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Comment Gather round, those who think you could make a go of it in tech retail or are currently working in the sector. Let's hear the tale of all that went wrong – and right – for Maplin Electronics Ltd, a once engaging and highly profitable business that smacked headfirst into a brick wall in 2018.
Much has been written about its core strengths and weaknesses, but not enough has been made of the nitty-gritty stuff: performance and debt and the cycle of business sale, investment and resale. It is indeed this cycle that precipitated its collapse.
Statistics - Percentage - Businesses - Equity - Venture
Statistics show that a large percentage of failed retail businesses were backed by private equity or venture capital and the technology industry is no exception. Quite simply, with outrageous valuations and prices paid comes the saddling of huge business debt at an often punitive interest rate which pretty quickly or immediately wipes out profit generation. Maplin Electronics is a classic case.
It was in the early part of the 1997 when I was approached by sales at a distributor that I worked at to see what I could do in terms of increasing open credit terms offered to Maplin. We had at that time possibly one of the best retail salesmen I've ever come across; he not only got right up close to the client but worked extremely hard with vendors in terms of support. He had a terrific sense of responsibility in fully understanding credit risk. The salesman had worked closely with me on many earlier occasions with different clients and in those days, sales remuneration was commission-based, with claw-backs on slow payment or total default.
Credit - Insurance - '90s - Maplin - Balance
Credit insurance, even back in the '90s, was sparse and restricted; Maplin's balance sheet was already bearing the weight of an initial investment by Brown Shipley Development Capital in 1990...
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