CASE STUDY:Ambitious from an early age and now with over 20 years' business experience, Sean Daly's first business has been expanding well. However, now with increased risk attached to every decision, he wonders how to further progress his growth strategy...

SEAN Daly couldn't wait to leave school. He was bright and diligent and his teachers said he would do well at university. But Sean had other ideas. His main aim was to get a job and have money in his pocket.

His pleasant, outgoing personality made him a natural for the sales sector and he got a job as a junior salesman with a large car dealership where he thrived. He bought his first car, went on his first continental holiday and, impatient to sample more of the good life, started looking for a more senior sales job.

He joined an office equipment company as a sales rep and at the end of his second year was appointed an area sales manager. A year later he was offered a promotion to the company's European head office in the UK where he spent the next five years in various middle management roles in sales, marketing, logistics and distribution. He got to travel widely throughout Europe and spent three months with the parent company in Japan. He also began studying business with the Open University and, having graduated near the top of his class, went on to complete an MBA.

On a flight home to Dublin one weekend Sean fell into conversation with an Irish businessman who imported and distributed speciality food ingredients for the catering trade. The company had started as a one-man band 15 years earlier and had grown into a substantial operation employing 10 people. However, the founder, now in his early 60s, was under pressure from his wife to retire and there was no one in the wings to take over the business.

The men exchanged business cards and after a sleepless night Sean Daly contacted the man the following day and arranged to meet. Running his own business had always been on his agenda and with this in mind he had been carefully building up a nest egg since starting work. He had expected to spend longer gaining experience before striking out on his own, but having been presented with this opportunity he felt he could make up in youthful enthusiasm what he lacked in experience.

Before making any commitment Sean spent six months evaluating the business with the help of legal and financial professionals. The possibility of a partnership or some sort of shared ownership was floated and considered, but Sean decided a clean break with the past was preferable and eventually bought the business lock, stock and barrel. The deal was financed from savings and bank facilities.

The business was in good shape and had been well run. Apart from upgrading the IT systems and replacing the ageing van fleet it needed little capital investment. Initially Sean was a very "hands-on" manager but with ambitious growth plans in his head he knew the company needed a proper management structure. Having put this in place he delegated the day-to-day running of the business to the new general manager and began to put his expansion plans into action.

Over the next five years he consolidated the company's position in fine ingredients distribution in the Republic and broke into the northern Ireland market for the first time. Following requests from customers, Sean began sourcing a wider range of ingredients and in the early 1990s he acquired two small UK distributors involved in the importation of Indian and Far Eastern spices respectively. He consolidated the two companies in a new warehousing complex on the outskirts of London and began spending part of each week in the UK building the customer base there.

Back at home he was also looking for further expansion opportunities outside speciality ingredients. Sean decided the time had come to dip his toe into the waters of mainstream food distribution. Rather than reinvent the wheel, he approached a number of small distributors with an offer to buy. It was already becoming clear that scale was becoming a big factor in food distribution and that the writing was on the wall for small players servicing the general food trade. Sean subsequently bought one small and two medium-sized distribution companies before acquiring one of his main competitors in 2000. These acquisitions were largely financed from the company's own resources.

In 2007, he set up a new division which supplies speciality Irish ingredients to the overseas restaurant trade. His logic was that trucks bringing goods from the company's UK warehouse to Ireland were empty on their return. Initially he was planning to supply the UK only but following a number of requests for ingredients from Irish gastro pubs in Europe, Sean thinks there may be scope to develop this strand. However, the products of most interest are perishables, such as smoked salmon, so getting the logistics right will be crucial.

Sean is now 23 years in business and has built a substantial operation employing 120 people between Ireland and the UK. This year the company will have a turnover in the region of €40 million. While the recession has affected sales, the impact has been cushioned to an extent by the diversity of the company's product portfolio.

However, it has made Sean acutely cost conscious and, while the idea of developing a European ingredients business is attractive, he thinks this may be the time to conserve resources rather than spend them.

In recent months he has taken time to fully review the business and believes it needs to be leaner and fitter to weather the crisis. In particular, he wants to look at further ways of containing costs and sharpening profit performance.

Given the nature of the business, one of its biggest single costs is distribution. It has a mix of its own and outsourced distribution. A large proportion of its products for the Irish market have to be delivered within a tight time frame. As a matter of prudence, up to now the company has always used its own fleet to deliver perishable products. But, Sean wonders, how big a risk would it be to service quality levels if he were to reduce the size of his own fleet and increase outsourcing of deliveries?

There is increasing pressure from loyal customers for more frequent deliveries of smaller quantities - effectively reducing their stock levels but putting pressure on Sean's margins. At this stage he is aware that his management information systems are not up to providing the level of detailed data needed to optimise distribution scheduling in such a difficult environment. But Sean wonders whether this is the time to be spending on upgrading and whether an upgrade could produce the savings required to justify the expense involved?

Another issue is whether there is an opportunity to improve margins by winning new customers or by carrying additional lines? With the main infrastructure costs fixed, incremental sales should have a disproportionately beneficial impact on the overall margins in the business.

Up to now Sean has grown his business by a series of well-researched and carefully managed incremental steps. Intuitively he believes that battening down the hatches because of the recession is not a sensible solution. But he also recognises that the risks inherent in adopting incorrect strategies are far greater now than they ever were in the past. For the first time he finds himself genuinely perplexed about how best to pursue his growth strategy.