Case Study: PRS Guitars Europe
“IF YOU WANT TO GROW A PREMIUM BRAND, THE CHALLENGE IS FINDING ADVISORS THAT ARE JUST A CONVERSATION AWAY FROM HELPING YOU FIND A SOLUTION”
Gavin Mortimer, CEO, PRS Guitars Europe
Paul Reed Smith’s beautifully designed guitars have been coveted by musicians in the US and beyond for the past 35 years. After decades of importing ‘PRS Guitars’ into the UK, distributor Gavin Mortimer accepted an offer to sell his company to the US-based guitar manufacturer six years ago.
Rather than spelling the end of his relationship with the brand, he has instead become an instrumental part of the wider group’s evolution.
He remains at the head of its European hub to this day. His team of six technicians make sure the US-made guitars are perfectly serviced and tuned, before delivering them to retailers across the UK, Ireland and Europe, as well as Turkey and Russian states.
ACHIEVING SUSTAINABLE GROWTH
“PRS Guitars Europe now has an annual turnover of over £11 million,” says Gavin. “We’re achieving growth of about 15% a year globally. We’ve doubled our business in Europe over the past five years and, despite a tricky year, we’re still over 9% up on 2018.”
The brand could amplify its growth by increasing production, but Gavin says this would be a mistake if quality was not upheld. “Even though there’s a year-long waiting list for our guitars, you can’t just open the tap. So, today our job is more about managing customer expectations than sales. We’re hiring all the time in the US factory, but for every 10 people we train, only three will become the highly skilled, long-term employees we need to make our high-quality product.”
LOCAL MARKET KNOWLEDGE
Business environments vary greatly across borders, so choosing the right markets is key. Here, the team at TC Group have played an important role in providing access to the right local contacts.
“US firms think the Netherlands is a great place to do business. But thanks to a local expert that TC Group put me in touch with, I found that actually its legal, tax and corporate structures were not a good fit. It’s a country which is just really good at promoting itself.”
By contrast, conversations with a recommended contact in Germany showed there were valuable opportunities for the brand. “This meant we were able to find out everything we needed to know about trading in Germany,” he explains. “We may be an SME, but the quality of advice we get from TC Group has always been of a level you’d expect as a large corporate.”
That’s why Gavin says he sees the TC Group team as problem solvers who can help with anything. “If I’m thinking ‘how do I do that?’, I just make a call and I get the answer I need. That’s their trump card.”
MANAGING BUSINESS RISK
Gavin has been working with TC Group for the past few years to manage these risks to the business. Yes, he received advice early on about tax and other accountancy ‘101’ services, but these areas of the business are now “buttoned down” and running efficiently. Today, the value is in conversations he has regularly with the TC Group team.
What’s great, Gavin concedes, is that the advice is never black and white. Rather than telling him what to do, the team at TC Group work together to take a wider view of the business, identify any risks on the horizon and formulate strategies.
Lately, these conversations have moved on to how the two PRS companies can trade more efficiently. “We’re a wholly owned subsidiary, but what’s good for the US business is not necessarily what’s good for us,” Gavin explains. “The TC Group team make sure that any decisions taken does not penalise us here in the UK.”
BEST ADVICE AT THE RIGHT TIME
These conversations also result in ideas turning into opportunities. “I always thought R&D Tax Relief was about guys in white coats with Bunsen burners,” Gavin says. “When I described to TC Group how we’ve been helping PRS Guitars to design and field test their electronic components – getting the right tone from a pickup is a dark art, for instance – they pointed out that we’ve helped to move guitar making forward as an industry, so we qualify for this relief. This saved us about £55k in tax.”
Yet, Gavin never feels like advice is being pushed on him. “The team understand my needs as a business owner. They know that taking the time to talk about opportunities and risks is vital. At the same time, they never waste my time by talking about services that I don’t really need, like selling me a pension scheme. I know that when I get advice, it’s advice I can trust.”
“WHAT’S GREAT, IS THAT THE ADVICE IS NEVER BLACK AND WHITE. RATHER THAN TELLING ME WHAT TO DO, THE TEAM AT TC GROUP WORK TOGETHER TO TAKE A WIDER VIEW OF THE BUSINESS, IDENTIFY ANY RISKS AND FORMULATE STRATEGIES”
Gavin Mortimer
PRS Guitars Europe