for sale and have people coming to the house. So they sell goods through us. And people who live in high crime areas have been known to bring expensive electronic goods to us so that we effectively store them while their owners are on holiday.

"Over the years we've bought some pretty strange things, from drum kits and odd musical instruments to engagement rings - even a fortune teller's crystal ball. But usually it's TVs, computers, videos and other electronic goods. Or it could be a student with a guitar or a bike, who wants some cash for the weekend."

Bargains abound on Cash Generator’s second-hand counters. As the company says: “Very few of us can resist genuine bargain basement prices on high quality products - our chairman is still one of our best customers, buying and selling lots of products for himself and his family."

CASH DEMANDS
Geoffrey Latham warns that new franchisees will probably find that their stock levels of second-hand goods will usually climb dramatically in the first couple of years.

"This can cause cash flow problems because in the early months demand on cash can be more than the profit you are generating,” he says. “Cash Generator is very careful to explain all this to new franchisees."

Cash Generator stresses that the local community is its customer base and does all it can to support it - recently Liverpool franchisees Robert Howard and Mike Hesketh sponsored new kit for a local team. Liverpool legend John Barnes came along to present it.

The community spirit goes deep into the franchisee network too, according to Paul and Melanie Fisher. Two weeks after opening a Cash Generator store in Boston, Lincolnshire, Melanie was rushed to hospital with serious heart problems.

Paul remembers: "Thanks to the tremendous efforts of the medical staff at our local hospital Melanie survived, but there seemed no alternative than to close the business so that I could look after her.

"But the very next day Cash Generator sent down top staff to help run the business until we were back on our feet again. We probably wouldn't have survived without this extraordinary generosity of spirit. We are proud to be part of the Cash Generator network."